1.1. Low Taxation and Simple Tax Structure

Paraguay operates with a "Triple 10" tax regime:

• Business Income Tax (IRE): 10%

• Personal Income Tax (IRP): 10%

• Value Added Tax (IVA): 10%

Paraguay has established itself as the hidden gem of tax-free status for international income. The simplicity of its system and the stability of its legal framework make it superior to many low-taxation jurisdictions.

1.2. The Great Advantage: Territorial Taxation (0% Tax on Foreign-Sourced Income)

Paraguay's Tax Law adheres to the principle of Territorial Source of Income. This concept, fundamental for the entrepreneur or digital nomad, works as follows:

• Foreign-Sourced Income = Tax Exempt (0%): If your work (consulting, coding, design, digital marketing, selling infoproducts, investments outside Paraguay, etc.) is performed for clients or companies outside Paraguayan territory, and the funds originate and are managed abroad, those incomes are legally exempt from Personal Income Tax (IRP) in Paraguay.

• Contrast with Worldwide Taxation: Unlike countries such as the U.S., Spain, or Canada, where you must pay taxes on your worldwide income regardless of where you live, Paraguay will only tax you if the economic activity that generates wealth is carried out within its borders. This allows you to drastically and completely legally reduce your global tax burden.

Furthermore, the country offers incentives such as a low burden on dividend taxes and

Law 60/90 for investment, which grants even more exemptions to companies investing

in strategic sectors. This combination of territoriality and low rates on local income creates

an extremely friendly environment for entrepreneurs and investors.

1.3. Flexible Residency Maintenance

Unlike other countries that demand a strict physical presence requirement (183 days or more),

Paraguay offers great flexibility to maintain your tax status. To maintain your Temporary (and

subsequently Permanent) Residency, you only need to:

Visit Paraguay for the periodic renewal of your Cédula de Identidad (Identity Card), which proves your legal residency.

Keep your RUC (Single Taxpayer Registry) active if you need the tax residency certificate for presentation in other countries (even if you have

no local income).

Taxes in Paraguay

We offer comprehensive consulting on Paraguayan taxes, helping you effectively manage your residency and tax obligations, either as an individual or through corporate structures, thus optimizing your tax position.