Starting a business in
🇵🇾Paraguay
Checked November 4, 2026 · How we score
Corporate tax
10%
Top income tax
10%
Setup from
$800
all-in, first year
Time to form
10 days
can be done remotely
Taxes in Paraguay
| Corporate income tax | 10% Flat 10% IRE (Impuesto a la Renta Empresarial) on Paraguayan-source income. Foreign-source income is not taxed. The Maquila regime offers a 1% single tax on value added in exports for qualifying manufacturing and services, and Law 60/90 gives investment incentives. |
|---|---|
| Personal income tax (top) | 10% IRP at 8% or 10% on Paraguayan-source personal income from services and 10% above a threshold; foreign-source income is not taxed. Individuals are taxed only on Paraguay-source income. |
| Tax system | Territorial (foreign income untaxed) |
| Capital gains tax | 10%Gains are taxed at 10% under the corporate or personal income tax when Paraguay-sourced; foreign gains are outside scope. |
| Dividend withholding (non-residents) | 15% |
| VAT / GST | 10% |
| Social security | IVA 10% (5% reduced). Dividends distributed are taxed at 8% for residents and 15% for non-residents under IDU. IPS social security contributions of 16.5% employer and 9% employee apply to payroll. |
Forming a company in Paraguay
| Usual entity | S.A.S. (Sociedad por Acciones Simplificada) or S.R.L. |
|---|---|
| Minimum capital | None |
| Setup cost (all-in) | $800–$2,500 |
| Annual running cost | $800–$3,000 |
| Time to incorporate | 10 days |
| Form remotely as a foreigner | Yes |
| Local director required | No |
| Local address required | Yes |
| Owners on public register | No |
| Statutory audit for small companies | No |
| Business banking for non-residents | Hard |
Residency and visas
Paraguay grants temporary then permanent residency to foreigners with a clean record and a modest deposit (about US$5,000 in a local bank plus fees); permanent residency can be sought directly and typically takes a few months, mostly in person in Asunción. Citizenship follows after three years of residence. There is no formal digital nomad visa. Confirm current requirements with the Dirección General de Migraciones.
| Digital nomad visa | No |
|---|---|
| Golden visa | No |
| Ease of residency for founders | 2/5 (1 = easiest) |
Special tax regimes
Paraguay residency program
Foreigners can obtain permanent residency with a clean criminal record, proof of income and a deposit of about US$5,000 in a Paraguayan bank, with total costs of roughly US$3,000–US$6,000 including legal help.
Maquila regime
Export-oriented manufacturing and services under the maquila law pay a single 1% tax on value added in Paraguay, with duty-free input imports.
Territorial taxation
Only Paraguayan-source income is taxed at 10%; foreign-source income of companies and individuals is outside the tax net.
Pros and cons
Why founders pick Paraguay
- Flat 10% corporate and personal tax; foreign income exempt
- Cheap residency with no minimum stay to keep it for the first years
- Low cost of living and inexpensive hydropower
- Simplified S.A.S. can be formed in days
Watch out for
- Weak institutions, informality and political risk
- International banking and Stripe-style payments are harder than in the US or EU
- A Paraguayan tax residency requires 183 days of presence under local rules
- Limited treaty network and Paraguayan peso volatility
Best for: Freelancers and online business owners wanting a cheap territorial base · Founders seeking easy South American residency and a second passport route · Agricultural, energy and Bitcoin-mining businesses using low power costs
Paraguay: common questions
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.
How do I get residency in Paraguay?
You apply through the Dirección General de Migraciones with a passport, apostilled criminal record and birth certificate, proof of income or business, and a bank deposit (around US$5,000). Total costs are roughly US$3,000–US$6,000 with a lawyer, and you must attend biometric appointments in Asunción.
Can foreigners form a company in Paraguay remotely?
An S.A.S. can be incorporated online with documents signed via power of attorney through a Paraguayan lawyer or accountant, and it needs a local registered address and an RUC tax ID. Opening a bank account usually still requires an in-person visit.
Do I pay tax on foreign income in Paraguay?
No. Paraguay taxes only Paraguayan-source income, so earnings from clients abroad by an individual or company are generally outside the system. Check the tax rules of your home country, which may continue to tax you if you remain a resident there.
Sources
- SET Paraguay (SubsecretarÃa de Estado de Tributación)
- Dirección General de Migraciones Paraguay
- PwC Worldwide Tax Summaries: Paraguay
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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.