Paraguay positions itself as a destination jurisdiction for individuals and capital

Paraguay is enjoying the longest period of macroeconomic stability in its history. Two decades of sustained growth, inflation kept in check under the Central Bank of Paraguay’s (BCP’s) inflation-targeting framework, public debt holding at around 40% of GDP – among the lowest in the region – and a currency, the guaraní, that has circulated without redenomination all add up to a degree of predictability rarely found in South America. That performance was rewarded with investment-grade ratings from Moody’s in 2024 and from S&P Global Ratings in December 2025, while Fitch keeps the country just one notch below, with a positive outlook.

The most recent indicators confirm that this performance was no one-off. The Paraguayan economy grew by 6.6% in 2025 – one of the strongest results in the region – driven by a broad-based expansion across almost every sector. For 2026, both the BCP and the IMF project growth of 4.4%, against a backdrop of contained inflation and macroeconomic fundamentals that remain among the soundest in Latin America.

The country’s momentum extends beyond the economy. Qualification for the 2026 FIFA World Cup after a 16-year absence, and the national team’s run to the round of 16 at the tournament, gave the country unprecedented international visibility – a timely metaphor for a Paraguay that is back playing in the big leagues.

That renewed interest is also visible in migration figures. After closing 2025 with a record 47,687 residence applications, the trend accelerated sharply in 2026. According to the National Migration Directorate (DNM), 33,243 applications were filed in the first half of the year – a 62% increase on the 20,567 filed in the same period of 2025, and equivalent to roughly 70% of the total received throughout 2025. The DNM has described the growth as unprecedented and has extended working hours and introduced weekend shifts to shorten processing times. Brazilian nationals account for the bulk of the flow: of the residences granted in the first quarter of 2026, 64% went to Brazilians, followed by Argentines (8.4%), Germans (4.5%), Spaniards (2.6%), and US nationals – reflecting the growing interest of investors, entrepreneurs, and families in settling in Paraguay.

Against that backdrop, the Paraguayan tax regime has become a decisive factor in attracting capital and individuals – particularly taxpayers completing their tax exit from worldwide-income jurisdictions.

Paraguay offers a low-tax regime built on the territoriality principle. Resident individuals are not taxed on foreign-source income; local capital income bears effective rates of between 2.4% and 8%; and foreign investors may apply for residence through the foreign investor certificate (CIE).

At the corporate level, profits distributed to shareholders bear a maximum combined burden of 17.2% or 23.5%, depending on the shareholder’s residence.

Item	Rate or burden
Corporate income tax (IRE)	10%
Dividend tax (IDU)	8% resident/15% non-resident
Capital income of individuals (effective)	2.4% to 4%
Foreign-source income of individuals	Not taxed
VAT	10% standard/5% reduced
Maquila (single tax)	1%
Free trade zone (on exports)	0.5%
Shares, funds, and bonds traded on the local exchange	Exempt (except IDU)

The three vehicles in common use are the corporation (SA), the limited liability company (SRL), and the simplified joint-stock company (EAS), all of which have liability limited to the capital contributed and are subject to IRE and IDU.

The SA is the classic vehicle for holding structures and companies with open capital: share capital represented by registered shares, a board of directors and a statutory auditor, and freely transferable shares unless restricted by the by-laws. The SRL, with between two and 25 partners, operates through quotas whose transfer to third parties requires the consent of the remaining partners, making it well suited to closely held, family-profile businesses. The EAS, created by Law No. 6480/2020, admits single-member incorporation and is registered digitally through the Unified System for the Opening and Closing of Businesses (SUACE) within a few days, making it an agile entry vehicle for small and medium-sized ventures.

As regards taxation, the general rule is IRE at 10% on actual net income, with two presumptive regimes: the sale of real estate by holding companies not engaged in the property business is taxed on a presumed profit of 30% of the price – a direct burden of 3% on the transaction – and an EAS with annual turnover of up to PYG 2 billion (approximately $330,000) and no import or export operations may opt for the SIMPLE regime, with a maximum effective rate of 3% on gross revenue. In every case, the IDU is followed by the IRE upon the subsequent distribution of profits.

A Paraguayan company that receives dividends, profits, or yields from foreign entities pays IRE at 10%: Law No. 6380/2019 expressly extends the source rule to such income, so the territoriality that benefits individuals does not carry over to the corporate level.

When profits are distributed, IDU applies: 8% for resident shareholders and 15% for non-residents. On a profit of 100, the total burden is 17.2 for a resident shareholder and 23.5 for a non-resident; Paraguayan residence therefore saves the shareholder 6.3 points. Paraguay does not compete as a holding jurisdiction, however; the figure matters as a measure of the cost of interposing a local company.

Personal income tax (IRP) applies exclusively to Paraguayan-source income. Dividends, interest, capital gains, and other yields that a resident individual derives from assets located abroad fall outside the scope of the tax, with no worldwide income reporting and no international fiscal transparency rules. Paraguay has neither controlled foreign company rules nor a wealth tax.

For a taxpayer who completes their tax exit from their country of origin, Paraguayan residence means that the return on their international portfolio is no longer subject to income taxation. For example, an individual who receives dividends from a Brazilian company, interest on US Treasury bonds, or rent from an apartment in Miami pays no tax whatsoever on that income in Paraguay.

Paraguayan-source capital income and gains of individuals are taxed at 8% on the actual gain or on a presumed one, whichever is lower: 30% of the price on the sale of real estate and shares (a maximum effective rate of 2.4%) and 50% of the price on leases (an effective rate of 4%).

Even more favourable is the local securities market: yields and capital gains on shares, funds, and bonds traded on the exchange are fully exempt, for individuals and IRE taxpayers alike, with the sole exception of IDU on dividends.

Transaction	Tax in Paraguay
Dividends, interest, or rent from abroad received by a resident	0 – outside the scope of IRP
Sale of an apartment in Asunción for $200,000	Maximum $4,800 (2.4%)
Letting that apartment for $1,000 per month	$40 per month (4%)
Business profit of 100 distributed to a resident shareholder	17.2 (IRE plus IDU)
On-exchange sale of local shares or bonds	Exempt

Businesses pay VAT on the sale of goods, the supply of services, and imports at the standard rate of 10%, reduced to 5% for certain goods and for real estate transactions, which are, in addition, assessed on reduced presumptive bases. Individuals are VAT payers only in respect of leases and independent services (or as sole proprietorships); the sale of real estate by individuals is outside the scope of the tax.

At the municipal level, businesses pay the business licence tax on the asset value declared in the balance sheet, and property tax of 1% on the fiscal value of the property, which in practice is far below market value. Neither materially alters the aggregate burden.

Labour costs are moderate by regional standards. The minimum wage stands at PYG 3,044,000 per month (a daily wage of PYG 117,077) following the 5% adjustment in force since July 2026. Employees receive an annual bonus equal to one twelfth of the year’s remuneration and 12 working days’ holidays, rising to 18 days after six years of service and to 30 after 10 years. After 10 years, employees also acquire special job security: dismissal is only possible for just cause proven in court. Unionisation in the private sector is almost non-existent, and social security is funded through employer contributions of 16.5% and employee contributions of 9%.

The system is rounded off by promotion regimes that substantially reduce the burden on investment- and export-oriented activities, comprehensively renewed by the package of incentive laws enacted in September 2025:

• Law No. 7548/2025 replaced the historic Law 60/90;

• Law No. 7547/2025 modernised the maquila regime and introduced service maquila;

• Law No. 7546/2025 created the electronics assembly regime; and

• Free trade zones remain governed by Law No. 523/95, although a revision of the law was announced.

Their essential features are summarised below.

Regime	Statute	Essential burden
Investment incentives	Law 7548/2025	Customs duty and VAT exemption on capital goods; non-resident income tax (INR) and IDU exempt for investments of $13 million or more (IDU for up to 10 years)
Maquila	Law 7547/2025	Single 1% tax; exemption from IRE and other domestic taxes; dividends exempt from IDU
Free trade zone	Law 523/95	Single 0.5% tax on sales abroad
Electronics assembly	Law 7546/2025	Customs duty exemption and reduced VAT bases

The migration regime under Law No. 6984/2022 provides for temporary residence, valid for two years and convertible into permanent residence, and for permanent residence. For a foreigner invoking investor status, Article 46 of the law makes permanent residence conditional on first obtaining the CIE, now regulated by Ministry of Industry and Commerce Resolution No. 0283/2026.

A recent development has a bearing on the transition from temporary to permanent residence: DNM Resolution No. 407/2026 unified the criteria for evidencing economic solvency, an admissibility requirement exclusive to permanent residence that also applies to the Mercosur regime (Law No. 3565/2008). Solvency must be documented under one of 12 categories – employees, self-employed professionals, digital nomads, property owners, shareholders (including those of an EAS), and retirees, among others – each with its own specific means of proof, and the documentation must be consistent with the activity declared when applying for temporary residence: the solvency category is planned from the outset.

The CIE, for its part, admits four investment routes, all reserved to foreign individuals.

Route	Minimum investment	Key requirements
Productive	$70,000	At least five formal jobs and a business plan
Tourism	$150,000	Business plan
Real estate	$200,000	At least 30% effectively paid; property for personal or family use excluded
Financial instruments	$200,000	Certification by an entity authorised by the BCP’s Superintendency of Securities

SUACE issues the certificate within five business days. The documents evidencing the investment may not be more than 180 days old, and foreign documents must be filed apostilled and translated, save that documents in Brazilian Portuguese are exempt from the translation requirement.

Paraguay has a limited but growing network of double tax treaties, in force with Chile, Taiwan, Qatar, the United Arab Emirates, Uruguay, and Spain. The treaty with Spain, the most recent to enter into force, introduced the lowest source-taxation limits in the network, with caps of 5% on interest and royalties. The treaty with Chile has just been renegotiated, and the resulting version is expected to incorporate limits on interest similar to those in the Spanish treaty.

Paraguay has not formally taken steps to raise its rates in light of pillar two, whose 15% global minimum exceeds the local 10% corporate rate. Along the lines of pillar one, by contrast, it already taxes foreign digital services: INR is paid by direct filing by the non-resident supplier in B2C transactions and withheld by the paying Paraguayan company in B2B transactions, plus the VAT collected by the bank when intermediating the payment.

Paraguay is a member of the OECD Inclusive Framework on BEPS and a signatory to the Convention on Mutual Administrative Assistance in Tax Matters. In practice, exchange of information operates on request or spontaneously, and the country has announced its intention to begin automatic exchange from 2027, a commitment whose materialisation remains to be seen. On the domestic front, National Directorate of Tax Revenue General Resolution No. 47/2026 introduced an information return on crypto-assets.

Paraguay combines a cycle of macroeconomic stability with a territorial, simple, and low-rate tax regime, the results of which are already verifiable in the investment-grade ratings, in the record numbers of foreigners taking up residence, and in a growing stock of investment. Individuals find in territorial taxation and in a rules-based residence process with short timeframes an equation that few jurisdictions offer, while businesses have at their disposal flexible corporate vehicles, moderate labour costs, an exempt securities market, and promotion regimes that place export activity on competitive terms – so that, on both fronts, the aggregate burden rarely exceeds single digits, and that simplicity is, in itself, part of the appeal.

Looking ahead, some issues remain unresolved and will need to be followed closely. The treaty network continues to expand – the treaty with Chile has just been renegotiated – and it remains to be seen what position Paraguay will take on the international transparency agenda, with the automatic exchange of information announced for 2027 yet to materialise, and on pillar two, in respect of which it has not yet decided whether to adjust its rates or the design of its incentive regimes. While those issues develop, the current regime retains its advantages, and with a well-executed tax exit in the country of origin and structures endowed with substance, Paraguay is consolidating its position as a destination jurisdiction for individuals and capital in South America.