Taxes, banking and companies

Does Paraguay tax foreign income?

Paraguay taxes on a territorial basis: the IRP (personal income tax) applies to Paraguayan-source income, under Article 48 of Law 6380/2019. That does not mean your foreign income goes untaxed in every case: it depends on the type of income, your activity in Paraguay and what your home country requires. On Paraguayan-source income, individuals pay IRP of 8% to 10% on personal services above PYG 80 million (Gs. 80 million) a year, and 8% on capital income.

Main taxes and rates

Companies pay 10% IRE (corporate income tax), and the standard IVA (VAT) rate is 10%, with a reduced rate of 5%. Individuals pay IRP of 8% to 10% on personal services once annual income exceeds PYG 80 million, and 8% on capital income. Dividends are subject to IDU (dividend tax): 8% for residents and 15% for non-residents.

Your home country still matters

Moving does not automatically end your tax obligations back home. Check with an advisor there on how and when you stop being a tax resident.