A complete guide for entrepreneurs and self-employed professionals
Paraguay is a unique country in Latin America from a tax perspective, combining two major advantages:
Income earned abroad is not taxed, as Paraguay applies the territorial principle of taxation;
Taxes in Paraguay are the lowest in the region and among the lowest in the world, excluding offshore jurisdictions and territories with special tax regimes.
This creates a unique business ecosystem in Paraguay and serves as a powerful incentive for major companies such as Adidas, Nike, and Amazon to relocate production facilities and offices from other developed countries in the region, including Brazil, Chile, and Argentina, to Paraguay.
At the same time, its tax system:
Is relatively simple in terms of understanding the payment procedure and its legal framework;
In practice, offers significant potential for optimisation, as almost every properly documented expense may be treated as a business or self-employed professional’s expense;
Is transparent for foreigners, while the country genuinely needs an inflow of foreign capital.
Add state-level capital protection and a straightforward residence permit procedure, and it becomes clear why Paraguay is attracting more and more foreign investors, with their number increasing by 30,000–40,000 people each year.
For a country with a population of no more than 5,000,000, this is an impressive figure.
In this article, we will cover:
Permanent residency programs for investors starting from USD 70,000;
What types of taxes individuals need to pay;
What types of taxes companies pay.
Main Documents and Reference Links for This Article
Paraguay applies the territorial principle: as a general rule, income from Paraguayan sources is taxed. The tax authority is DNIT, or Dirección Nacional de Ingresos Tributarios; the main taxes are filed through Marangatu, and the legal framework is Law No. 6380/2019.
The main sources are:
DNIT — the tax and customs authority responsible for RUC, IVA, IRE, IRP, IDU, INR, and Marangatu;
MEF / Ministerio de Economía y Finanzas — economic and tax policy, publication of laws and regulatory documents;
IPS / Instituto de Previsión Social — social security and employee and employer contributions;
Servicio Nacional de Catastro — the fiscal value of real estate and the basis for impuesto inmobiliario;
The municipality where the business or property is located — commercial patents, licences, and municipal fees;
MIC / SUACE — company registration and the investment route under CIE/SUACE;
BCP — the official exchange rate and the financial sector;
SEPRELAD — compliance, source of funds, and AML.
Obtaining Permanent Residency in Paraguay by Starting a Business
As I mentioned earlier, Paraguay attracts investors from around the world through its SUACE program. I personally opened my business through this program, and I will now explain it briefly, because permanent residency in Paraguay allows you to obtain a Paraguayan ID. It is not yet a passport, but it is more than a temporary residence permit, and it allows you to:
Live in Paraguay;
Start a business;
Open bank accounts;
Buy land and register it in your own name;
Relocate family members;
Use medical services, including free healthcare;
Use colleges and schools;
Cross the borders with Uruguay, Brazil, Bolivia, and Argentina, which are MERCOSUR countries.
This is a full-fledged document for living, working, and doing business. It is issued for 10 years and does not allow you to vote.
Your business plan may serve as the basis for obtaining it.
Below is the official list of documents required to use this option. I received this list directly from SUACE, so it is in Spanish, but I will explain the main points.
Choose the Basis for Obtaining a Residence Permit
There are three available grounds:
Ownership of real estate worth at least USD 200,000 or the equivalent in local currency;
Establishing a business in the tourism sector with total investment in the business’s physical assets of at least USD 150,000;
Establishing a business in any sector with total investment in the business’s physical assets of at least USD 70,000.
Physical business assets include:
Real estate;
Tangible assets;
Construction;
Equipment;
Furniture;
Machinery and technology;
Vehicles;
Marketing.
Payroll and represantation expenses ARE NOT INCLUDED IN PHYSICAL ASSETS.
Provide a Brief Business Plan — Although the More Detailed It Is, the Better
This business plan must be written personally by the business owner, or you may use our company’s services to prepare a professionally structured plan that will be accepted.
The business plan must contain several mandatory sections:
2.1 Company Information
The official name of the company;
Whether the company is already operating or is only being established.
2.2 Investor and Management Information
Full name;
Citizenship;
Position;
Passport or identity document number;
Profession.
2.3 Type of Activity
What the company will do;
The main type of activity;
The economic activity code, CIIU.
2.4 Company Location
The following should be specified:
Address;
City;
Department;
Contact telephone number;
Whether the premises will be owned or rented.
2.5 Products Manufactured, If Applicable
If the company is engaged in manufacturing, it is necessary to describe the products it will produce.
If the activity is limited to services, this section is usually left blank.
2.6 Services Provided
For example:
Legal support;
Accounting services;
Support for foreign investors;
Real estate transactions;
Logistics;
Transport services;
IT services;
Consulting.
2.7 Planned Investment
The business plan must contain a detailed investment structure.
SUACE provides the following examples:
Purchase of real estate;
Construction;
Vehicles used in the business;
Equipment;
Machinery and technology;
Installation;
Other capital investments;
The total project cost.
It is important to note that this list is illustrative and may be expanded depending on the specific nature of the business.
2.8 Project Implementation Schedule
The approximate time frames must be specified for:
Starting operations;
Completing the investment in full.
The SUACE template provides the following example:
Start of operations — 6 months;
Completion of investment — 12 months for projects with investment from USD 70,000 to USD 100,000.
HOWEVER, IT IS IMPORTANT TO REMEMBER THAT THE MAXIMUM PERIOD FOR COMPLETING THE INVESTMENT IS 24 MONTHS.
2.9 Job Creation Plan
The number of employees to be hired should be specified.
For example:
Specialists;
Technical personnel;
Workers;
The total number of jobs to be created.
The minimum number of employees for SUACE is 5.
2.10 Market Analysis
A brief market study must be prepared, including:
Demand analysis;
Supply analysis;
Justification of demand for the proposed goods or services.
If you need a consultation on obtaining documents and starting a business in Paraguay, as well as a more detailed review of your situation, use the services of our client and business support manager. CONTACT US via TELEGRAM OR WHATSAPP for quick communication.
Determine the Tax Burden for the Selected Type of Business
In this article, I will list all the types of taxes that an entrepreneur and an individual must pay. Using this table, you will be able to calculate your tax expenses based on the selected project.
This is important, especially given that the business requirements under this program involve employing and maintaining at least five employees.
If we take the minimum salary in Paraguay, which currently amounts to about PYG 3,100,000, approximately USD 500, you can see that the business must pay around 25% of this salary in taxes and contributions.
Taxes for Individuals
| Tax | Rate | Who Pays | Description |
| IRP | 8–10% | Individuals | Personal income tax for tax residents. |
| IVA | 5% or 10% | Individuals and entrepreneurs | Value added tax. |
| IPS | 9% | Employee | Mandatory social security contributions. |
| Real Estate Tax | Approximately 1% | Owner | Calculated based on the cadastral value of the property. |
Taxes for Legal Entities
| Tax | Rate | Description |
| IRE | 10% | Corporate income tax. |
| IVA | 5% or 10% | Value added tax. |
| IDU | 8% / 15% | Dividend tax. |
| INR | Up to 15% | Tax on payments to non-residents. |
| IPS | 16.50% | Employer social security contributions. |
| Municipal Taxes and Fees | Individual | Municipal patents, licences, and local fees depending on the type of activity and municipality. |
Submit the Business Plan to SUACE
In addition to the business plan, you will also be required to provide your personal documents, including:
A copy of the passport with a notarised translation;
A copy of the document confirming entry into the country;
A criminal record certificate from the country of origin, apostilled, translated, and notarised in Paraguay;
An INTERPOL criminal record certificate;
A criminal record certificate from the local police.
Some documents must be clarified at the time of submission.
Submit the Documents to Migration
After the document package has been approved and permission to open a business under this program has been obtained, you submit the same document package together with the SUACE confirmation to the immigration department in Asunción.
This is the simplest stage and requires only your presence and identity confirmation.
In approximately 15 days, you will be able to receive your first permanent residence permit in Paraguay for three years.
Approximately three months later, you will receive your first Paraguayan ID — the Paraguayan cédula.
If you wish, after this document expires, you will be able to submit your document package for citizenship by naturalisation.
BUT THIS IS IMPORTANT!
RUN YOUR BUSINESS LEGALLY, AND YOUR PROJECT MUST COMPLY WITH SUACE REQUIREMENTS.
If you have questions and need help choosing the best country for living and obtaining temporary residency, permanent residency, or a passport, CONTACT US via TELEGRAM OR WHATSAPP for quick communication.
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