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Taxes in Paraguay: the 10 percent system, from corporate income tax and dividends to IVA, non resident withholding and penalties

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

Paraguay runs one of the lightest and simplest tax systems in the Americas, rebuilt by Ley 6380 of 2019: 10 percent corporate income tax (IRE), 10 percent standard IVA with a 5 percent rate for staples, property and medicines, and personal income tax of 8 to 10 percent. Profits paid to a foreign owner bear a further 15 percent dividend tax (IDU), for a combined 23.5 percent, and interest, royalties and fees paid abroad bear 15 percent non resident tax (INR) on a deemed net base. The tax and customs authority is the DNIT, the statute of limitations is five years, late payment costs 4 to 14 percent plus interest and fraud is fined at one to three times the tax.

USD figures use PYG 5,847.90 per US dollar, the Banco Central del Paraguay reference quotation for 27 October 2026 (latest published planilla on the verification date). 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
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
Effective INR on interest to unrelated foreign lenders (15 percent on 30 percent deemed net)	4.5 %Ley 6380/2019 art. 75 and 76, as of 2026-10-28 · in force
Effective INR on interest to related foreign parties (15 percent on 100 percent)	15 %Ley 6380/2019 art. 75 and 76, as of 2026-10-28 · in force
Effective INR on royalties to related foreign parties	15 %Ley 6380/2019 art. 75 and 76, as of 2026-10-28 · in force
IVA standard rate	10 %Ley 6380/2019 art. 90, as of 2026-10-28 · in force
IVA reduced rate (staples, real estate, residential rent, listed farm products, medicines)	5 %Ley 6380/2019 art. 90, as of 2026-10-28 · in force
Top IRP rate on personal services income	10 %Ley 6380/2019 art. 69, as of 2026-10-28 · in force
IRP rate on individuals' capital income and gains	8 %Ley 6380/2019 art. 60, as of 2026-10-28 · in force
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
Statute of limitations for tax collection	5 yearsLey 125/1991 art. 164, as of 2026-10-28 · in force
Maximum late payment (mora) fine, before interest	14 %Ley 125/1991 art. 171, as of 2026-10-28 · in force
Fraud fine range, times the tax evaded	1 to 3 timesLey 125/1991 art. 175, as of 2026-10-28 · in force
Comprehensive income tax treaties approved by law	6 treatiesDNIT list; Leyes 2965, 3972, 6230, 6276, 6387, 7271, as of 2026-10-28 · in force
Income tax treaty with Argentina	None in the DNIT list DNIT list of international agreements, as of 2026-10-28 · in force
SIMPLE regime prior year income ceiling	2000000000 PYGLey 6380/2019 art. 26, as of 2026-10-28 · in force
RESIMPLE regime prior year gross income ceiling	80000000 PYGLey 6380/2019 art. 27, as of 2026-10-28 · in force

The rule

1. Corporate income tax (IRE) at 10 percent. IRE taxes all Paraguayan source income, profits and gains from every kind of economic activity (agriculture, commerce, industry and services) plus income from assets and rights and any increase in net worth. Taxpayers include S.A., S.R.L. and other companies, single owner businesses (empresas unipersonales, including EIRL), cooperatives and associations, state companies and branches, agencies or permanent establishments of foreign persons or entities. Companies formed under Paraguayan law are resident, and so are foreign entities that set up a domicile in Paraguay from their registration in the Public Registry. The fiscal year is the calendar year and income and expenses are recognised on an accrual basis. The rate is 10 percent of net income, which is gross income less expenses that are necessary, real, documented (with withholding made where due) and not above market price when self invoiced. Dividends received from Paraguayan companies that are subject to IDU are exempt from IRE.
Cost to do it: 10 percent of taxable net income. No minimum tax and no separate corporate surcharge in Ley 6380.
Example: Taxable net income of PYG 5,847,900,000: IRE PYG 584,790,000. / US$1,000,000 of taxable profit: US$100,000 of IRE.Ley Nº 6380/2019 De modernización y simplificación del sistema tributario nacional, Art. 1, 2, 5, 7, 14, 21 and 25 numeral 1 c) (IRE), 2019-09-25 official text · verified 2026-10-28

2. What counts as Paraguayan source, including some foreign income. Income is Paraguayan source when it comes from activities in Paraguay, assets located there or rights used economically there. The law adds technical assistance, management, advertising, technical and logistics services rendered in Paraguay, assets and rights used in Paraguay even partly, and, when the investor is resident in Paraguay, interest and gains on deposits held abroad, exchange differences, dividends from foreign companies and derivative results. Income an IRE taxpayer earns from other activities abroad is also taxed unless it already paid a foreign income tax at a rate equal to or above 10 percent. Foreign income tax paid on that income can be credited against IRE up to the Paraguayan tax on the same income, and the same credit applies under tax treaties in force.
Cost to do it: At most 10 percent IRE on foreign income, reduced by the creditable foreign income tax; zero extra if the foreign tax rate was 10 percent or more.
Example: A Paraguayan S.A. earns PYG 58,479,000 of interest on a deposit in a foreign bank with no foreign tax: it is Paraguayan source income and bears IRE of PYG 5,847,900. / US$10,000 of foreign deposit interest: US$1,000 of IRE if no foreign tax was withheld.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

3. Tax losses carry forward five years, capped at 20 percent of each year's income. A tax loss can be offset against net income of the next five consecutive fiscal years, starting the year after the loss, but each year the offset cannot exceed 20 percent of that year's net income. There is no carryback. The rule applies to losses generated from the entry into force of IRE.
Cost to do it: No fee; the cost is the timing limit, since at least 80 percent of each year's net income stays taxable while losses are being used.
Example: Loss of PYG 584,790,000 in 2026 and net income of PYG 1,169,580,000 in 2027: offset is capped at PYG 233,916,000, taxable income is PYG 935,664,000 and IRE PYG 93,566,400; PYG 350,874,000 of loss remains for 2028 to 2031. / Loss of US$100,000, then profit of US$200,000: only US$40,000 of loss can be used, IRE is US$16,000 (an uncapped offset would have left US$10,000), and US$60,000 carries on.Ley Nº 6380/2019 De modernización y simplificación del sistema tributario nacional, Art. 18, 2019-09-25 official text · verified 2026-10-28

4. Simplified regimes for small businesses. SIMPLE is optional for single owner businesses and other private entities without a specific category whose prior year accrued income did not exceed PYG 2,000,000,000; they pay 10 percent on the lower of real net income or 30 percent of gross billing, and single owner businesses in SIMPLE are not IDU taxpayers. RESIMPLE is optional for single owner businesses with prior year gross income of PYG 80,000,000 or less, which pay a fixed monthly amount of PYG 20,000, 40,000, 60,000 or 80,000 by income band and are not IVA taxpayers. Importers and exporters must use the general regime, and moving up a regime is automatic when thresholds are exceeded. The guaraní amounts can be updated for inflation by the Executive.
Cost to do it: RESIMPLE: PYG 20,000 to 80,000 a month (about US$3.42 to US$13.68). SIMPLE: at most 10 percent of 30 percent of gross billing, an effective 3 percent of sales.
Example: A SIMPLE business billing PYG 1,000,000,000 with real net income of PYG 400,000,000 pays IRE on the lower base of PYG 300,000,000: PYG 30,000,000. / Sales of about US$171,000 with US$68,400 of real profit: tax base US$51,300, IRE about US$5,130.Ley Nº 6380/2019 De modernización y simplificación del sistema tributario nacional, Art. 26, 27, 28, 29, 139 and 140, 2019-09-25 official text · verified 2026-10-28

5. Dividend tax (IDU). Dividends, profits or returns made available or paid by Paraguayan companies to their owners, partners or shareholders, including profits remitted by branches to the foreign head office, bear IDU of 8 percent when the recipient is resident in Paraguay and 15 percent when it is a non resident, including the foreign head office. The payer withholds. Owners of companies that add value to agricultural raw material get a 20 percent reduction of these rates when the company invested at least US$5,000,000 in qualifying fixed assets in the last five years. Details on timing, deemed dividends and capital reductions are on the FX and capital flows page.
Cost to do it: 15 percent of the gross dividend paid abroad, withheld at source; combined with IRE, 23.5 percent of pre tax profit.
Example: Pre tax profit PYG 5,847,900,000; IRE PYG 584,790,000; dividend PYG 5,263,110,000; IDU PYG 789,466,500; net to the foreign parent PYG 4,473,643,500. / US$1,000,000 of profit: US$100,000 IRE, US$135,000 IDU, US$765,000 net abroad (23.5 percent combined).Ley Nº 6380/2019 De modernización y simplificación del sistema tributario nacional, Art. 40 to 44 and 133 (IDU), 2019-09-25 official text · verified 2026-10-28

6. Non resident income tax (INR) on payments abroad. Non residents pay INR on Paraguayan source income, including interest, royalties, technical assistance, services linked to IRE taxed activity and other amounts remitted abroad (imports of goods excluded). The rate is 15 percent, applied to a deemed net income of 30 percent for interest and commissions on loans from unrelated foreign lenders and of 100 percent for payments to shareholders, the head office or related entities and for other items not specifically listed. The payer withholds and the tax is final. Paraguayan public debt and securities traded on regulated stock exchanges are exempt.
Cost to do it: Effective 4.5 percent on interest to unrelated foreign banks and 15 percent on interest, royalties and fees paid to related parties.
Example: Royalties of PYG 584,790,000 paid to the foreign parent: INR PYG 87,718,500 withheld. / US$100,000 of royalties to the parent: US$15,000 withheld; the same interest to an unrelated foreign bank: US$4,500.Ley Nº 6380/2019 De modernización y simplificación del sistema tributario nacional, Art. 71 to 79 (INR), 2019-09-25 official text · verified 2026-10-28

7. Personal income tax (IRP). Resident individuals, Paraguayan or foreign, pay IRP on Paraguayan source income in two separate categories. Capital income and gains (excluding dividends taxed by IDU) bear 8 percent. Income from personal services, employed or independent, becomes taxable once gross income in the year exceeds PYG 80,000,000 and is then taxed on net income at progressive rates: 8 percent up to PYG 50,000,000, 9 percent from PYG 50,000,001 to PYG 150,000,000 and 10 percent above. Employee pension and social security contributions are excluded from gross income. The Executive may update these guaraní amounts for inflation once cumulative CPI exceeds 10 percent; the figures here are those written in the law.
Cost to do it: Top marginal rate 10 percent; 8 percent on capital income.
Example: Net services income of PYG 200,000,000: PYG 4,000,000 (8 percent of 50 million) plus PYG 9,000,000 (9 percent of 100 million) plus PYG 5,000,000 (10 percent of 50 million) equals PYG 18,000,000, an average 9 percent. / About US$34,200 of net services income: about US$3,078 of IRP.Ley Nº 6380/2019 De modernización y simplificación del sistema tributario nacional, Art. 47, 49, 53, 60, 62, 63, 69 and 139 (IRP), 2019-09-25 official text · verified 2026-10-28

8. Value added tax (IVA). The general rate is 10 percent. A 5 percent rate applies to residential rentals, sales of real estate, listed staples (rice, pasta, vegetable oil, yerba mate, milk, eggs, flour and iodised salt), listed agricultural, horticultural, fruit and livestock products and their primary derivatives, and registered human medicines; the Executive may raise some of these between 5 and 10 percent. IVA is self assessed by return, and all taxpayers, even exempt ones, must file. For digital services supplied from abroad and paid through banks, finance companies, exchange houses, cooperatives or payment processors, those intermediaries collect the IVA.
Cost to do it: 10 percent of the taxable price (5 percent for listed goods and services), net of input IVA credit.
Example: A service invoiced at PYG 58,479,000 plus IVA of PYG 5,847,900; with input IVA of PYG 2,923,950 on purchases, IVA payable is PYG 2,923,950. / US$10,000 of services: US$1,000 IVA charged, US$500 payable after US$500 of input credit.Ley Nº 6380/2019 De modernización y simplificación del sistema tributario nacional, Art. 90, 96 and 97 (IVA), 2019-09-25 official text · verified 2026-10-28

9. Tax treaties and Argentina. Paraguay has comprehensive income tax treaties approved by law with Chile (Ley 2965/2006), Taiwan (Ley 3972/2010), the United Arab Emirates (Ley 6230/2018), Uruguay (Ley 6276/2019), Qatar (Ley 6387/2019) and Spain (Ley 7271/2024), plus transport only agreements. The DNIT states the Spain treaty entered into force on 14 October 2024 and is Paraguay's first with an OECD member. There is no comprehensive income tax treaty with Argentina in the DNIT list, so Argentine investors rely on Paraguay's domestic rates and the foreign tax credit rules of each country. Treaty relief and unilateral relief work through the IRE credit for foreign tax.
Cost to do it: No official fee to apply a treaty was found in the texts reviewed; the treaty text sets the reduced rates and conditions.
Example: Without a treaty, a PYG 584,790,000 dividend to an Argentine parent bears IDU of PYG 87,718,500. / US$100,000 dividend to an Argentine parent: US$15,000 IDU in Paraguay, with any relief depending on Argentine law.Ley Nº 7271/2024 (Spain treaty) and DNIT list of international agreements; Ley Nº 6380/2019 art. 134, Treaty approval laws; Ley 6380 art. 134, 2024-10-14 official text · verified 2026-10-28 · changed: The Paraguay Spain income tax treaty, approved by Ley 7271/2024, entered into force on 14 October 2024 according to the DNIT, adding Paraguay's first treaty with an OECD country.

10. The tax and customs authority (DNIT). The Dirección Nacional de Ingresos Tributarios is an autonomous public law entity, linked to the Executive through the Ministry of Finance. It took over the staff, assets and budgets of the former tax undersecretariat (SET) and the customs directorate, and legal references to the SET now mean the DNIT's Gerencia General de Impuestos Internos. It applies internal taxes (income, sales of goods, services and domestic commerce) and customs law, collects import and export duties, interprets tax rules administratively and issues the general rules for their application. Court cases against it are heard in Asunción.
Cost to do it: No cost; one authority handles RUC registration, returns, payments, customs and refunds.
Example: An importer deals with the same DNIT for its customs clearance and its monthly IVA return. / Not applicable.Ley Nº 7143/2023 Que crea la Dirección Nacional de Ingresos Tributarios, Art. 1, 2, 3, 23, 25 and 27, 2023-08-04 official text · verified 2026-10-28 · changed: Ley 7143, promulgated and published on 4 August 2023, replaced the SET (named in Ley 6380 art. 146) and the customs directorate with the single DNIT.

11. Statute of limitations, late payment and penalties. The right to collect taxes prescribes after five years counted from 1 January of the year after the obligation was due; for annual income taxes the taxable event occurs at fiscal year end. Prescription is interrupted by a signed final inspection record, a notified assessment or a filed return, acknowledgement of the debt, partial payment, a request for payment facilities or collection proceedings, and suspended by appeals. Late payment (mora) is fined at 4 percent of the unpaid tax if up to one month late, rising 2 points a month to 14 percent at five months or more, plus monthly interest computed daily at the rate the Executive sets every four months. Fraud (defraudación) is fined at one to three times the tax evaded, graded by aggravating and mitigating factors such as voluntary disclosure; a withholding agent that fails to pay over withheld tax for more than 30 days is presumed to commit fraud. Other underpayment (omisión de pago) is fined up to 50 percent of the tax omitted.
Cost to do it: Late payment: 4 to 14 percent of the tax plus interest; fraud: 100 to 300 percent of the tax; omission: up to 50 percent.
Example: IVA of PYG 58,479,000 paid 45 days late: mora fine 6 percent, PYG 3,508,740, plus interest at the current official rate. / US$10,000 of tax paid 45 days late: US$600 fine plus interest; if found to be fraud, a further US$10,000 to US$30,000 fine.Ley Nº 125/1991 Que establece el nuevo régimen tributario, Libro V (kept in force by Ley 6380 art. 153, which repealed only Books I, III and IV), Art. 164, 165, 166, 171, 174 numeral 5, 175 and 177, 1991-12-18 official text · verified 2026-10-28

Tax	Rate	Who pays or withholds	Rule
Corporate income tax (IRE)	10 percent of net income	Company, branch or permanent establishment	Ley 6380 art. 21
Dividend tax (IDU)	15 percent to non residents and head offices; 8 percent to residents	Recipient; withheld by the paying company	Ley 6380 art. 43
Non resident income tax (INR)	15 percent on deemed net of 30 percent (unrelated foreign loans) or 100 percent (related parties, other)	Non resident; withheld by the Paraguayan payer	Ley 6380 art. 75 and 76
Personal income tax (IRP)	8 percent on capital income; 8, 9 and 10 percent on services income above PYG 80,000,000	Resident individuals	Ley 6380 art. 60 and 69
Value added tax (IVA)	10 percent; 5 percent for listed items	Seller or service provider; intermediaries for foreign digital services	Ley 6380 art. 90 and 97
SIMPLE / RESIMPLE	10 percent on the lower of real or 30 percent deemed income / PYG 20,000 to 80,000 a month	Small businesses that opt in	Ley 6380 art. 26 and 27

Main Paraguayan taxes for a foreign owned company, with the rule behind each (Ley 6380/2019 text published by the DNIT and Ley 125/1991 Book V, read on 28 October 2026).

Worked example

A US company owns a Paraguayan S.A. that earns taxable profit of PYG 5,847,900,000 (US$1,000,000) in 2026. It pays IRE of PYG 584,790,000 (US$100,000) with its annual return (Ley 6380 art. 21 and 23).
The S.A.'s shareholders' meeting declares the remaining PYG 5,263,110,000 (US$900,000) as a dividend. The S.A. withholds IDU at 15 percent, PYG 789,466,500 (US$135,000), and wires PYG 4,473,643,500 (US$765,000) to the parent with no FX permit (Ley 6380 art. 43; Ley 117/91 art. 6). Total Paraguayan tax on the profit: 23.5 percent.
During the year the S.A. also paid the parent PYG 584,790,000 (US$100,000) of royalties and withheld INR of PYG 87,718,500 (US$15,000) (Ley 6380 art. 75 and 76). The royalty deduction for IRE is limited, as explained on the FX and capital flows page (Ley 6380 art. 15).
Had the parent been resident in Spain, the Paraguay Spain treaty in force since 14 October 2024 would also need to be checked for the treaty rate; with Argentina there is no treaty and the domestic rates apply.

Step by step

Register with the DNIT in the RUC before the first taxable operation (see Choosing an entity and Start here for the company setup steps).
Confirm which taxes apply: general IRE regime for companies and branches; SIMPLE or RESIMPLE only for qualifying single owner businesses and entities, never for importers or exporters (Ley 6380 art. 26 to 28).
Set up invoicing and books that meet IVA documentation rules, which also govern IRE (Ley 6380 art. 22 and 92), and keep records for the five year prescription period (Ley 125/1991 art. 164).
File IVA returns for each period, even if all sales are exempt (Ley 6380 art. 96), and the annual IRE return with financial statements where required (art. 23).
Before any payment abroad, compute and withhold INR or IDU and pay it over on time; withheld tax unpaid for over 30 days is presumed fraud (Ley 125/1991 art. 174 numeral 5).
Before paying a recipient in a treaty country, check the DNIT treaty list and the treaty text for the applicable rate and conditions.
Track losses by year: each can be used only for five years and only up to 20 percent of each year's income (Ley 6380 art. 18).

Common traps

The 10 percent headline is not the full cost for a foreign owner: distributing profits adds 15 percent IDU, so the combined burden is 23.5 percent, and branch profits remitted to the head office are treated the same way (Ley 6380 art. 40 and 43).
Paraguay is not purely territorial for resident companies: interest on foreign deposits, exchange differences, foreign dividends and other foreign income can be taxed in Paraguay unless foreign income tax of at least 10 percent was paid (Ley 6380 art. 6).
Loss carryforward is slow: only 20 percent of each year's income can be sheltered and unused losses expire after five years, so start up losses can be lost (Ley 6380 art. 18).
INR is 15 percent of a deemed base, not of the gross payment, but for related parties the deemed base is 100 percent, so the full 15 percent applies to intercompany interest, royalties and fees (Ley 6380 art. 75).
The guaraní thresholds for IRP, RESIMPLE and SIMPLE can be updated by the Executive for inflation (Ley 6380 art. 139 and 140); check the DNIT for any update before relying on the statutory amounts.
Withholding agents get no payment plans for tax they withheld, and late payment over 30 days is presumed fraud with fines of one to three times the tax (Ley 125/1991 art. 161, 174 and 175).
Ley 6380 still names the SET as tax administration; under Ley 7143/2023 art. 23 that reference now means the DNIT's Gerencia General de Impuestos Internos, and returns, refunds and customs are handled by the DNIT.

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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