The Argentine government's decision to expand the installation of duty-free shops (free shops) beyond border crossings and authorized urban centers has raised alarm among merchants in Ciudad del Este, Paraguay, who fear losing customers to neighboring Puerto Iguazú, Argentina.
The measure was formalized through Decree 438/2026, which fully incorporates the free shop regime provided for in Mercosur agreements into Argentine legislation. Until now, these establishments were restricted to border crossings and customs zones; under the new rule, they will be able to operate in any authorized urban area, opening the prospect of significant expansion in Puerto Iguazú, a city that has coexisted for years with the Paraguayan commercial hub on the other side of the border.
For Ciudad del Este, the announcement represents a direct threat to a business model built over decades. The capital of Alto Paraná has established itself as a regional shopping destination, supported by a wide variety of products, robust commercial infrastructure, and a steady flow of visitors, especially Brazilians and Argentines. Formal commerce in the city's shopping centers generates around US$3.8 billion per year, and data from the Central Bank of Paraguay indicate that Ciudad del Este accounts for about 8% of the country's GDP.
Competition in the region, however, had already been intensifying. In recent years, Brazil moved forward with the authorization of duty-free shops in border municipalities, and now Argentina is reinforcing the same model, making the battle for consumers even fiercer in one of the most active commercial zones in South America.
Chariff Hammoud, president of the Center of Importers and Merchants of Alto Paraná (CICAP), assessed that the challenge could turn into an opportunity. "Ciudad del Este is in fashion and should focus on improving its infrastructure, enhancing the shoppers' experience, and making better use of the expertise that local business owners have by offering consumers the latest global launches," he said. Among the priorities identified are the improvement of streets and sidewalks and the full operation of the Puente de la Integración, which would ease the flow of vehicles and people across the Puente de la Amistad.
Meanwhile, Argentina's Ministry of Economy and the Customs Revenue and Control Agency (ARCA) will be responsible for regulating the system's operation in the coming weeks, defining the conditions for opening new establishments and the mechanisms for overseeing the activity. The initiative also faces resistance within Argentina itself: representatives of traditional commerce in the province of Misiones expressed concern over the potential growth of tax-exempt shops, arguing that they could create unequal conditions for businesses operating under the common tax regime.