Countries › Paraguay › Guide › 6. Taxes › Tax losses in Paraguay: five year carryforward capped at 20 percent of each year's income

Tax losses in Paraguay: five year carryforward capped at 20 percent of each year's income

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

A company's IRE tax loss can be carried forward for five consecutive years, but in each year it can shelter at most 20 percent of that year's net income, and there is no carryback. That makes Paraguay one of the slowest regimes in the region to absorb start up losses: a large early loss can expire unused even if the business turns profitable. SIMPLE taxpayers cannot carry losses forward at all, and individuals can carry forward only losses created by deducting a home purchase.

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

Tax loss carryforward period	5 yearsLey 6380/2019 art. 18, as of 2026-10-28 · in force
Annual cap on loss offset, share of net income	20 %Ley 6380/2019 art. 18, as of 2026-10-28 · in force
Loss carryback	None Ley 6380/2019 art. 18, as of 2026-10-28 · in force

The rule

1. Carryforward. If net income after allowed deductions is negative, the loss can be offset against net income of up to the next five fiscal years, counted consecutively from the year after the loss. In each year the offset is limited to 20 percent of that year's net income. The rule applies to losses generated after IRE came into force; the law provides no carryback.
Cost to do it: Unused losses after five years are lost.
Example: Loss of PYG 1,000,000,000 in 2026; net income of PYG 1,000,000,000 in each of 2027 to 2031: offset PYG 200,000,000 a year, all used by 2031. / A US$170,407 loss needs five years of income at least equal to it to be fully used.Ley Nº 6380/2019 De modernización y simplificación del sistema tributario nacional, Art. 18, 2019-09-25 official text · verified 2026-10-28

2. No carryforward in SIMPLE. Under the SIMPLE regime, negative results from the deductible outlays are not offset or carried forward.
Cost to do it: Opting into SIMPLE in a loss year forfeits the loss.
Example: A sole proprietor with a PYG 100,000,000 loss in SIMPLE cannot use it next year. / Same result at any size within SIMPLE.Ley Nº 6380/2019 De modernización y simplificación del sistema tributario nacional, Art. 26, 2019-09-25 official text · verified 2026-10-28

3. Individuals. Losses from personal service income deductions are not carried forward, except losses created by deducting a home purchase, which offset up to 20 percent of service net income in each of the next five years.
Cost to do it: Same 20 percent and five year pattern as companies.
Example: A home bought for PYG 900,000,000 with income of PYG 300,000,000 leaves a PYG 600,000,000 loss usable at 20 percent of later income. / A US$153,366 home purchase creates a carryforward usable over five years.Ley Nº 6380/2019 De modernización y simplificación del sistema tributario nacional, Art. 64 and 66, 2019-09-25 official text · verified 2026-10-28

4. Transfers of a business close the year. Transferring a commercial establishment closes the fiscal year for the seller, and the buyer keeps the seller's tax values for the assets.
Cost to do it: The law contains no rule transferring tax losses to the buyer of a business.
Example: A buyer of a going concern takes the assets at the seller's tax value. / Loss rich targets are usually acquired by buying the shares instead.Ley Nº 6380/2019 De modernización y simplificación del sistema tributario nacional, Art. 13, 2019-09-25 official text · verified 2026-10-28

Year	Net income	Offset (20%)	Taxable	IRE	Loss left
2027	1,000,000,000	200,000,000	800,000,000	80,000,000	1,800,000,000
2028	1,000,000,000	200,000,000	800,000,000	80,000,000	1,600,000,000
2029	1,000,000,000	200,000,000	800,000,000	80,000,000	1,400,000,000
2030	1,000,000,000	200,000,000	800,000,000	80,000,000	1,200,000,000
2031	1,000,000,000	200,000,000	800,000,000	80,000,000	1,000,000,000
2032	1,000,000,000	0	1,000,000,000	100,000,000	Expired: 1,000,000,000

Loss of PYG 2,000,000,000 in 2026 with PYG 1,000,000,000 of income each later year (Ley 6380 art. 18)

Worked example

A start up EAS loses PYG 2,000,000,000 (US$340,814) in 2026 and earns PYG 1,000,000,000 a year from 2027.
From 2027 to 2031 it offsets PYG 200,000,000 a year, paying IRE of PYG 80,000,000 (US$13,633) each year instead of PYG 100,000,000.
By the end of 2031 it has used PYG 1,000,000,000; the remaining PYG 1,000,000,000 (US$170,407) expires.
Accelerating income into the carryforward window, or capitalising start up costs (amortisable over up to five years under art. 15 num. 9), can reduce the waste.

Step by step

Track each year's loss separately with its expiry year.
Model the 20 percent cap before choosing to expense or capitalise start up and reorganisation costs.
Avoid opting into SIMPLE in a loss year.
In acquisitions, value losses only to the extent the 20 percent cap lets them be used within five years.

Common traps

The 20 percent cap applies every year, so losses larger than the sum of 20 percent of five years' income will expire (art. 18).
No carryback (art. 18).
SIMPLE losses are lost (art. 26).

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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