Frequently asked questions about taxes and companies in Paraguay

DNIT (Dirección Nacional de Ingresos Tributarios) is Paraguay's tax authority, responsible for administering both domestic and customs taxes. It was created by merging SET (the former tax office, Subsecretaría de Estado de Tributación) with the National Customs Directorate, so a single institution now handles what used to be split between two. If your company was formed before that merger, all of its history, its RUC (tax ID) and its obligations remain valid under DNIT: there is no need to re-incorporate the company or obtain a new number. Filing channels and access credentials carry over, although the transition brought some specific administrative adjustments that are worth verifying before each filing. In practice, whenever you see SET in older documentation, read it as DNIT.

Under Law 6380/2019 (Ley 6380/2019), a company in Paraguay deals primarily with four taxes. IRE (Impuesto a la Renta Empresarial, corporate income tax) applies to profits. IVA (Impuesto al Valor Agregado, VAT) applies to sales of goods and to services, and is settled monthly by deducting input credits from purchases. IDU applies to the distribution of dividends and profits to partners. And ISC (Impuesto Selectivo al Consumo, excise tax) applies only to specific products such as fuel, beverages or tobacco. On top of these come formal obligations: electronic invoicing, informational filings and withholdings where applicable. The exact combination depends on the industry and the regime, and that is one of the first things we review when we get to know a company.

IRE is Paraguay's corporate income tax, with a general rate of 10% on profits. Law 6380/2019 (Ley 6380/2019) provides for three regimes based on the company's revenue level. RESIMPLE is designed for very small businesses, with a simplified flat-fee scheme. IRE SIMPLE applies to companies within the revenue threshold set by the regulations and allows a filing with fewer documentation requirements. IRE GENERAL applies to companies above that threshold: it requires full accounting records and a return based on actual net income. Choosing the wrong regime, or staying in one that no longer fits, has concrete consequences: more administrative burden than necessary, or outright non-compliance. That is why the classification should be reviewed at registration and every time the company's volume changes scale.

Paraguay has a general IVA (VAT) rate of 10%, with a reduced 5% rate for certain goods and services defined by regulation, including some basic food-basket products and certain real estate transactions. IVA is settled monthly: output tax on sales is calculated, input tax on purchases backed by valid invoices is deducted, and the difference is what you pay. That is why supporting documentation is not a bureaucratic detail: an input credit without a valid invoice simply cannot be used. The same company can have both 10% and 5% transactions in the same period, and that classification has to be done correctly at the invoicing stage.

IRP (Impuesto a la Renta Personal, personal income tax) applies to the income of individuals resident in Paraguay, with graduated rates of 8%, 9% and 10% depending on the income level and the deductions allowed. It reaches, among others, people who provide personal services, earn professional fees, realize capital gains or receive certain income from independent activity. It is a different tax from IRE, which applies to the company itself. That distinction matters in practice: a business owner may have to consider their company's IRE and, separately, their own IRP position, depending on how they take income out.

IDU applies to the distribution of dividends and profits by a Paraguayan company to its partners or shareholders. The rate is 8% when the recipient is a resident of Paraguay and 15% when the beneficiary is a non-resident individual or company. This is especially relevant for foreign investors planning to remit profits to their home country, because it directly affects the net return on the investment. It also matters for local partners deciding between reinvesting in the company and distributing. It should be projected from the initial corporate design, not discovered after the decision has already been made.

INR (Impuesto a la Renta de No Residentes) is Paraguay's non-resident income tax, and it applies to Paraguayan-source income earned by individuals or companies abroad without tax residency in Paraguay, at a general rate of 15% on the taxable base established by law. It applies, for example, when a Paraguayan company pays for services, interest, royalties or technical assistance from a supplier abroad. In those cases the local company usually acts as withholding agent, so non-compliance is not the foreign supplier's problem but the Paraguayan company's. It is worth analyzing before signing contracts with foreign suppliers.

SIFEN (Sistema Integrado de Facturación Electrónica Nacional) is DNIT's system for issuing electronic invoices with full tax validity. It was rolled out in stages, by groups of taxpayers defined by the tax authority, and by now it covers the great majority of active companies, with the final groups joining according to the official calendar. If your company still invoices from a paper booklet or with a self-printing system, it is worth confirming which group it belongs to and planning the migration with time to spare, because the change is not only technological: it means adjusting internal invoicing, collections and document-archiving processes.

The three most commonly used structures are the EAS (Empresa por Acciones Simplificada, simplified stock company), the SRL (Sociedad de Responsabilidad Limitada, limited liability company) and the SA (Sociedad Anónima, corporation). The EAS was designed as a fast, flexible route for startups and small and mid-sized businesses, with a simpler incorporation process. The SRL is the traditional vehicle for businesses with few partners and simple governance, where ownership is represented by membership quotas. The SA is the usual choice for larger operations: it allows shares to be issued, investors to be brought in and a more formal governance structure to be maintained, something banks, funds and institutional partners often require. The right choice depends on the number of partners, the growth plan, whether investors will be brought in, and the type of counterparties the company will work with.

The timeline depends on the legal structure chosen, on the current workload at the registries and notary offices involved and, above all, on how complete the documentation is from the outset. When there are foreign partners whose documents must be legalized or apostilled abroad, that is usually the step that drives the calendar, because it does not depend on Paraguay. The EAS is generally the fastest structure to set up, thanks to its simplified design. Rather than promising a fixed number of days, the useful thing is to assemble the complete file from the start: that is what actually shortens the timeline.

Generally speaking, you need identification for each partner — a Paraguayan ID card for nationals, a passport and immigration documentation for foreigners — the bylaws or articles of association with the corporate purpose and ownership structure, the definition of share capital and how it is paid in, and the appointment of directors or legal representatives. Where there are foreign partners, whether individuals or legal entities, you also need documentation legalized or apostilled in the country of origin, with official translation where required. If a foreign legal entity will be a partner, the parent company's corporate documentation is required as well. It is worth reviewing the exact list before starting legalizations, so you do not pay twice for procedures handled incorrectly.

In many cases it is possible to advance much of the process remotely, using special powers of attorney granted before a notary in your country of origin and duly legalized or apostilled, which authorize a local representative to sign the corporate documentation. That said, certain specific steps, above all opening a bank account and some immigration procedures, usually require physical presence or at least more direct involvement from the interested party. The recommended approach is to plan from the outset what can be resolved remotely and what is best concentrated into a single trip to Paraguay.

Share capital is defined according to the legal structure chosen and the type of activity, and it must bear a reasonable relationship to the operation the company will carry out. It is not a merely formal figure: banks, commercial counterparties and public agencies look at it when assessing the company, and capital that is inconsistent with the volume of operations raises questions. This is one of the items we review in the initial assessment, along with the ownership structure and the corporate purpose.

From the moment it obtains its RUC (tax ID), the company is subject to the obligations of the regime it registered under, even if it has not yet issued a single invoice. That includes filing the applicable returns by each deadline, issuing tax-valid invoices through the electronic invoicing system, keeping accounting records and preserving supporting documentation. Filing a zero return when there was no activity also counts as compliance: failing to file, even with no activity, creates formal breaches that have to be remediated later.