🇵🇾 Paraguay Company Formation
Territorial taxation — 0% on foreign-source income. 10% CIT, 10% PIT. Permanent residency in 30–60 days with path to citizenship in 3 years.
Updated April 2026
Corp Tax
10%
Foreign Income
0%
Personal Tax
10%
Maquila Rate
~1%
Citizenship
3 years
Tax System
Rates and incentives
| Tax | Rate | Note |
|---|---|---|
| Corporate income tax (IRE) | 10% | On Paraguayan-source income only. Foreign-source income is entirely exempt under territorial system. |
| Maquila regime | ~1% | Effective tax on value added for export-oriented manufacturing and services. |
| Personal income tax | 10% | Flat 10% on PY-source income. Territorial basis — foreign income exempt. |
| WHT — dividends to non-residents | 15% | On profits distributed from Paraguayan-source income. Residents pay 8%. |
| VAT | 10% | Standard rate. Reduced 5% rate applies to certain goods and services. |
Why Paraguay
Key advantages
Territorial taxation — 0% on foreign income
Paraguay taxes only Paraguayan-source income. Foreign dividends, foreign service income, and foreign capital gains are entirely outside the Paraguayan tax net.
Maquila regime — ~1% effective tax
One of the lowest effective rates globally for export-oriented businesses. Applies to services and manufacturing for international clients.
Permanent residency in 30–60 days
One of the world's fastest and most accessible residency programs. Minimal documentation. No nationality restrictions. Dual citizenship allowed.
Path to citizenship in 3 years
Paraguayan citizenship and passport available after 3 years of permanent residency. 142 visa-free countries.
Mercosur access — 300M+ consumers
Full access to the South American trade bloc. Strategic position between Brazil and Argentina.
What We Build
Full scope of implementation
- ✓Cédula (permanent residency) coordination and application
- ✓Company registration — SA or SRL with local registered office
- ✓Maquila regime application and approval
- ✓Local representative and accountant coordination
- ✓Bank account opening and annual compliance filing
- ✓Tax residency certificate from SET
Who This Is For
Ideal client profiles
2025 – 2026
What has changed
⚠ FATF grey list — ongoing enhanced monitoring
Paraguay remains on the FATF grey list. International correspondent banks apply additional due diligence to Paraguayan transfers. Does not affect EU blacklist status.
DNIT replaces SET as tax authority
Paraguay restructured its tax administration. The new Dirección Nacional de Ingresos Tributarios (DNIT) handles all tax filings and registrations.
Electronic invoicing — SIFEN enforcement expanding
Digital invoicing system becoming mandatory for more business categories. Compliance requirements increasing for all registered companies.
Common Questions
FAQ
Is foreign income really tax-free in Paraguay?
Yes. Paraguay operates a strict territorial tax system. Only Paraguayan-source income is subject to the 10% IRE. Income from foreign clients, foreign investments, and foreign capital gains is entirely exempt. No CFC rules apply.
How fast can I get Paraguayan residency?
Permanent residency (Cédula) is typically processed in 30–60 days. Requirements include basic documentation, a modest bank deposit, and a brief in-person visit. No minimum physical presence after that — visit every 3 years to maintain status.
Does the FATF grey list affect my business?
It creates friction, not a block. International wire transfers may face additional compliance scrutiny from correspondent banks. Paraguayan accounts are functional for day-to-day operations. Using an international EMI as a secondary account mitigates most practical issues.
What is the Maquila regime?
A special tax regime for export-oriented businesses. Tax is calculated at approximately 1% of value added rather than standard 10% CIT. Available for manufacturing and certain service activities that export to international clients. Requires approval from the Maquila authority.