Tax basics
Taxes in Paraguay for foreign founders
Paraguay taxes on a territorial basis: income sourced within the country is taxed here, largely independent of where the owner lives. Here is how that plays out across the three taxes a new company usually meets first.
IRE — corporate income tax
A company's annual profit is taxed under one of three regimes depending on its annual turnover: Resimple (a fixed monthly instalment, for turnover up to Gs. 80,000,000 a year), IRE Simple (tax on real profit, up to Gs. 2,000,000,000 a year) or IRE General (full accounting, above that threshold or where required by structure). These thresholds are set by regulation and can change, so we confirm the current figures with you before registering your company into a regime.
The annual return is filed on Formulario 120 through Marangatu, the DNIT's online system, in the first months of the year following the close of the fiscal year. We do not state the current tax rate here — ask us for the figure that applies to your regime, since it is set by regulation.
IVA — value-added tax
Most goods and services carry a 10% general VAT rate; a reduced 5% rate applies to a limited list of items — mainly basic foodstuffs and certain real-estate and financial transactions. VAT is filed monthly, and the current list of items under the reduced rate is confirmed with the DNIT since it can change by regulation.
A company that only sells outside Paraguay, or that has no local sales yet, still files a monthly return — a zero-movement period must still be declared, not skipped.
IRP — personal income tax and residency
IRP applies to an individual's income, added up across sources — salary, professional fees, rental income. The current threshold and deduction limits are set by regulation and can change, so we confirm the current amount on request rather than state a figure here that may already be out of date.
Paraguay determines individual tax residency mainly by how much time you spend physically in the country and by where your main economic activity is based, rather than by citizenship or company ownership alone. The exact criteria are set by regulation — we review your specific situation with you rather than assume a residency status.
Frequently asked questions
Do I owe personal tax in Paraguay if I do not live there?
Owning a Paraguayan company does not by itself make you a Paraguay tax resident. Individual residency depends on time spent in the country and where your economic activity is centred — we review your specific situation rather than assume.
What is the VAT rate in Paraguay?
A general rate of 10% applies to most goods and services; a reduced 5% rate applies to a limited list of items, mainly basic foodstuffs and certain real-estate and financial operations. We confirm the current list with the DNIT since it can change.
Does my company have to file taxes even with no sales yet?
Yes — a zero-movement VAT period is still a required filing, not an optional one. Missing it can trigger a fine even when no tax is actually owed.
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