How corporate tax works in Paraguay
Paraguay levies IRE at 10% on Paraguayan-source income, profits and gains from economic activity. That includes commercial, industrial, agricultural and service activity carried on in the country.
Foreign-source income is generally outside the Paraguayan corporate tax base. Branches are taxed at the same rate as domestic corporations, and profits remitted to the head office are subject to IDU at 8% or 15% depending on residence.
Smaller taxpayers may use simplified regimes. PwC notes IRE SIMPLE for taxpayers with prior-year income up to PYG 2 billion, and RESIMPLE for sole proprietorships with gross income up to PYG 80 million.
Electronic invoicing is being rolled out by designated taxpayer groups. New legal entities registered from 1 April 2025 must issue electronically, while the 2024–2027 schedule progressively brings existing groups into the system.
Tax rates at a glance
- Corporate income tax
- 10%Territorial
- Foreign-source income
- 0% generally
- Dividend distribution tax
- 8% / 15%
- VAT
- 10%
Who benefits most
These profiles tend to benefit most when the rules match their real residence, payroll and business setup.
Local operating companiesRegional operatorsService firmsHolding companiesFamily businesses
Watch out for
- Paraguay has no foreign tax credit against local income tax payments, so foreign taxes do not usually offset Paraguayan corporate tax.
- The annual return is due in the fourth month after year-end, with advance payments in May, July, September and November.
- Mandatory e-invoicing and formal invoice support matter a lot, because the tax authority is strict about deductible expenses and VAT credit documentation.
Frequently asked questions
Does Paraguay have corporate income tax?
Yes. Paraguay's standard corporate income tax rate is 10% on Paraguayan-source profits.
What income is taxed in Paraguay?
Paraguayan-source income from commercial, industrial, agricultural and service activities is taxed. Foreign-source income is generally outside the corporate base.
Is Paraguay good for companies?
It can be, especially for local or regional operations that can use the territorial system. Companies still need to budget for VAT, payroll social security, dividend withholding and electronic invoicing.