Paraguay Tax Landscape 2026: Everything You Need to Know, in One Page

Last reviewed: November 2026 · Reviewed by Stéphane Gombauld, tax expert, technologist and digital nomad

You are considering Paraguay as a base, a company location or a plan B, and you want the whole tax picture on one page. This hub explains how the 2026 system works, the main taxes, what changes when you move in or out, and how businesses are taxed. Each section links to a detailed guide.

Paraguay taxes in 2026: the key figures

Is this guide for you?

Read on if you…

• plan to live in Paraguay for more than 120 days a year and want to know what you will owe;
• earn from foreign clients, an employer or a portfolio and need to understand the territorial system's limits;
• want one page mapping every Paraguayan tax topic before diving into the details.

Probably not your case if you…

• only visit Paraguay for short stays with no local income or property;
• need the detailed rules of a single topic. Jump straight to the relevant guide below.

How does the Paraguayan tax system work?

One law, five main taxes

Paraguay rebuilt its tax system with Law 6380/2019, in force since 2020. It created five national taxes: corporate income tax (IRE), dividend tax (IDU), personal income tax (IRP), non-resident tax (INR) and VAT (IVA), plus excise duties (ISC). Procedures and penalties still follow Law 125/91. The tax authority is the DNIT (Dirección Nacional de Ingresos Tributarios), formed in 2023 by merging the former SET with customs.

Territorial, with a twist

Paraguay taxes Paraguayan-source income. Income is Paraguayan-source when the activity happens in Paraguay, the asset sits in Paraguay or the payer is in Paraguay. Your Spanish pension, your London flat's rent or your salary for work done in Berlin are outside the net.

Here's the twist. Law 6380/2019 treats capital income from abroad received by residents as taxable: dividends, interest and gains on foreign securities carry a flat 8% IRP. And services you physically perform in Paraguay are Paraguayan-source, even if every client is abroad.

Who is resident?

You are a tax resident if you hold a permanent residence card or spend more than 120 days in Paraguay in any 12-month period, continuous or not. A cédula alone does not make you resident, and it does not end your residence elsewhere. Paraguay has few treaties, with Chile, Taiwan, Qatar, the UAE, Uruguay and Spain, so your home country's rules often decide.

What are the main taxes in Paraguay in 2026?

Personal income tax (IRP)

IRP has two baskets. Service income (salaries, freelance fees) is taxed progressively at 8%, 9% and 10% once your gross income exceeds 80 minimum monthly wages a year, about PYG 224 million or USD 30,000. Net income is gross minus documented personal and family expenses: rent, food, health, education, your car. The personal deductions guide lists what counts.

Capital income (rent, interest, dividends, gains) is taxed at a flat 8%, with no personal deductions. See capital gains tax in Paraguay.

Social security (IPS)

Employees contribute 9% of salary and employers 16.5% to the Instituto de Previsión Social. Freelancers and founders are not compulsorily covered; voluntary affiliation exists. Most expats keep private health insurance.

Corporate income tax (IRE) and dividend tax (IDU)

Companies pay 10% IRE on Paraguayan-source net profit. Distributed profits then carry IDU of 8% for resident shareholders or 15% for non-residents. The combined burden on distributed profit is about 17.2% for residents and 23.5% for non-residents. Small businesses can use the SIMPLE regime (turnover up to PYG 2 billion) or RESIMPLE (up to PYG 80 million, fixed monthly amounts). Details in corporate income taxes in Paraguay.

VAT (IVA) and excise (ISC)

VAT is 10%, with a 5% rate on the basic food basket, medicines, residential rent and real estate sales. Digital services bought from foreign platforms carry 10% VAT withheld by card issuers. Excise duties hit fuel, alcohol and tobacco. The specific taxes guide covers VAT, ISC and the municipal property tax.

Non-resident tax (INR)

Non-residents earning Paraguayan-source income pay INR at 15% on a presumed net base, giving effective rates of 4.5% on most services, 10.5% or 15% depending on the income type. The payer withholds it.

Wealth, inheritance and property

There is no wealth tax, inheritance tax, gift tax or exit tax. Property owners pay a municipal real estate tax of about 1% of cadastral value, which sits far below market prices.

Are there special regimes for newcomers?

Paraguay has no expat or digital nomad tax regime. The territorial system is the incentive. What exists:

• Foreign pensions and foreign salaries for work done abroad: not taxed at all.
• Investor residence: about USD 70,000 invested through SUACE, or the 2026 Investor Pass from about USD 200,000, both giving direct permanent residence.
• Law 60/90, maquila and free zones: investment incentives for larger projects, with reduced or zero tax on exports and dividends.

The full picture is in tax incentives for expats and digital nomads in Paraguay.

What happens when you move in or move out?

Moving in

1. Apply for temporary residence at the Dirección Nacional de Migraciones with apostilled documents; convert to permanent residence after two years.
2. Obtain your cédula, then register a RUC with the DNIT if you will earn income or need a tax residency certificate.
3. Track your days. Above 120 in any 12 months, you are resident and 8% applies to foreign capital income.
4. Deregister properly in your home country. Paraguay's few treaties mean its certificate rarely overrides foreign tests.

Step by step in how to obtain your tax residency in Paraguay.

Moving out

There is no exit tax. You file a final IRP return for the year of departure, cancel or suspend your RUC, and keep proof of your new residence. If you keep Paraguayan property or a company, you become a non-resident taxed under INR and 15% IDU. See how to cease your tax residency in Paraguay.

How are businesses taxed in Paraguay?

A founder usually chooses between a sole proprietorship, an EAS (Empresa por Acciones Simplificadas, single shareholder, no minimum capital, set up in days through SUACE), an SRL or an SA. All companies pay 10% IRE and withhold IDU on distributions. Expenses are deductible when necessary, documented with a legal invoice and at market value; losses carry forward five years, capped at 20% of yearly profit.

Two warnings. A foreign company managed from Paraguay can create a permanent establishment taxed locally. And electronic invoicing through SIFEN is mandatory for most taxpayers, so every expense needs a compliant document. Read legal forms of business in Paraguay and business expenses in Paraguay. For the penalty side, see tax fraud regulations of Paraguay.

Crypto is taxed as capital income at 8% for individuals and as business profit for companies. Details in cryptocurrency taxes in Paraguay.

Common mistakes (and what they cost)

• Assuming "territorial" means zero tax on everything foreign → 8% IRP on foreign dividends, interest and securities gains, plus 50% omission penalties when found.
• Working from Paraguay without a RUC → services performed locally are Paraguayan-source; late registration brings back taxes, mora up to 14% and fines.
• Treating the cédula as a tax exit from your home country → Spain, Germany or France keep taxing worldwide income until their own tests are met.
• Running a foreign company from an Asunción flat → permanent establishment risk, with 10% IRE on the profit attributed to Paraguay.
• Losing invoices → in a five-year DNIT audit, undocumented deductions are disallowed and taxed as omitted income.

Frequently asked questions

Does Paraguay tax worldwide income?

No. Paraguay taxes Paraguayan-source income only. Foreign pensions, foreign salaries for work done abroad and foreign rental income are untaxed. The exception is capital income from abroad received by residents: dividends, interest and gains on foreign securities are taxed at a flat 8% under Law 6380/2019.

What is the income tax rate in Paraguay in 2026?

Personal income tax (IRP) on services is 8% on net income up to 50 minimum monthly wages, 9% up to 150 and 10% above, once gross income exceeds 80 minimum wages a year. Capital income is taxed at a flat 8%. Corporate income tax (IRE) is 10%, and dividends carry 8% or 15%.

How do I become a tax resident of Paraguay?

Hold a permanent residence card, or spend more than 120 days in Paraguay in any 12-month period. Immigration residence starts with a temporary permit from the Dirección Nacional de Migraciones, convertible to permanent residence after two years. A tax residency certificate from the DNIT requires a cédula, a RUC and proof of presence.

What is VAT in Paraguay?

The standard VAT (IVA) rate is 10%. A 5% rate applies to the basic food basket, medicines, residential rent, real estate sales and some agricultural products. Foreign digital services are subject to 10% VAT withheld by payment intermediaries. Exports of goods and most exported services are zero-rated.

Does Paraguay have a wealth or inheritance tax?

No. There is no national wealth tax, inheritance tax, gift tax or exit tax. Property owners pay a municipal real estate tax of roughly 1% of cadastral value, which is usually far below market value. Transfers of real estate trigger IRP on the gain for individuals and VAT at 5% on the sale.

How does Paraguay compare with Mexico or Costa Rica?

Mexico taxes residents on worldwide income at up to 35%. Costa Rica is territorial like Paraguay but with higher corporate and personal rates. Paraguay combines territoriality with a 10% corporate rate and 10% VAT. Compare the Mexico and Costa Rica hubs for the details.

Paraguay tax guides

• How to obtain your tax residency in Paraguay – the 120-day test, temporary and permanent residence, and the DNIT certificate.
• How to cease your tax residency in Paraguay – final return, RUC cancellation and what stays taxable after you leave.
• Tax incentives for expats and digital nomads in Paraguay – what the territorial system really exempts, and the investor routes.
• Personal tax deductions and benefits of Paraguay – which personal and family expenses cut your IRP.
• Capital gains tax in Paraguay – 8% on shares, funds and property, with the presumed-gain rules.
• Cryptocurrency taxes in Paraguay – how trading, staking and mining are taxed for individuals and companies.
• Legal forms of business in Paraguay – sole trader, EAS, SRL or SA, and who can run them remotely.
• Corporate income taxes in Paraguay – 10% IRE, IDU on dividends, SIMPLE and RESIMPLE regimes.
• Business expenses in Paraguay – what a company or freelancer can deduct, and the invoice rules.
• Specific taxes in Paraguay – VAT, excise duties, property tax and the non-resident tax.
• Tax fraud regulations of Paraguay – surcharges, penalties, DNIT audits and criminal evasion.
• All country tax guides

Related guides

• Mexico tax landscape overview
• Costa Rica tax landscape overview
• Panama tax landscape overview
• Tax incentives for expats and digital nomads in Paraguay
• Corporate income taxes in Paraguay
• All country tax guides

Sources

• DNIT – Dirección Nacional de Ingresos Tributarios
• Ley N° 6380/2019 de Modernización y Simplificación del Sistema Tributario Nacional – Biblioteca y Archivo Central del Congreso (search by law number)
• Instituto de Previsión Social (IPS)
• Dirección Nacional de Migraciones
• Ministerio de Economía y Finanzas
• PwC Worldwide Tax Summaries – Paraguay

This guide is general information, not personalised tax advice. See how we research and review.