Paraguay Corporate Tax Guide 2026 — IRE 10% Flat
Paraguay's IRE (Impuesto a la Renta Empresarial) is a flat 10% corporate income tax — the lowest in South America. Agricultural enterprises benefit from 0% on the first PYG 50M of profit. Combined with the territorial system, Paraguay offers the simplest corporate tax regime in the region.
IRE applies to all legal entities resident in Paraguay, including corporations (SA), limited liability companies (SRL), and branches of foreign companies. The tax year is the calendar year. Companies are taxed only on Paraguayan-source income under the territorial system. Foreign-source income is exempt. The tax authority is the Subsecretaría de Estado de Tributación (SET).
Example: A services company in Asunción earns PYG 500M in net profit. IRE due: PYG 50M (10% of 500M). No additional surcharges, no municipal income tax. Effective rate: 10%.
IRE Tax Rate
Standard rate: 10% on net taxable profit from Paraguayan sources. This is a single flat rate with no progressive brackets. There are no municipal surcharges on corporate income (unlike Argentina or Brazil).
Agricultural sector: 0% on the first PYG 50M of net profit from agricultural activities. Profit above PYG 50M is taxed at the standard 10% rate. This applies to farming, livestock, and related agricultural businesses.
Simplified regime (IRPC): Small taxpayers with annual turnover below PYG 400M may opt for the simplified regime with a lower effective rate and reduced compliance obligations.
Taxable Income and Deductions
Taxable income is calculated as gross revenue from Paraguayan sources minus allowable deductions. Key deductions include:
- Operating expenses: Rent, salaries, utilities, supplies, and other business costs directly related to Paraguayan operations
- Depreciation: Buildings (2% per year), vehicles (20%), machinery (10-20%), computers (33%)
- Interest expense: Deductible on loans used for business purposes (subject to thin capitalisation limits for related-party debt)
- Employee costs: Salaries, bonuses, IPS contributions, and other employment costs
- Tax losses: Can be carried forward for up to 5 years. No carryback.
Tax Compliance
Companies must file an annual IRE return by April 30 of the following year. Advance payments are made monthly based on estimated annual tax. VAT (IVA) returns are filed monthly. The SET requires electronic filing through the Marangatu system. Companies must maintain proper accounting records in Spanish and retain them for at least 5 years.
FAQs
Can a foreign company register a subsidiary in Paraguay?
Yes. Foreign companies can register a subsidiary (SRL or SA) in Paraguay with standard incorporation procedures. A minimum of 2 shareholders is required. There are no restrictions on foreign ownership.
Is there a withholding tax on dividends paid by a Paraguayan company?
No. Paraguay does not impose withholding tax on dividend distributions. Dividends paid by a Paraguayan company to both resident and non-resident shareholders are tax-free at the shareholder level.
What accounting records are required?
Companies must maintain a general ledger, journal entries, inventory records, and supporting documentation for all transactions. Financial statements must be prepared in Spanish and in accordance with Paraguayan accounting standards (or IFRS for larger companies).
Disclaimer
This guide is for informational purposes only and does not constitute tax advice. Corporate tax planning requires professional advice. Consult a qualified Paraguayan accountant (contador público) for advice tailored to your business.