Taxes in Paraguay – Income Tax, Corporate Tax & Territorial System Explained (2026 Guide)

Paraguay is one of the most tax-efficient jurisdictions in South America. Understanding taxes in Paraguay is essential if you are considering residency, investing in real estate, or relocating your business. The country operates under a territorial taxation system, which means that only income generated within Paraguay is taxed. Foreign-sourced income is generally not subject to Paraguayan income tax.

The standard personal income tax rate in Paraguay is 10%, making it one of the lowest flat income tax rates in the region. The same 10% rate also applies to corporate income tax, which creates a simple and predictable environment for entrepreneurs and investors. Compared to many Western countries, Paraguay offers a much lighter overall tax burden.

Another important element of the Paraguayan tax system is the absence of wealth tax and inheritance tax. There is no annual tax on worldwide assets, which makes Paraguay attractive for high-net-worth individuals seeking long-term tax efficiency. Value Added Tax (VAT) is typically 10%, with certain reduced rates applied in specific sectors.

For expats and investors, tax residency is a key concept. Becoming a resident of Paraguay does not automatically mean you pay taxes on your worldwide income. Due to the territorial model, taxation depends on where the income is generated, not only on residency status. This structure makes Paraguay particularly appealing for digital entrepreneurs, remote business owners, and international investors.

In this section, you will find detailed articles covering:

• Income tax in Paraguay

• Corporate taxation rules

• VAT and business compliance

• Tax residency requirements

• Real estate taxation

• Structuring investments efficiently

If you are planning to relocate or optimize your global tax position, understanding how taxes in Paraguay work is the first strategic step.