šµš¦Panama vs Paraguayšµš¾
Checked November 4, 2026 Ā· How we score
| Metric | Panama | Paraguay |
|---|---|---|
| Corporate tax | 25% | 10% |
| Top personal tax | 25% | 10% |
| Capital gains tax | 10% | 10% |
| VAT | 7% | 10% |
| Usual entity | S.A. (Sociedad AnĆ³nima) or LLC (Sociedad de Responsabilidad Limitada) | S.A.S. (Sociedad por Acciones Simplificada) or S.R.L. |
| Setup cost | $1,200ā$3,000 | $800ā$2,500 |
| Yearly cost | $800ā$2,500 | $800ā$3,000 |
| Time to form | 5 days | 10 days |
| Remote setup | Yes | Yes |
| Banking difficulty | 4/5 | 4/5 |
| Digital nomad visa | Yes | No |
| Our score | 6.8/10 | 6.5/10 |
Choose Panama ifā¦
- āFreelancers and online businesses earning only foreign-source income
- āFounders seeking a territorial base and USD-denominated economy
- āHolding and trading companies needing a flexible, private structure
Choose Paraguay ifā¦
- āFreelancers and online business owners wanting a cheap territorial base
- āFounders seeking easy South American residency and a second passport route
- āAgricultural, energy and Bitcoin-mining businesses using low power costs
Questions people ask
Is Panama or Paraguay better for a new company?
Paraguay has the lower overall tax burden (10% corporate, 10% top personal). Panama is easier to set up, while Paraguay is cheaper to run. Panama carries more weight with banks, investors and customers. Overall, Panama scores 6.8/10 on our index vs 6.5/10.
Does Panama tax foreign income?
No. Panama taxes only income generated in Panama, so income from clients and activities abroad is generally outside the tax net for both companies and individuals. Since 2019, group entities earning foreign passive income need economic substance to keep the 0% rate, otherwise 15% applies.
Is Panama on the EU tax blacklist in 2026?
Panama was on the EU list of non-cooperative jurisdictions (Annex I) until 9 October 2026, when EU finance ministers moved it to the grey list (Annex II) after it reformed its foreign-source income exemption regime. The change takes effect when the revised annexes are published in the Official Journal, so verify the current status before relying on it. Banks and EU counterparties may still apply enhanced due diligence.
Is Paraguay a tax haven?
Not formally. Paraguay is not on the EU blacklist, but it has a territorial system with low flat rates of 10%, and foreign-source income is not taxed. Banks and counterparties still view it as a lower-transparency jurisdiction compared with the EU or US.
What is the Paraguay corporate tax rate?
The corporate income tax (IRE) is a flat 10% on Paraguayan-source profits. Dividends are subject to an additional 8% (residents) or 15% (non-residents). VAT is 10%, and foreign-source income is not taxed.
More comparisons
Not tax or legal advice. Rates and rules change; we check official sources and update every page, but verify with a licensed adviser in the country before acting. Spotted something out of date? Use the correction form below.