Taxes and cost of living: Chile and Bolivia vs Paraguay 2026

In 2025, three tax systems competed quietly for the attention of Latin American professionals, entrepreneurs, and investors: Paraguay's 10-10-10 territorial system, which taxes only locally-sourced income; Chile's Global Complementary Tax (IGC), with a maximum marginal rate of 40% on worldwide income; and Bolivia's system — nominally moderate in statutory rates but now shaken by a currency crisis that limits dollar access to less than US$25 per week. This comparison analyzes all three with verified data, without promoting any destination, and with the honesty to indicate when each jurisdiction does — and does not — make sense.

This guide is informational and comparative. It does not constitute personalized tax, legal, or immigration advice. For your specific situation, consult a licensed professional in the relevant jurisdiction.

Tax systems compared: Paraguay, Chile, and Bolivia

The most useful starting point is a structural overview of all three systems. The figures below correspond to the legal framework in force as of mid-2026:

Three immediate conclusions: (1) Paraguay offers the lowest and most predictable tax burden on foreign income; (2) Chile has the most sophisticated and demanding system, with the 2024 reform expanding audit capabilities; (3) Bolivia, though nominally competitive in statutory rates, is in a macroeconomic situation that makes it impossible to evaluate its tax system in isolation.

Paraguay's tax system: understanding the real 10-10-10

The "10-10-10" label summarizes the core: 10% VAT, 10% corporate income tax (IRE), 10% personal income tax (IRP). But what makes it structurally different is not just the rates — it is the territorial principle established in Law 6380/2019.

What Paraguay taxes — and what it does not

The IRP (Personal Income Tax) applies only to income generated within Paraguay. Dividends, interest, royalties, or capital gains from abroad are not taxed in Paraguay — regardless of amount. Furthermore, IRP kicks in only when Paraguay-source income exceeds approximately ₲80 million per year (roughly US$10,000 at 2026 exchange rates), which effectively exempts small local entrepreneurs.

The IRE (Business Income Tax), also at 10%, applies to the net income of Paraguay-source activities. Companies with operations abroad organized under a Paraguayan structure only pay tax on what is generated locally.

10% VAT is half of Chile's and the lowest of the three countries. For consumers and businesses invoicing locally, the impact on final prices is significantly lower.

Tax residency: 120 days, no asset threshold

Paraguayan tax residency is obtained through two alternative routes: 120 days of physical presence during the fiscal year, or an accredited main domicile in Paraguay. There is no asset or minimum property investment threshold — unlike Uruguay (UI 15M ≈ US$1.5M) or historical Portuguese regimes. The DNIT issues the tax residency certificate separately from the immigration permit. For the full process: Tax residency in Paraguay: full 2026 process.

Moody's Baa3 investment grade and macro stability

In July 2024, Moody's confirmed the Baa3 investment grade for Paraguay, ratified in August 2025. This matters for investors: it signals low sovereign default risk as assessed by an independent rating agency. The guaraní has maintained controlled depreciation against the dollar, and the exchange system has no access controls — unlike Bolivia.

Real estate returns in USD

The Asunción real estate market offers 7–9% annual returns in dollars in well-located residential and commercial segments, with prices per square meter between US$1,200 and US$2,000 depending on neighborhood. For the full tax system analysis: Paraguay's complete tax system: IRE, IRP and VAT.

Chile's tax system: sophistication, high burden, and the 2024 reform

Chile has one of the most complex and demanding fiscal systems in Latin America. For anyone evaluating relocation or tax restructuring, four elements cannot be ignored.

The Global Complementary Tax (IGC): 8 brackets, 40% maximum

The IGC taxes the worldwide income of Chilean tax residents. The scale has 8 brackets, with a maximum marginal rate of 40%. In the mid-range brackets (roughly US$30,000–80,000 annually), the effective rate already exceeds 20%. This means a Chilean with dividends from a foreign company, rental income abroad, or international capital gains pays IGC on those earnings — something that does not happen in Paraguay.

Law 21,713 (2024): the reform that changed the rules

Published in October 2024, Law 21,713 introduced two structural changes with direct impact on high-net-worth taxpayers:

• Reinforced General Anti-Avoidance Rule (GAAR): the Internal Revenue Service (SII) now has expanded capacity to recharacterize transactions that, while not individually illegal, result in a tax saving not matching their economic substance. Application is discretionary and subject to SII interpretation.
• Banking secrecy reform: banks must report to the SII upon request in the context of an audit. Secrecy no longer operates as an absolute barrier to banking information.

These two reforms, combined with the 40% rate, explain why more Chileans with diversified income are evaluating fiscal relocation. The framework is legal — tax planning with full regulatory compliance is a taxpayer right in every country.

The Chile-Paraguay DTT: a unique differential in Latin America

There is a Double Taxation Treaty (DTT) between Chile and Paraguay, ratified through Chilean Law 2,965/06 and in force since 2009. This DTT is significant because Chile has not signed equivalent treaties with all low-tax jurisdictions in the region. The treaty:

• Establishes fiscal residency tie-breaker criteria between both countries.
• Reduces withholding tax rates on dividends, interest, and royalties flowing between CL and PY.
• Includes a tax information exchange mechanism between the Chilean SII and Paraguay's DNIT.
• Provides legal certainty for capital flows between both countries — distinguishing Paraguay from other low-burden jurisdictions that do not have a DTT with Chile.

For Chileans evaluating Paraguay as a tax residence, the DTT is an important legal security element: it defines which country has the right to tax each type of income and eliminates the risk of being taxed in both simultaneously on the same earnings. Full residency guide for Chileans: Chileans in Paraguay 2026: tax residency and DTT guide.

Cost of living: Asunción vs Santiago

According to Numbeo 2026 data, Asunción is approximately 24.5% cheaper than Santiago as a city to live in. Differences are most pronounced in rentals (-18.8%) and supermarket spending (-25%). A two-bedroom apartment in Santiago's premium districts (Providencia, Las Condes) runs US$1,500–2,200/month; in Asunción the equivalent profile is US$600–1,000/month. For more: Cost of living in Paraguay 2026.

Bolivia's tax system: a currency crisis that overshadows nominal rates

Bolivia presents a singular situation: its statutory corporate tax rate (IUE 25%) and VAT (13%) are intermediate in the regional context — lower than Chile, slightly higher than Paraguay. However, fiscal evaluation cannot be done in the abstract, because the 2024-2025 macroeconomic and currency crisis introduces variables that radically alter the analysis.

The three pillars of Bolivia's tax system

• IUE (Corporate Income Tax): 25% on net profits. When dividends are remitted abroad, an additional levy applies (IUE-BE, 12.5%), which can raise the total effective burden for structures with foreign shareholders.
• IT (Transactions Tax): 3% on gross sales revenue. This tax applies even if the company is running a loss, making it particularly burdensome during low-profitability periods.
• RC-IVA (Complementary VAT Regime): 13% on individuals' income (salaries, fees, rentals), functioning as a flat-rate personal income tax. VAT invoiced can be offset as a tax credit.

The currency crisis: what the numbers alone cannot explain

Since late 2023, Bolivia has experienced a foreign currency shortage that intensified in 2024-2025:

• Official exchange rate: Bs 6.96 per dollar (fixed since 2011).
• Parallel exchange rate: Bs 9.98–10.40 per dollar (with a recorded peak of Bs 20 in May 2025). This gap implies an effective real devaluation of approximately 40–50% relative to the official rate for those operating in the informal market.
• Dollar cash withdrawals limited to approximately US$25 per week per person at most financial institutions, per 2024-2025 reports.
• Inflation: 15.5% year-on-year as of June 2025, eroding the purchasing power of boliviano-denominated assets.

For those with assets in Bolivia or boliviano-denominated income, the situation is genuinely difficult and deserves empathy: it is a structural crisis affecting the majority of Bolivia's population, not only large investors. Bolivians evaluating Paraguayan residency are in many cases seeking a diversification backstop, not abandoning their country.

Bolivia in Mercosur since August 2024

Bolivia completed its accession as a full Mercosur member in August 2024, after decades as an associate state. This has a direct practical consequence for Bolivians evaluating residency in Paraguay: they can now access the Mercosur Residency Agreement, simplifying the immigration process similarly to Argentine and Brazilian nationals. The procedure becomes more accessible and less costly.

No Bolivia-Paraguay DTT

A technically important point: no bilateral Double Taxation Treaty exists between Bolivia and Paraguay. The Andean Community's Decision 578 — which establishes a double non-taxation regime for member countries — does not apply to Paraguay because Paraguay is not and has never been a CAN member. Capital flows between Bolivia and Paraguay have no treaty umbrella and must be analyzed under each country's domestic legislation on a case-by-case basis. More details for Bolivians: Bolivians in Paraguay 2026: residency and tax guide.

For whom does Paraguay make sense?

• Those with significant foreign-source income (LLC dividends, overseas rental income, international financial returns) currently subject to IGC up to 40% in Chile — or exposed to Bolivia's currency uncertainty.
• Those seeking a permanent tax structure with no expiration date, unlike time-limited "tax holiday" regimes.
• Those who value macro stability (controlled guaraní, Moody's Baa3 investment grade, free dollar access).
• Chileans wanting to leverage the DTT in force since 2009 to structure capital flows with legal certainty and reduced withholding on dividends and interest.
• Bolivians needing asset diversification outside Bolivia as a hedge against the currency crisis, without necessarily abandoning their Bolivian residency.
• Those who can meet the 120-day annual presence requirement in Paraguay.

Next steps and professional guidance

This guide has deliberate limits: it analyzes legal frameworks valid at mid-2026 but cannot substitute for analysis of your specific situation. Professional consultation with a licensed advisor is warranted when any of these factors apply:

• Significant assets in Chile (property, mutual funds, local equities, AFP) or Bolivia (real estate, corporate shareholdings) with a planned tax residency change.
• An operating company in Chile or Bolivia that will continue after the relocation.
• Mixed-source income (part CL/BO, part foreign) requiring analysis of which country has primary taxing rights.
• Chilean structures potentially subject to Law 21,713's GAAR that could be recharacterized by the SII.
• Bolivian capital in bolivianos that needs to be converted and protected amid the exchange-rate gap.

ViaParaguay coordinates advisory services with licensed professionals in Paraguay, Chile, and Bolivia: Paraguayan notaries, tax attorneys specializing in the Chile-Paraguay DTT, and immigration managers experienced in the new Mercosur pathway for Bolivians. If you'd like to assess your specific case, contact us and we'll match you with the right advisor profile.

This guide is informational and reflects legislation and macroeconomic conditions as of mid-2026. Exchange rate, inflation, and tax rate figures are inherently variable — always verify with current official sources and a licensed professional before making decisions. It does not constitute legal, tax, or immigration advice.