Paraguay
Top Income Tax
10%
Marginal rate
Corporate Tax
10%
Standard rate
VAT / Sales Tax
10%
Standard rate
Capital Gains
10%
Standard rate
Overview
Paraguay offers one of the simplest and lowest tax systems in the Americas with a flat 10% rate on everything and territorial taxation. The cost of living is among the lowest in South America. Asuncion has a small but growing expat community attracted by the low taxes.
Income Tax Brackets
| Income Range (PYG) | Tax Rate |
|---|---|
| 0+ | 10% |
Flat 10% rate on personal income. Territorial basis — only Paraguay-source income taxed.
Corporate Tax
Standard Rate
10%
10% flat corporate tax. Plus 5% additional tax on profit distribution.
VAT / Sales Tax
Standard Rate
10%
Reduced Rates
5%
10% standard. 5% on basic food, pharmaceuticals, and agricultural products.
Capital Gains Tax
Standard Rate
10%
Taxed as regular income at 10%.
Social Security Contributions
Employee
9%
Employer
16.5%
Self-Employed
9%
IPS contributions for employees. Self-employed can opt in.
Special Tax Regimes
Maquila Regime
1% tax on value added for export assembly operations.
Eligibility: Manufacturing operations focused on export. Must apply to Ministry of Industry.
Pros & Cons
Pros
- Flat 10% income and corporate tax
- Territorial taxation
- Extremely low cost of living
- Simple tax system
- Easy residency
Cons
- Limited infrastructure
- Small market
- No digital nomad visa
- Language barrier (Spanish/Guarani)
- Limited international flights
Living Indicators
Cost of Living Index
Very affordable
Quality of Life Index
Average
Best For
Data Sources
Tax rate data for Paraguay is compiled from the following authoritative sources:
- OECD Tax Database
- Tax Foundation International Tax Competitiveness Index
- World Bank Business Enabling Environment
- Paraguay government tax authority publications
- PwC Worldwide Tax Summaries
Last verified: 2024-01
Disclaimer: This content is for informational purposes only and does not constitute tax advice. Tax laws change frequently. Always consult a qualified tax professional before making decisions about your tax residency or obligations.