Paraguay offers an increasingly attractive environment for doing business, with a competitive tax framework that balances simplicity and fiscal stability. In this article, we outline the country’s main tax obligations, including who is required to pay them, key filing deadlines, tax periods, and the role of withholding agents.
1. Value Added Tax (VAT)
Paraguay’s VAT system is the cornerstone of its indirect taxation regime. It applies primarily to:
- The sale of goods within Paraguayan territory;
- The provision of services performed in the country (excepting employment-based services); and
- The importation of goods into Paraguay.
Functioning much like VAT regimes in OECD jurisdictions, this tax is structured to capture value creation at each stage of the supply chain. Businesses collect VAT on their sales (output VAT) and are allowed to credit the tax paid on their purchases (input VAT), remitting the net difference to the tax authority. Ultimately, it is the final consumer who bears the economic burden.
| Taxpayers | • Individuals providing personal or professional services not under an employment relationship. Individuals operating a sole proprietorship. • Private entities in general (corporations, associations, cooperatives, foundations, public works consortia). • Branches, agencies, or permanent establishments of non-resident individuals or foreign entities conducting taxable activities in Paraguay. • Autonomous entities, state-owned enterprises, decentralized agencies, and mixed-capital companies. • Regular and occasional importers. • Fiscally transparent entities. • INR taxpayers (Non-Resident Income Tax). |
| Fiscal period closing | VAT’s fiscal period closes on the last day of each month. |
| Tax return filing and payment | Taxpayers must file their monthly tax returns by the due date of the following month, in accordance with the official tax calendar. |
| Tax rates | The general VAT rate is 10% (ten percent). A reduced rate of 5% applies to certain goods and services (e.g., human-use medicines, basic food basket items, unprocessed natural products, etc.). |
2. Corporate Income Tax (IRE)
This tax regime applies to income, profits, or gains from Paraguayan sources derived from any type of economic activity, including agricultural, commercial, industrial, or service activities (excluding those taxed under the Personal Income Tax regime).
Taxpayers under the IRE must determine their tax liability according to one of the following regimes:
- General Regime – IRE General
- Simplified Regime for Medium-Sized Enterprises – SIMPLE
- Simplified Regime for Small Enterprises – RESIMPLE
2.1. General Regime – IRE General (IRE RG)
This is the General Regime applicable to companies engaged in activities subject to IRE, when their accrued income in the previous fiscal year exceeds G. 2.000.000.000 (ca. USD 250.000) The applicable tax rate is 10% on net taxable income.
| Mandatory regime | Optional regime |
| • Corporations (S.A., S.A.E., S.A.E.C.A., S.R.L.) • Limited partnerships (simple and by shares), associations, corporations, foundations, cooperatives, and mutual entities. • Public works consortia.Branches, agencies, or permanent establishments of foreign entities.Fiscally transparent entities. • State-owned enterprises, autonomous entities, decentralized bodies, and mixed-capital companies. • Sole proprietorships with income exceeding G. 2.000.000.000 (ca. USD 250.000) or engaged in import/export activities. | Sole proprietorships with income not exceeding G. 2.000.000.000 (ca. USD 250.000) and not engaged in import/export activities. |
Fiscal Year-End (Deadlines Established by Decree No. 3.182/2019)
- The standard fiscal year-end is December 31 of each year.
- Sugar mills and cooperatives engaged in the industrialization of agricultural products may opt for April 30 as their fiscal year-end.
- Insurance and reinsurance companies, as well as beer and soft drink manufacturers, may opt for June 30 as their fiscal year-end.
Deadline for filing tax returns and payment
Taxpayers must file their tax returns and make the corresponding payments by the due date of the fourth month following the end of the fiscal year, in accordance with DNIT Resolution No. 38/2020.
2.2. SIMPLE Regime (IRE SIMPLE)
This is a simplified regime for medium-sized enterprises whose accrued income in the previous fiscal year does not exceed G. 2.000.000.000.
The applicable rate is 10%, calculated on either the Net Taxable Income (NTI) or a Presumed Net Income (PNI) base of 30% of gross income (direct tax of 3% over the annual gross income), whichever is lower.
| Optional regime taxpayers | • Sole proprietorships and the undivided estates of their owners. • Private entities and businesses of any nature, with or without legal personality. |
| Fiscal year-end | December 31 of each year, pursuant to Decree No. 3.182/2019. |
| Filing and payment deadline | Taxpayers must file their tax returns and make the corresponding payments by the due date of the third month following the end of the fiscal year, in accordance with DNIT Resolution No. 38/2020. |
2.3. RESIMPLE Regime (IRE RESIMPLE)
This is a simplified and optional regime for taxpayers whose income in the previous fiscal year is equal to or less than G. 80.000.000 (ca. USD 10.000).
| Optional regime taxpayers | It is recommended for micro-entrepreneurs seeking to formalize their business activities. |
| Fiscal year-end | December 31 of each year, pursuant to Decree No. 3.182/2019. |
| Filing and payment deadline | • Taxpayers must file a single annual tax return by February 26 following the end of the fiscal year, in accordance with DNIT Resolution No. 61/2020. • If the return is not submitted by the deadline, the Tax Authority (DNIT) will automatically generate the return on February 27 of each year. In such cases, payment installments will be calculated based on gross income of up to G. 20.000.000 (ca. USD 2.500), pursuant to Resolution No. 61/2020. • The taxpayer must make quarterly payments in March, June, September, and December, as established by the same resolution. |
Quarterly payment amount (pursuant to Resolution No. 61/20)
| Total income from the previous fiscal year | Quarterly payment (March, June, September, December) |
| Up to G. 20.000.000 | G. 60.000 (ca. USD 7,5) |
| From G. 20.000.001 to G. 40.000.000 | G. 120.000 (ca. USD 15) |
| From G. 40.000.001 to G. 60.000.000 | G. 180.000 (ca. USD 22,5) |
| From G. 60.000.001 to G. 80.000.000 | G. 240.000 (USD 30) |
3. Personal Income Tax (IRP)
The Personal Income Tax applies to Paraguayan-source income earned by individuals, including capital income and capital gains, excluding income subject to the IDU (Dividends Tax), as well as income derived from the provision of independent or employment-based personal services.
Regimes
a) Income from Capital Gains (IRP – RGC): Applies to individuals who earn income or gains, in cash or in kind, derived directly or indirectly from assets, rights, or property owned by the taxpayer. The tax rate is 8%.
b) Income from Personal Services (IRP – RSP): Applies to individuals who earn income from the provision of personal or professional services, whether under an employment relationship or independently, provided that their gross taxable income exceeds G. 80.000.000 (ca. USD 10.000). Tax rates are 8%, 9%, or 10%, applied to the net taxable income for the fiscal year.
| Fiscal year-end | The fiscal year ends on December 31 of each year. |
| Tax return filing and payment | Taxpayers must file their tax returns and make the corresponding payments by the due date of the third month following the end of the fiscal year (March), in accordance with the official tax calendar. |
4. Dividends Tax (IDU)
This tax applies to profits, dividends, or returns made available or paid to owners, partners, shareholders, or consortium members.
| Taxpayers | • Individuals receiving dividends, profits, or returns as owners, partners, shareholders, or consortium members. • Legal or fiscally transparent entities receiving dividends, profits, or returns as shareholders, partners, or beneficiaries. |
| Withholding agents | According to Decree No. 3.110/19, the withholding agents are the Dividend, Profit, and Return Generating Entities (EDGUR), which are required to issue and submit the withholding certificate to the tax authority and pay the tax. These include: • Sole proprietorships. • Corporations (S.A., S.A.E., S.A.E.C.A., S.R.L.). • Public works consortia. • Foreign entities with a permanent establishment. • Fiscally transparent entities. • Other similar private entities or companies. |
| Filing and payment deadlines | • Tax Return: Once profits are paid, or their distribution or availability to owners, partners, or shareholders is decided, the EDGUR must issue a withholding certificate. The tax must then be paid in the following month, with the payment deadline set for the 13th day of the month following the triggering of the tax obligation. • Informative tax return: Furthermore, Decree No. 3.110/19 provides that EDGURs must file an informative tax return within 6 (six) months following the end of the fiscal year, according to the official tax calendar. |
| Tax rates | The IDU is levied at a rate of 8% when the recipient is a resident in Paraguay, and 15% when the recipient is a non-resident. |
5. Excise Tax (ISC)
This tax regime applies to the importation of certain goods (such as tobacco, cigarettes, essences and similar products, alcoholic beverages, high-calorie products, fuels, and others) as well as to the first sale of such goods when produced domestically.
The purpose of this tax is twofold: to generate revenue to address public health issues potentially caused by the consumption of these goods, and to discourage the use of products that are harmful to the environment.
| Taxpayers | • Private entities in general (companies, associations, cooperatives, foundations, public works consortia). •Legal entities. • Sole proprietorships. |
| Fiscal period-end | The fiscal period closes on the last day of each month. |
| Filing and payment deadlines | Taxpayers must file their monthly tax returns and make the corresponding payments by the due date of the following month, as established in the official tax calendar. |
| Tax rates | The law sets minimum and maximum rates, allowing the Executive Branch to establish differential rates for various goods subject to the ISC: •Tobacco and related products: 18% • Beverages: 5% to 11% • Luxury goods: 1% to 5% • High-calorie products: 2% • Fuels: Up to 38% |
6. Non-Resident Income Tax (INR)
INR applies to income, profits, or gains earned by non-resident individuals, legal entities, or other entities from commercial, industrial, or service activities carried out in Paraguay, regardless of whether such taxpayers operate through an agent, attorney-in-fact, or representative in the country.
| Withholding agents (Decree No. 3.181/19) | • Legal and private entities when they pay for personal and/or professional services to non-resident entities obtaining Paraguayan sourced income. • Independent individuals providing personal services, when they pay for similar services directly related to generating taxable income under the IRP. • Banks, financial institutions, exchange houses, cooperatives, payment processors or similar entities, and telecom companies or intermediaries that facilitate the provision of digital services using credit/debit cards or transfers for purchases made from Paraguay to non-resident providers. • Notaries and public registrars involved in the transfer of real estate or registrable movable property located in Paraguay. • Individuals or entities listed in Law No. 6380/19, including the State and Municipalities, when they make available, remit, or pay income accrued to INR taxpayers. |
| Filing and payment deadlines | The tax is settled through a pro forma return made available by the Tax Administration, which reflects the INR withholdings made by the withholding agents in the preceding tax period. This return must be verified and confirmed within the first 6 calendar days of the month. |
| Tax rate | The INR is levied at a 15% rate on a taxable base ranging from 30% (4,5% effective rate) to 100% (15% effective rate), depending on the taxable event, as provided by Law No. 6.380/19. |
Tax Authority’s official calendar for filing and payment of Paraguayan taxes
The due dates for filing and payment of tax returns, in accordance with DNIT Resolution No. 38/2020, are as follows:
| Tax ID’s last number | Due date (fixed day of each month) |
| 0 | 7 |
| 1 | 9 |
| 2 | 11 |
| 3 | 13 |
| 4 | 15 |
| 5 | 17 |
| 6 | 19 |
| 7 | 21 |
| 8 | 23 |
| 9 | 25 |
If the due date falls on a non-business day, it will be moved to the next immediate business day, without affecting the rest of the scheduled deadlines.
Failure to pay at the time of filing the tax return will trigger the penalty set forth in article 171 of Law No. 125/91, which establishes that the fine will be calculated on the amount of unpaid tax as follows:
- 4% if the delay does not exceed one month;
- 6% if the delay does not exceed two months;
- 8% if the delay does not exceed three months;
- 10% if the delay does not exceed four months;
- 12% if the delay does not exceed five months;
- 14% if the delay is five months or more.
All time periods are counted from the day following the due date of the unpaid tax obligation. Other penalties may also apply in case of non-compliance with substantial and/or formal tax obligations.
