How vat / sales tax works in Paraguay
Paraguay VAT defaults to 10% on domestic supplies, with 5% on basic foods, pharmaceuticals, and passenger transport.
Traders register past turnover tests, file monthly Marangatu returns, and run electronic invoicing that validates every transaction.
Exports zero-rate, free-zone flows follow special regimes, and cross-border digital supplies face collection rules.
Tax rates at a glance
- Standard VAT
- 10%
- Reduced VAT
- 5%
- Basic foods
- 5%
- Exports
- 0%
- Free-zone flows
- Special regime
- Filing rhythm
- Monthly
Who benefits most
These profiles tend to benefit most when the rules match their real residence, payroll and business setup.
E-commerce sellersManufacturersFreelancersExpatsCross-border traders
Watch out for
- Border-town cash flows with Brazil and Argentina complicate VAT-inclusive pricing and credit chains.
- Free-zone and maquila regimes redirect treatment for qualifying operations, with status evidence deciding per flow.
- Electronic invoicing through Marangatu conditions credits, with formal defects denying claims.
- Territorial income rules interact with VAT registration where foreign sellers test local presence.
Frequently asked questions
What is the VAT rate in Paraguay?
Paraguay applies 10% standard VAT in 2026, with 5% for basic foods, pharmaceuticals, and transport.
How often are Paraguayan VAT returns filed?
Monthly through Marangatu electronic returns, with input credits conditioned on valid issuance.
Do free zones change VAT treatment?
Yes for qualifying operations under zone regimes, with status, activity scope, and documentation deciding per flow.