Countries › Paraguay › Guide › 5. FX and capital controls › Foreign loans to Paraguayan companies: no FX approval, 4.5 or 15 percent INR on interest and deduction caps

Foreign loans to Paraguayan companies: no FX approval, 4.5 or 15 percent INR on interest and deduction caps

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Last verified: 2026-10-28 · Status: Stable

A Paraguayan company may borrow abroad in any currency with no FX approval or registration, and the loan is enforceable in the agreed currency. Interest paid abroad bears non resident income tax (INR): an effective 4.5 percent to unrelated foreign lenders and 15 percent to the parent or related parties, withheld when paid or made available. Related party interest is deductible only at rates up to the BCP average deposit rate and within 30 percent of net income; banks must notify the BCP of foreign credit lines.

USD figures use PYG 5,868.31 per US dollar, the Banco Central del Paraguay reference quotation for 28 October 2026 (daily planilla). Conversions are for orientation only.

Key facts

FX registration or approval for foreign loans	Not required Ley 117/91 art. 4 and 6, as of 2026-10-28 · in force
Effective INR on interest to unrelated foreign lenders	4.5 %Ley 6380/2019 art. 75 num. 1 a) and 76, as of 2026-10-28 · in force
Effective INR on interest to the foreign parent or related parties	15 %Ley 6380/2019 art. 75 num. 6 and 76, as of 2026-10-28 · in force
IRE cap on related party interest, royalties and technical assistance	30 % of net incomeLey 6380/2019 art. 15 num. 23, as of 2026-10-28 · in force
Foreign currency obligations enforceable in the agreed currency	Yes Ley 434/94 art. 1, as of 2026-10-28 · in force

The rule

1. No approval; the state does not guarantee. Free exchange covers entry and exit of capital and remittance of interest and commissions abroad. The State does not back or guarantee foreign or domestic credit agreements signed by private persons.
Cost to do it: No FX registration or approval fee.
Example: A company borrows PYG 5,868,310,000 equivalent in dollars from abroad and repays it without BCP approval. / US$1,000,000 loan in and out with no FX permit.Ley Nº 117/91 De Inversiones, Art. 4, 6 and 13, 1992-01-07 official text · verified 2026-10-28

2. Foreign currency loans are enforceable in that currency. Obligations and contracts in foreign currency are valid and enforceable in the agreed currency; they can be secured by registered pledges, mortgages, warrants or other security for the amount in the currency of the obligation, registered stating the amount of the obligation and of the security. Credit instruments in foreign currency with executive force can be enforced through the summary executive procedure, and attachments are recorded in the currency of the obligation. Banks and other BCP supervised institutions must notify the BCP of credit operations they contract abroad, except ordinary banking operations.
Cost to do it: Security registration costs at the public registry apply as for any guarantee; no FX surcharge.
Example: A mortgage securing a US$1,000,000 loan is registered for US$1,000,000, not PYG 5,868,310,000. / Security is stated in US dollars.Ley Nº 434/94 Obligaciones en moneda extranjera, Art. 1, 2, 3, 4 and 6, 1994-10-10 official text · verified 2026-10-28

3. INR on interest. Interest on loans from the foreign head office or other foreign branches, and interest or commissions on financing where the lender is abroad, are Paraguayan source income of the non resident. The deemed net income is 30 percent of gross interest and commissions on loans from foreign public or private lenders and multilateral bodies that are not related, including bonds placed on recognized foreign markets, and 100 percent for amounts paid to partners, shareholders, head office or related entities. The rate is 15 percent; the tax arises when funds are made available, remitted or paid, whichever is first (offset and novation count); the payer withholds, cannot gross down the base by the tax, and the payment is final.
Cost to do it: Effective 4.5 percent of gross interest to unrelated foreign lenders, 15 percent to related lenders.
Example: Annual interest PYG 469,464,800: INR PYG 21,125,916 if the lender is an unrelated foreign bank, PYG 70,419,720 if it is the parent. / US$80,000 of interest: US$3,600 or US$12,000 withheld.Ley Nº 6380/2019 De modernización y simplificación del sistema tributario nacional, Art. 73 num. 1 and 2, 74, 75 num. 1 a) and 6, 76 and 77, 2019-09-25 official text · verified 2026-10-28

4. Deductibility. Interest is deductible for IRE when it is taxable income for the creditor under an income tax and the rate does not exceed the BCP published average deposit (passive) rate for similar operations (not applicable to banks under Ley 861/96). Interest, royalties and technical assistance paid to shareholders, the foreign head office or related companies are deductible only at market prices or within that rate, if the related taxes have been paid, and in total up to 30 percent of net income before that deduction; the interest stays subject to withholding even when not deductible.
Cost to do it: Non deductible related party interest costs 10 percent IRE on the excess on top of the 15 percent INR.
Example: Net income before related charges of PYG 2,934,155,000 caps related interest at PYG 880,246,500. / On US$500,000 of net income, at most US$150,000 of related interest, royalties and technical assistance is deductible.Ley Nº 6380/2019 De modernización y simplificación del sistema tributario nacional, Art. 15 numerals 10 and 23, 2019-09-25 official text · verified 2026-10-28

5. Reserve requirements on foreign currency. Foreign currency deposits in banks are subject to reserve requirements set by the BCP Board, and reserve requirements may also be imposed on foreign currency loans; above 10 percent the BCP must pay interest on the excess at no more than the average foreign currency deposit rate.
Cost to do it: Indirect: reserve requirements feed into the pricing of dollar loans from local banks.
Example: A dollar loan from a Paraguayan bank may price in the bank's reserve cost; a direct foreign loan does not. / Compare the all in cost of a local US$ loan with a foreign loan plus 4.5 percent INR.Ley Nº 489/95 Orgánica del Banco Central del Paraguay, as amended by Ley Nº 6104/2018, Art. 70 (as reworded by Ley 6104/2018 art. 1), 2018-07-03 official text · verified 2026-10-28

Lender	Deemed net income	INR	USD	PYG	Deduction test
Unrelated foreign bank	30%	4.5% effective	3,600	21,125,916	Rate within BCP average passive rate
Foreign parent or related company	100%	15% effective	12,000	70,419,720	BCP rate, tax paid and 30% of net income cap
Bond placed on a recognized foreign market (unrelated holders)	30%	4.5% effective	3,600	21,125,916	As for unrelated lenders

US$1,000,000 loan at 8 percent, annual interest US$80,000 (PYG 5,868.31 per US$)

Worked example

Parent loan or bank loan: a Paraguayan subsidiary needs US$1,000,000. From its parent at 8 percent it withholds PYG 70,419,720 (US$12,000) a year and can deduct the interest only within the BCP average passive rate and the 30 percent cap. From an unrelated foreign bank it withholds PYG 21,125,916 (US$3,600). A back to back structure through a group company falls under the 100 percent rule.

Step by step

1. Sign the loan agreement in the chosen currency; it is enforceable in that currency (Ley 434 art. 1).
2. Register any security in the currency of the obligation (Ley 434 art. 2).
3. Receive the funds by bank transfer; no FX registration is needed.
4. On each interest payment, accrual made available, offset or novation, withhold INR (4.5 or 15 percent effective) and pay it to DNIT.
5. Test deductibility: BCP average passive rate, tax withheld and paid, 30 percent cap for related parties.
6. Keep a transfer pricing file for related party loans.

Common traps

Offsetting interest against a receivable from the lender triggers INR just like a payment (Ley 6380 art. 74).
The 4.5 percent rate needs an unrelated lender; group finance companies are related parties.
Interest above the BCP average passive rate is not deductible even to unrelated lenders (art. 15 num. 10).
The INR cannot be grossed down: the payer withholds on the full gross amount (art. 77).

Sources

Related: Paraguay country profile · live dashboard · central bank and release calendar · our posts on X · where Argentina is involved, see The Argentine Thread guide

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