Countries › Paraguay › Guide › 6. Taxes › Dividend tax (IDU) in Paraguay: 8 percent for residents, 15 percent for non residents and branch remittances

Dividend tax (IDU) in Paraguay: 8 percent for residents, 15 percent for non residents and branch remittances

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

Profits leaving a Paraguayan company or branch are taxed a second time by the Impuesto a los Dividendos y a las Utilidades (IDU): 8 percent when the owner is resident and 15 percent when the owner is a non resident, including a foreign head office. The company withholds and is jointly liable; for non residents the tax is final, and for Paraguayan corporate shareholders it becomes a credit against their own later distributions. Profits kept in reserves or capitalised are not taxed until paid out, but loans to shareholders, cash shortfalls and owners' personal expenses are deemed dividends.

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

Dividend tax (IDU) on dividends to non residents	15 %Ley 6380/2019 art. 43, as of 2026-10-28 · in force
Dividend tax (IDU) on dividends to residents	8 %Ley 6380/2019 art. 43, as of 2026-10-28 · in force
IDU on profits obtained by a foreign head office from its Paraguayan branch	15 %Ley 6380/2019 art. 40 and 43, as of 2026-10-28 · in force
Default deemed distribution date for S.R.L. with silent bylaws, months after year end	4 monthsLey 6380/2019 art. 44, as of 2026-10-28 · in force
Deadline to formalise a resolved capitalisation of profits	12 monthsLey 6380/2019 art. 44, as of 2026-10-28 · in force
Minimum investment for the Ley 7548 ten year IDU exemption	13000000 USDLey 7548/2025 art. 4 e), as of 2026-10-28 · in force

The rule

1. What is taxed. IDU applies to profits, dividends or returns made available or paid to owners, partners or shareholders by sole proprietorships, S.A., S.R.L., other Paraguayan companies and entities, and by permanent establishments of foreign entities. Any distribution in cash or kind counts, except shares or quotas issued by capitalising profits. Distributions of excess legal reserve, optional reserves or capital formed by capitalised profits are dividends, and capital withdrawals are presumed to come first from reserves (including revaluation), then retained profits, then paid in capital.
Cost to do it: No fee; the cost is the tax itself.
Example: Reducing capital of PYG 500,000,000 that came from capitalised profits is taxed as a dividend. / Reducing capital of US$85,203 that came from capitalised profits is taxed as a dividend.Ley Nº 6380/2019 De modernización y simplificación del sistema tributario nacional, Art. 40, 2019-09-25 official text · verified 2026-10-28

2. Deemed dividends. The law presumes distribution when the company lends to an owner, partner or shareholder (unless it is a lender and the loan is within 2 percent of its loan book), when cash shortfalls exceed 10 percent of the cash account in the financial statements, and when owners withdraw funds or use company assets or services without paying for them, including personal expenses for them or their families. Cooperatives, mutual societies and maquila companies are outside IDU.
Cost to do it: A deemed dividend to a non resident costs 15 percent of the amount.
Example: A PYG 300,000,000 loan to the foreign parent is a deemed dividend: IDU PYG 45,000,000. / A US$51,122 loan to the foreign parent is a deemed dividend: IDU US$7,668.Ley Nº 6380/2019 De modernización y simplificación del sistema tributario nacional, Art. 40, 2019-09-25 official text · verified 2026-10-28

3. Rates. 8 percent when the recipient is a Paraguayan resident individual, company or entity; 15 percent when the recipient is non resident, including profits obtained by a foreign head office. The base is the net dividend made available or paid; amounts allocated to legal reserve, optional reserves or capitalisation are not taxed until capital is redeemed.
Cost to do it: Withholding is on the gross distribution; there is no gross up.
Example: Dividend of PYG 900,000,000 to a foreign parent: IDU PYG 135,000,000, net PYG 765,000,000. / Dividend of US$153,366 to a foreign parent: IDU US$23,005, net US$130,361.Ley Nº 6380/2019 De modernización y simplificación del sistema tributario nacional, Art. 42 and 43, 2019-09-25 official text · verified 2026-10-28

4. Who pays and the credit chain. The recipient is the taxpayer, but whoever makes the dividend available or pays it must withhold and is jointly liable. When the shareholder is a company, a transparent structure or a sole proprietorship, the IDU withheld becomes a credit it can use only against IDU on its own later distributions; the credit never expires and is never refunded. For resident individuals and for non residents the IDU is a single and final payment.
Cost to do it: A Paraguayan holding company layer does not double the 8 percent: the credit flows up.
Example: Opco pays PYG 900,000,000 to a Paraguayan Holdco: IDU 8 percent PYG 72,000,000 becomes Holdco's credit; when Holdco pays a non resident it owes 15 percent less that credit. / On US$153,366 the 8 percent credit is US$12,269, offset against Holdco's later 15 percent IDU.Ley Nº 6380/2019 De modernización y simplificación del sistema tributario nacional, Art. 41, 2019-09-25 official text · verified 2026-10-28

5. When the tax is triggered. In an S.A. and other entities with shareholder meetings, dividends are made available when the meeting resolves to distribute them, regardless of payment date; a resolved capitalisation must be formalised within twelve months. In an S.R.L. and entities without meetings, profits are deemed distributed on the date set in the bylaws or, if none, in the fourth month after year end, unless the partners decide otherwise in a notarised record. Sole proprietorships are deemed to distribute in the fourth month after year end unless profits are reinvested.
Cost to do it: Notarising an S.R.L. retention decision costs a notary fee but avoids a deemed distribution.
Example: An S.R.L. with silent bylaws and a 31 December year end is deemed to distribute its profits in April unless the partners record otherwise before a notary. / A US parent of an S.R.L. can owe 15 percent IDU in April without receiving cash if the bylaws are silent.Ley Nº 6380/2019 De modernización y simplificación del sistema tributario nacional, Art. 44, 2019-09-25 official text · verified 2026-10-28

6. Return and documentation. IDU is settled by sworn return in the form and on the dates set by the tax administration; the regulation defines the documents supporting the distribution and the credit.
Cost to do it: Late payment of withheld IDU triggers the Ley 125 mora fine of 4 to 14 percent plus interest (see the audits page).
Example: File and pay the IDU withheld in the month after the shareholders' resolution, per the DNIT calendar. / A one month delay on US$23,000 of withheld IDU adds a 4 percent fine before interest.Ley Nº 6380/2019 De modernización y simplificación del sistema tributario nacional, Art. 45 and 46, 2019-09-25 official text · verified 2026-10-28

7. Investment incentive exemption. Projects approved under the Ley 7548/2025 incentive regime with an investment of at least US$13,000,000 (CPI updatable) can obtain a ten year IDU exemption on dividends from that project, counted from the first distribution; for non resident investors it applies only if the money does not come from a low or no tax jurisdiction or the IDU would not be creditable in the investor's home country.
Cost to do it: Application to the MIC Investment Council; projects above US$13,000,000 must be prepared by registered national consultants (art. 8).
Example: A qualifying project paying PYG 900,000,000 of dividends abroad saves PYG 135,000,000 of IDU a year. / A qualifying project paying US$153,366 of dividends abroad saves US$23,005 of IDU a year.Ley Nº 7548/2025 (investment incentives regime, repeals Ley 60/90), Art. 4 e) and 32, 2025-09-08 official text · verified 2026-10-28

Recipient	Rate	Nature
Resident individual	8 percent	Final
Resident company, transparent structure or sole proprietorship	8 percent	Credit against its own later IDU, no expiry, no refund
Non resident individual or company	15 percent	Final
Foreign head office of a branch	15 percent	Final
Treaty resident (Spain, Chile)	Treaty cap may be lower (see tax treaties)	Treaty relief

IDU by recipient (Ley 6380/2019 art. 41 and 43)

Worked example

A Paraguayan S.A. has after tax profit of PYG 900,000,000 (US$153,366) and its sole shareholder is a Delaware company.
The shareholders' meeting on 30 April 2027 resolves to distribute it all; IDU arises on that date even if payment is later.
The S.A. withholds 15 percent: PYG 135,000,000 (US$23,005) and pays the parent PYG 765,000,000 (US$130,361).
If instead the meeting allocates PYG 300,000,000 to optional reserves, IDU falls to PYG 90,000,000 now, with the reserve taxed when later distributed.

Step by step

Approve annual financial statements and the profit allocation in the shareholders' meeting (S.A.) or partners' decision (S.R.L.).
For an S.R.L., set a distribution date in the bylaws or notarise any decision to retain profits, otherwise the fourth month rule applies.
Withhold IDU at 8 or 15 percent on the date the dividend is made available and file the withholding on the DNIT calendar.
If a treaty applies, document the shareholder's residence and beneficial ownership before applying the lower rate.
Track IDU credits received from subsidiaries in a register for later distributions.
Avoid shareholder loans and personal expenses through the company; they are deemed dividends.

Common traps

IDU is triggered by the resolution, not by payment, in companies with shareholder meetings (art. 44).
S.R.L. profits are deemed distributed in the fourth month after year end if the bylaws are silent (art. 44).
Loans to shareholders are deemed dividends unless the company is a lender within the 2 percent limit (art. 40).
Capital reductions are presumed to come first from reserves and retained profits, so they are taxed (art. 40).
Ley 6380 art. 40 still names the repealed maquila Ley 1064/1997; maquila operators now fall under Ley 7547/2025 art. 38, which exempts maquila income from IDU.

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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