Why Smart Investors Are Choosing Paraguay for Tax-Friendly Company Formation

By easyco Updated October 12, 2026

Paraguay has one of the simplest and lowest tax systems in Latin America. That is why investors set up trading, service and holding companies there. Here is how the system works in 2026, and what a company has to file.

The main taxes

Tax	Rate
Corporate income tax (IRE)	10% of net profit
VAT (IVA)	10% general; 5% on some goods
Personal income tax (IRP)	8% to 10%
Dividend tax (IDU)	8% for residents; 15% for non-residents

These rates are set by Law 6380/2019. Taxes are administered by the DNIT (Dirección Nacional de Ingresos Tributarios), created by Law 7143/2023, which replaced the former SET. Income tax applies mainly to Paraguayan-source income.

What a company files

RUC: every company registers with the DNIT and gets a RUC (tax ID).
Monthly: VAT returns, even with no activity, and the tax withholdings the company makes.
Annual: the IRE return. The fiscal year is the calendar year, and the return is due in the following months according to DNIT’s calendar.
Invoicing: electronic invoicing (SIFEN, e-Kuatia) is being made mandatory in stages.

Accounting books and financial statements

Journal (Libro Diario), ledger (Libro Mayor), and inventory and balance book
Annual financial statements: balance sheet and income statement
Larger companies may need an external audit under DNIT rules

Many investors outsource these filings; see outsourcing tax and accounting in Paraguay.

Why investors choose Paraguay

Dollar-friendly: accounts in US dollars and guaraníes, no exchange controls.
No minimum capital, and 100% foreign ownership in an EAS, S.R.L. or S.A.
Regional access: a MERCOSUR member bordering Argentina, Brazil and Bolivia.
Investment grade from Moody’s and S&P.

Common uses

International trading and distribution
Holding companies
Software, digital services and SaaS
Import, export and e-commerce

To start, see the types of companies in Paraguay and how to set up a company in Paraguay.

Get help from Easyco

Easyco coordinates the company setup in Paraguay up to the issue of the RUC, and supports companies afterwards with tax, accounting, payroll and company compliance, including a registered office address. Contact us to discuss your project.