The tax system in Paraguay – territorial and simple
Paraguay taxes on a territorial basis. That means: in principle only income earned domestically is taxable in Paraguay. Anyone living in Paraguay as a resident but funding their livelihood from foreign sources – e.g. rental income, dividends or business profits from abroad – pays no income tax on that in Paraguay.
This principle is the central tax advantage of the country and a key reason why Paraguay is so attractive for internationally active entrepreneurs and asset holders.
Tax rates in Paraguay
- Income tax (IRACIS): 10% on profits earned domestically by companies.
- Value added tax (IVA): 10% on goods and services (5% on basic food and medicine).
- Dividend tax: 8% on distributed profits of Paraguayan companies.
- Foreign income: Not taxable in Paraguay provided it was not earned in the country.
Asset protection through structure
Besides tax-free foreign income, Paraguay offers further advantages for asset protection. There is no inheritance tax and no gift tax between close relatives. Capital can be transferred freely – in and out without approval requirements.
For entrepreneurs, the combination of Paraguayan residency and a local company structure (SRL or SA) is recommended to make optimal use of tax and legal advantages. See Company formation in Paraguay.
What ParaguayJoker contributes
ParaguayJoker works with experienced local tax advisers and lawyers to ensure your asset structure in Paraguay is set up in a legally correct, tax-optimised and sustainable way. We ensure you benefit from all advantages of the Paraguayan system without taking unnecessary risks. We are happy to inform you about bank accounts and investment options in Paraguay.
