Countries › Paraguay › Guide › 6. Taxes › Corporate income tax (IRE) in Paraguay: 10 percent on net income, who pays, source rules, deductions and filing
Corporate income tax (IRE) in Paraguay: 10 percent on net income, who pays, source rules, deductions and filing
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Last verified: 2026-10-28 · Status: Stable
Paraguay taxes company profits through the Impuesto a la Renta Empresarial (IRE) at a flat 10 percent of net income, one of the lowest headline rates in the Americas. It reaches companies, branches of foreign entities, sole proprietorships and most other entities on Paraguayan source income, and resident companies also pay on foreign interest, dividends and exchange gains unless taxed abroad at 10 percent or more. The fiscal year is the calendar year, income is taxed on an accrual basis, and deductions are tightly conditioned: real, documented, necessary and, for many payments, subject to withholding.
USD figures use PYG 5,868.31 per US dollar, the Banco Central del Paraguay reference quotation for 28 October 2026 (planilla de cotizaciones of that day). Conversions are for orientation only.
Key facts
| Corporate income tax (IRE) rate | 10 %Ley 6380/2019 art. 21, as of 2026-10-28 · in force |
|---|---|
| Cap on foreign expenses paid without INR withholding, share of gross income | 1 %Ley 6380/2019 art. 15 num. 18, as of 2026-10-28 · in force |
| Optional presumed net income on sales of land held as fixed assets, share of price | 30 %Ley 6380/2019 art. 19, as of 2026-10-28 · in force |
| Maximum amortisation period for start up and reorganisation costs | 5 yearsLey 6380/2019 art. 15 num. 9, as of 2026-10-28 · in force |
| Combined IRE and IDU burden on profits fully distributed to a non resident | 23.5 %Ley 6380/2019 art. 21 and 43, as of 2026-10-28 · in force |
The rule
1. A flat 10 percent rate on net income. IRE taxes all Paraguayan source income, profits and gains from every economic activity (primary, secondary and tertiary, including farming, trade, industry and services), plus income from assets and rights, their disposal and any increase in the taxpayer's net worth. The rate is 10 percent of net income.
Cost to do it: No registration fee is set in the law; compliance cost is the annual sworn return and bookkeeping.
Example: Net income of PYG 1,000,000,000 pays IRE of PYG 100,000,000. / Net income of US$170,407 pays IRE of US$17,041.Ley Nº 6380/2019 De modernización y simplificación del sistema tributario nacional, Art. 1 and 21, 2019-09-25 official text · verified 2026-10-28
Cost to do it: No registration fee is set in the law; compliance cost is the annual sworn return and bookkeeping.
Example: Net income of PYG 1,000,000,000 pays IRE of PYG 100,000,000. / Net income of US$170,407 pays IRE of US$17,041.Ley Nº 6380/2019 De modernización y simplificación del sistema tributario nacional, Art. 1 and 21, 2019-09-25 official text · verified 2026-10-28
2. Who pays. Taxpayers include sole proprietorships (including EIRLs), S.A., S.R.L. and other commercial companies, public works consortia, associations, cooperatives, foundations, public companies, and branches, agencies or permanent establishments of foreign persons carrying on taxed activities in Paraguay. Trusts, investment funds and joint ventures are tax transparent: their income is taxed in the hands of the beneficiaries. Companies formed under Paraguayan law, and foreign entities that set up domicile in Paraguay from their registration, are resident.
Cost to do it: Being in scope means keeping full accounts and filing the IRE return every year.
Example: A Brazilian company's branch registered in Asunción pays IRE on its Paraguayan profits like a local S.A. / A US parent's Paraguayan EAS is a resident IRE taxpayer from its registration.Ley Nº 6380/2019 De modernización y simplificación del sistema tributario nacional, Art. 2, 3, 4 and 5, 2019-09-25 official text · verified 2026-10-28
Cost to do it: Being in scope means keeping full accounts and filing the IRE return every year.
Example: A Brazilian company's branch registered in Asunción pays IRE on its Paraguayan profits like a local S.A. / A US parent's Paraguayan EAS is a resident IRE taxpayer from its registration.Ley Nº 6380/2019 De modernización y simplificación del sistema tributario nacional, Art. 2, 3, 4 and 5, 2019-09-25 official text · verified 2026-10-28
3. Paraguayan source, with a foreign income hook. Income is Paraguayan source when it comes from activities in Paraguay, assets located there or rights used economically there; technical assistance, management, advertising, technical and logistics services rendered in Paraguay are included. For resident companies the law also treats as taxable interest on deposits abroad, exchange differences, dividends from foreign companies and other foreign income, unless foreign income tax at a rate equal to or above 10 percent was paid on it; art. 134 governs relief.
Cost to do it: Keep proof of foreign tax paid; the DNIT sets the evidence requirements (art. 6, last paragraph).
Example: Interest of PYG 50,000,000 on a deposit abroad, untaxed abroad, adds PYG 5,000,000 of IRE. / Interest of US$8,520 on a deposit abroad, untaxed abroad, adds US$852 of IRE.Ley Nº 6380/2019 De modernización y simplificación del sistema tributario nacional, Art. 6 and 134, 2019-09-25 official text · verified 2026-10-28
Cost to do it: Keep proof of foreign tax paid; the DNIT sets the evidence requirements (art. 6, last paragraph).
Example: Interest of PYG 50,000,000 on a deposit abroad, untaxed abroad, adds PYG 5,000,000 of IRE. / Interest of US$8,520 on a deposit abroad, untaxed abroad, adds US$852 of IRE.Ley Nº 6380/2019 De modernización y simplificación del sistema tributario nacional, Art. 6 and 134, 2019-09-25 official text · verified 2026-10-28
4. Calendar year, accrual basis. The tax liability arises at fiscal year end, which coincides with the calendar year unless the DNIT authorises another closing date. Income, costs and expenses are allocated on an accrual basis. Unrealised gains from biological growth, equity method revaluations and technical revaluations of fixed assets are taxed only when realised.
Cost to do it: No cost; a different year end needs DNIT authorisation.
Example: A company closing on 31 December 2026 owes IRE for 2026 on the return filed in 2027. / Gains on revaluing land are taxed only when the land is sold.Ley Nº 6380/2019 De modernización y simplificación del sistema tributario nacional, Art. 7, 2019-09-25 official text · verified 2026-10-28
Cost to do it: No cost; a different year end needs DNIT authorisation.
Example: A company closing on 31 December 2026 owes IRE for 2026 on the return filed in 2027. / Gains on revaluing land are taxed only when the land is sold.Ley Nº 6380/2019 De modernización y simplificación del sistema tributario nacional, Art. 7, 2019-09-25 official text · verified 2026-10-28
5. What counts as gross income. Gross income includes gains on fixed assets, exchange differences, insurance recoveries, gains on transferring a business or selling shares and quotas, rents and royalties, recovered bad debts, forgiven debts, interest, dividends received and unexplained increases in net worth. Loans made by the company must carry interest at least equal to the Banco Central del Paraguay average passive rate for similar placements (banks, cooperatives and staff advances excepted). Related company sales are valued at market price.
Cost to do it: An interest free loan to a group company can create taxable deemed interest.
Example: An interest free loan of PYG 1,000,000,000 to an affiliate is taxed as if it earned at least the BCP average passive rate. / An interest free loan of US$170,407 to an affiliate is taxed as if it earned at least the BCP average passive rate.Ley Nº 6380/2019 De modernización y simplificación del sistema tributario nacional, Art. 8, 2019-09-25 official text · verified 2026-10-28
Cost to do it: An interest free loan to a group company can create taxable deemed interest.
Example: An interest free loan of PYG 1,000,000,000 to an affiliate is taxed as if it earned at least the BCP average passive rate. / An interest free loan of US$170,407 to an affiliate is taxed as if it earned at least the BCP average passive rate.Ley Nº 6380/2019 De modernización y simplificación del sistema tributario nacional, Art. 8, 2019-09-25 official text · verified 2026-10-28
6. Deductions are conditional. Expenses are deductible only if necessary to earn and keep the income, real, properly documented, subject to any required withholding and, for self billed purchases, not above market price. Salaries are deductible only if social security was paid; payments to non resident providers are fully deductible only when INR was withheld, otherwise foreign expenses are capped at 1 percent of gross income; several items (payments to non IRP individuals, donations, staff benefits, purchases from RESIMPLE taxpayers) are capped together at 1 percent of gross income. Start up and reorganisation costs can be amortised over up to five years.
Cost to do it: The cost of a missing invoice or missing withholding is the lost deduction, that is 10 percent of the expense.
Example: A foreign consulting fee of PYG 200,000,000 paid without INR withholding by a company with gross income of PYG 5,000,000,000 is deductible only up to PYG 50,000,000. / A foreign consulting fee of US$34,081 paid without INR withholding by a company with gross income of US$852,034 is deductible only up to US$8,520.Ley Nº 6380/2019 De modernización y simplificación del sistema tributario nacional, Art. 14 and 15, 2019-09-25 official text · verified 2026-10-28
Cost to do it: The cost of a missing invoice or missing withholding is the lost deduction, that is 10 percent of the expense.
Example: A foreign consulting fee of PYG 200,000,000 paid without INR withholding by a company with gross income of PYG 5,000,000,000 is deductible only up to PYG 50,000,000. / A foreign consulting fee of US$34,081 paid without INR withholding by a company with gross income of US$852,034 is deductible only up to US$8,520.Ley Nº 6380/2019 De modernización y simplificación del sistema tributario nacional, Art. 14 and 15, 2019-09-25 official text · verified 2026-10-28
7. Non deductible items. IRE itself, fines, profits allocated to capital or reserves, self generated goodwill, personal expenses of owners and their families, IVA that is creditable or refundable, and costs of earning untaxed, exempt or foreign source income are not deductible. Mixed costs are prorated by gross income.
Cost to do it: Tax penalties are a pure after tax cost.
Example: A DNIT fine of PYG 10,000,000 costs the full PYG 10,000,000; no IRE saving. / A DNIT fine of US$1,704 costs the full US$1,704; no IRE saving.Ley Nº 6380/2019 De modernización y simplificación del sistema tributario nacional, Art. 16 and 17, 2019-09-25 official text · verified 2026-10-28
Cost to do it: Tax penalties are a pure after tax cost.
Example: A DNIT fine of PYG 10,000,000 costs the full PYG 10,000,000; no IRE saving. / A DNIT fine of US$1,704 costs the full US$1,704; no IRE saving.Ley Nº 6380/2019 De modernización y simplificación del sistema tributario nacional, Art. 16 and 17, 2019-09-25 official text · verified 2026-10-28
8. Presumed net income options. Forestry and sales of land forming part of fixed assets may be taxed on a presumed net income of 30 percent of the sale price (no evidence to the contrary admitted). Telecom, data and audiovisual services rendered from Paraguay abroad, container leasing and international transport may opt for a 30 percent presumed net income, locked in for five years.
Cost to do it: Effective IRE of 3 percent of the price or of gross income under the 30 percent options.
Example: Sale of farmland held as a fixed asset for PYG 2,000,000,000: presumed net income PYG 600,000,000, IRE PYG 60,000,000. / Sale of farmland held as a fixed asset for US$340,814: presumed net income US$102,244, IRE US$10,224.Ley Nº 6380/2019 De modernización y simplificación del sistema tributario nacional, Art. 19 and 20, 2019-09-25 official text · verified 2026-10-28
Cost to do it: Effective IRE of 3 percent of the price or of gross income under the 30 percent options.
Example: Sale of farmland held as a fixed asset for PYG 2,000,000,000: presumed net income PYG 600,000,000, IRE PYG 60,000,000. / Sale of farmland held as a fixed asset for US$340,814: presumed net income US$102,244, IRE US$10,224.Ley Nº 6380/2019 De modernización y simplificación del sistema tributario nacional, Art. 19 and 20, 2019-09-25 official text · verified 2026-10-28
9. Return, payment and advances. IRE is settled by sworn return in the form and on the dates set by the tax administration, which can also require financial statements consistent with those filed with banks and other public bodies. The administration may require advance payments during the year, capped at the average tax of the last three years; excess advances are offset against future IRE.
Cost to do it: Records must be kept for the five year prescription period (art. 22).
Example: A company that paid IRE of PYG 90,000,000, PYG 100,000,000 and PYG 110,000,000 in the last three years can be asked for advances totalling up to PYG 100,000,000. / Average tax of US$17,041 caps the yearly advances at US$17,041.Ley Nº 6380/2019 De modernización y simplificación del sistema tributario nacional, Art. 22, 23 and 24, 2019-09-25 official text · verified 2026-10-28
Cost to do it: Records must be kept for the five year prescription period (art. 22).
Example: A company that paid IRE of PYG 90,000,000, PYG 100,000,000 and PYG 110,000,000 in the last three years can be asked for advances totalling up to PYG 100,000,000. / Average tax of US$17,041 caps the yearly advances at US$17,041.Ley Nº 6380/2019 De modernización y simplificación del sistema tributario nacional, Art. 22, 23 and 24, 2019-09-25 official text · verified 2026-10-28
10. Key exemptions. Interest on government and municipal bonds, education services, dividends taxed by IDU received from Paraguayan companies, cooperative surpluses with members, export freight, BCP monetary instruments, and returns on securities traded on regulated stock exchanges are exempt, as are non profit entities meeting the statutory conditions.
Cost to do it: Exempt income drags proportional costs out of the deduction pool (art. 16 and 17).
Example: A holding S.A. receiving dividends from its Paraguayan subsidiary pays no IRE on them; IDU applies instead. / Listed bond interest earned through the Asunción exchange is IRE exempt.Ley Nº 6380/2019 De modernización y simplificación del sistema tributario nacional, Art. 25, 2019-09-25 official text · verified 2026-10-28
Cost to do it: Exempt income drags proportional costs out of the deduction pool (art. 16 and 17).
Example: A holding S.A. receiving dividends from its Paraguayan subsidiary pays no IRE on them; IDU applies instead. / Listed bond interest earned through the Asunción exchange is IRE exempt.Ley Nº 6380/2019 De modernización y simplificación del sistema tributario nacional, Art. 25, 2019-09-25 official text · verified 2026-10-28
11. Who administers it. The Dirección Nacional de Ingresos Tributarios (DNIT) took over the former tax undersecretariat (SET) and customs; references in Ley 6380 to the SET or tax administration now mean the DNIT's Gerencia General de Impuestos Internos.
Cost to do it: No cost; returns and payments are filed through the DNIT systems.
Example: Rulings and returns are with the DNIT, not the Ministry of Economy. / Same authority handles income tax and customs for a US importer.Ley Nº 7143/2023 Que crea la Dirección Nacional de Ingresos Tributarios, Art. 1, 2 and 23, 2023-08-04 official text · verified 2026-10-28
Cost to do it: No cost; returns and payments are filed through the DNIT systems.
Example: Rulings and returns are with the DNIT, not the Ministry of Economy. / Same authority handles income tax and customs for a US importer.Ley Nº 7143/2023 Que crea la Dirección Nacional de Ingresos Tributarios, Art. 1, 2 and 23, 2023-08-04 official text · verified 2026-10-28
| Item | Rule | Article |
|---|---|---|
| Rate | 10 percent of net income | 21 |
| Fiscal year | Calendar year unless DNIT authorises otherwise | 7 |
| Method | Accrual | 7 |
| Foreign income of residents | Taxed unless taxed abroad at 10 percent or more | 6 and 134 |
| Foreign expenses without INR withholding | Capped at 1 percent of gross income | 15 num. 18 |
| Related party interest, royalties, technical assistance | Capped at 30 percent of net income before them | 15 num. 23 |
| Losses | Five years, 20 percent of each year's net income | 18 |
| Advances | Up to the average tax of the last three years | 24 |
IRE at a glance (Ley 6380/2019, verified 28 October 2026)
Worked example
- A Paraguayan S.A. owned by a US company earns net taxable income of PYG 1,000,000,000 (US$170,407) in 2026.
- IRE at 10 percent: PYG 100,000,000 (US$17,041). Profit after IRE: PYG 900,000,000 (US$153,366).
- If the shareholders' meeting distributes all of it, IDU at 15 percent is withheld: PYG 135,000,000 (US$23,005). Cash reaching the US parent: PYG 765,000,000 (US$130,361).
- Total Paraguayan tax: PYG 235,000,000 (US$40,046), an effective 23.5 percent of pre tax profit.
Step by step
- Register with the DNIT (RUC) and choose a calendar year end unless there is a reason to request another closing date.
- Set up withholding on every payment to non residents (INR) and keep invoices with the buyer's RUC; without them the expense is lost.
- Price intercompany loans at or above the BCP average passive rate and intercompany sales at market value.
- Track foreign source income and keep proof of foreign tax paid at 10 percent or more.
- File the annual IRE sworn return and financial statements on the DNIT calendar date for the RUC ending; pay any advances the DNIT requires during the year.
- Keep books and support for at least five years after the year the tax fell due.
Common traps
- Ten percent is not the full cost to a foreign owner: IDU of 15 percent on distribution brings it to 23.5 percent (art. 21 and 43).
- A missing INR withholding not only exposes the payer to the INR but also caps the foreign expense at 1 percent of gross income (art. 15 num. 18).
- Interest free or cheap loans to affiliates are taxed as if they earned the BCP average passive rate (art. 8 num. 11).
- Unexplained increases in net worth are gross income (art. 8 num. 13).
- Salaries without IPS contributions are not deductible (art. 15 num. 4).
Sources
- DNIT, Ley Nº 6380/2019 text
- BACN, Ley Nº 6380/2019 (promulgation 25 September 2019)
- BACN, Ley Nº 7143/2023 creating the DNIT
- Banco Central del Paraguay, reference exchange rates (28 October 2026)
Related pages
- taxes/tax-system-overview
- taxes/dividend-tax-idu
- taxes/non-resident-withholding-inr
- taxes/tax-losses
- taxes/interest-deductibility-and-thin-cap
- taxes/transfer-pricing
- entities/choosing-an-entity
- entities/annual-compliance
- /country/paraguay/
- /calendar/
- Live dashboard
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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