Paraguayan tax system: IVA, IRE and INR explained (FAQ 2026)

Following the Law 6380/2019 on the Modernisation and Simplification of the National Tax System, Paraguay has been left with one of the simplest and most competitive tax frameworks in South America. Three taxes account for almost all collections: IVA, IRE (Corporate Income Tax) and IRP (Personal Income Tax), plus INR (Non-Resident Income Tax) which operates by withholding at source. We have brought together here the questions we are most often asked by businesses and individuals settling in the country.

Frequently asked questions

1. What is the rate of IVA in Paraguay and when does the reduced rate apply?

The standard IVA is 10%. There is a reduced rate of 5% for:

• Basic basket-of-goods staples (rice, milk, meat, bread).
• Specific ethical medicines and pharmaceutical products.
• Residential property leases in certain cases.
• Sale of real estate (on a taxable base reduced to 30% of the price).
• Certain unprocessed agricultural products.

Exports are taxed at 0% with the right to recover IVA credit.

2. What is IRE and what rates apply?

The IRE (Corporate Income Tax) replaced IRACIS, IRAGRO and IRPC. It has three regimes:

• General IRE: a rate of 10% on net profit. Applies to SAs, SRLs, branches, cooperatives and other companies.
• IRE SIMPLE: for small taxpayers with annual turnover below a cap (around G. 2,000 million; check with the DNIT for the current figure). Lower effective rate via deemed profit.
• IRE RESIMPLE: a simple deemed regime for micro-businesses, with a low fixed monthly amount.

On top of the nominal 10% there is the 8% IDU (Tax on Dividends and Profits) when the company distributes profits to resident individuals. If the beneficiary is non-resident, 15% applies as INR.

3. What is INR and how does it work?

The INR (Non-Resident Income Tax) taxes Paraguayan-source income received by individuals or legal entities resident abroad. It is applied by withholding at source, with the local payer responsible. Typical rates:

• Dividends, profits, capital gains: 15% (on a deemed base of 70% of the gross amount, unless evidenced).
• Interest paid abroad: 15% on a deemed base.
• Royalties and fees for technical services: 15% on a deemed base.
• International transport: a reduced percentage on a deemed base.

These withholdings are final: the non-resident has no obligation to file an annual return in Paraguay.

4. Does a foreign resident pay the same as a Paraguayan?

Yes. The system does not discriminate by nationality but by tax residency. A foreigner who obtains Paraguayan tax residency pays IRP on Paraguayan-source income, not on foreign income. The treatment is the same as for a resident Paraguayan.

5. How is the sale of a property taxed?

It depends on the seller:

• Resident individual: IRP-GC at 8% on the net gain. A deemed regime is also available: 8% on 30% of the price (2.4% effective).
• Company: IRE at 10% on the net gain on the sale, in line with the regime.
• IVA: if it is the first sale of new property, 5% IVA applies on a taxable base of 30% of the price (1.5% effective).

More detail in our guide to property purchases by foreigners.

6. Are dividends always taxed at 8%?

When distributed by a Paraguayan company to an individual resident in Paraguay: yes, IDU is 8% and the withholding is final. If the distribution goes to a non-resident shareholder, INR applies at 15%. When dividends are distributed between two Paraguayan companies, specific rules apply to avoid economic double taxation.

7. What expenses can a company deduct under IRE?

The general rule: all actual, documented expenses linked to the activity generating taxable income. In particular:

• Wages, IPS contributions and bonuses.
• Rents, services and inputs.
• Depreciation of fixed assets under specific rules by category.
• Interest expense (subject to thin-capitalisation limits).
• Advertising, marketing and entertainment (subject to caps).

Not deductible: fines, personal gifts and expenses not documented with an electronic invoice.

8. What about electronic invoicing?

The Sifen (e-Kuatia) system is mandatory for general IRE taxpayers. It was rolled out in stages by turnover and from 2024-2025 covers most taxpayers. Documents are issued electronically and reported in real time to the DNIT.

9. How are advance payments calculated?

IRE and IRP settle four-monthly advance payments based on the previous year's tax. They are paid in May, September and January. The balance is settled in the annual tax return. The 2026 IRP deadlines are scheduled by RUC final digit.

10. Is there wealth tax, inheritance tax or tax on foreign financial gains?

No. Paraguay does not levy:

• Net wealth tax.
• Inheritance or gift tax (at national level).
• Tax on foreign-source income for residents, as a general rule.

There is a municipal property tax (approx. 1% per year on the fiscal value) and the ISC (Selective Consumption Tax) on certain goods.

11. How does the maquila regime fit with the general system?

The maquila displaces IRE, IVA and tariffs in favour of a single 1% tax on value added. IRP and IDU are still payable by the partners/directors on their remuneration and dividends.

12. Does Paraguay have double-taxation treaties?

Yes, with a limited number of countries: Chile, Uruguay, Taiwan, the United Arab Emirates and Qatar, among others. The list expands gradually. With Argentina, Brazil, Germany and other major trading partners there is still no DTA in force, which is managed via territoriality planning and withholdings.

13. What happens if I do not invoice a transaction electronically?

The buyer's expense is not deductible and the seller is exposed to a formal penalty. It is one of the most common causes of sanction in DNIT audits.

14. Can the DNIT inspect overseas bank accounts?

Paraguay has signed up to the automatic exchange of financial information (CRS) with several countries. The DNIT can receive passive information on bank accounts held by Paraguayan residents in adhering jurisdictions. It is therefore advisable to declare overseas funds even if the income is not taxable — holding overseas assets is compatible with territoriality.

How to put it all into practice

For a company setting up in Paraguay, the standard route is:

1. Define the corporate structure (SRL / SA / branch / maquila).
2. Register the RUC and activate the activities at the DNIT.
3. Enrol in Sifen for electronic invoicing.
4. Build a local accounting team with the deadline calendar loaded.
5. Coordinate with the partners on their personal tax residency in order to optimise the flow of dividends.

15. Is there an ISC and which products does it apply to?

Yes. The Selective Consumption Tax (ISC) covers tobacco, alcoholic drinks, sugary drinks, fuels, new cars, perfumes and certain electronics. Rates range from 1% to 38% depending on the product. It is settled on importation or local production and is not creditable against IVA.

16. What withholdings operate within the country?

• IVA withholding: certain agents (large taxpayers, the State) withhold part of the IVA from their suppliers.
• IRP/IRE withholding: on services rendered by professionals or entities without a continuous billing contract.
• INR withholding: whenever the local payer remits abroad in respect of taxable items (dividends, interest, royalties, technical services).

The withholding agent is jointly and severally liable for tax not withheld or paid late.

17. How are property rents taxed?

It depends on the lessor:

• Resident individual: the rent is subject to IRP. A progressive rate of 8-10% on the net (gross rent less allowable deductions).
• Company: the rent is consolidated into the company's result and pays IRE at 10%.
• IVA: a reduced rate of 5% on residential lettings (in certain cases). Commercial lettings are at 10%.

18. How is IVA settled on overseas digital services?

Since 2021, digital services rendered by non-domiciled providers to end consumers in Paraguay have been subject to 10% IVA. Streaming platforms, app stores and international digital advertising must register with the DNIT as "digital IVA taxable persons" and settle monthly. The impact for the consumer is similar to that in countries that have already adopted the so-called "Netflix tax".

19. Is there a tax on crypto assets?

Paraguay still does not have a comprehensive specific regulation on cryptocurrencies for tax purposes. In practice: Paraguayan-source gains from crypto trading are treated as a capital gain under IRP-GC (8% on the gain) or IRE depending on whether the trader is an individual or a company. Gains generated on overseas exchanges, with no Paraguayan substrate, follow the general territoriality principle. It is worth tracking DNIT and Central Bank (BCP) resolutions because the matter is evolving.

How to put it all into practice

For a company setting up in Paraguay, the standard route is:

1. Define the corporate structure (SRL / SA / branch / maquila).
2. Register the RUC and activate the activities at the DNIT.
3. Enrol in Sifen for electronic invoicing.
4. Build a local accounting team with the deadline calendar loaded.
5. Coordinate with the partners on their personal tax residency in order to optimise the flow of dividends.

Key annual deadlines

• IVA: monthly, falling due between the 7th and 25th of each month according to RUC final digit.
• IRE: advance payments in May, September and January; annual return in March-May for a calendar tax year.
• IRP: four-monthly advance payments; annual return on a staggered timetable. See the 2026 IRP timetable.
• IPS (employee contributions): monthly, between the 1st and 15th of the following month.
• Accounting books and balance sheets: stamped each year before the year-end close.

A tax calendar shared between the in-house team and the external accountant drastically reduces the risk of late-filing penalties.

Integration with foreign trade

Exporters and importers integrate customs operations with IVA, IRE and INR. Read the foreign-trade guide to understand the standard customs regimes and their interaction with internal taxes.