Paraguay VAT Guide 2026 — IVA 10% Standard, 5% Reduced
Paraguay's IVA (Impuesto al Valor Agregado) is a value-added tax with rates of 10% standard, 5% reduced for agricultural products, and 0% for exports. The registration threshold is approximately PYG 100M in annual turnover. Monthly filing is required.
IVA is Paraguay's national value-added tax administered by the SET. It applies to most goods and services supplied in Paraguay, as well as imports. Businesses registered for IVA charge output tax on sales and can credit input tax on purchases, remitting the net difference to the tax authority. Paraguay's IVA system is relatively simple compared to other Latin American countries.
Example: A retail store sells PYG 50M of goods (10% IVA = PYG 5M output tax) and has PYG 30M of purchases (10% IVA = PYG 3M input tax). Net IVA remitted to SET: PYG 2M.
IVA Rate Categories
- Standard rate (10%): Applies to most goods and services — electronics, clothing, furniture, vehicles, professional services, restaurant dining, telecommunications, and general consumer goods
- Reduced rate (5%): Applies to agricultural products including unprocessed foodstuffs, fresh meat and fish, fruits and vegetables, dairy products, eggs, rice, bread, and agricultural inputs (seeds, fertilisers, animal feed)
- Zero rate (0%): Exports of goods and services, international transport, and certain services provided to non-residents
- Exempt: Healthcare services, education, financial services (loans, insurance), real estate rentals (residential), and public transport are exempt from IVA (no input credit available)
Registration Threshold
Businesses with annual turnover exceeding approximately PYG 100 million must register for IVA. Registration is voluntary below this threshold. Once registered, businesses must charge IVA on all taxable sales and may recover input IVA on their purchases. Businesses below the threshold may still register voluntarily to recover input tax, which can be beneficial for capital-intensive startups.
Filing and Compliance
IVA returns are filed monthly through the SET's electronic system (Marangatu). The filing deadline is the 15th day of the following month. Late filing penalties: 2% per month on IVA due. Businesses must issue electronic invoices (factura electrónica) for all transactions. Proper records of all sales and purchases must be maintained for at least 5 years.
FAQs
Do I need to charge IVA as a freelancer?
Yes, if your annual turnover exceeds PYG 100M. Freelance services are subject to the standard 10% IVA rate. Below the threshold, registration is optional but may be beneficial to recover input tax.
Can a foreign company register for IVA in Paraguay?
Yes. Non-resident companies providing taxable services in Paraguay or importing goods may need to register for IVA. A local tax representative may be required.
What is the IVA on digital services?
Digital services provided by foreign companies to Paraguayan consumers are subject to 10% IVA. Foreign digital service providers must register with the SET and charge IVA on their services.
Disclaimer
This guide is for informational purposes only and does not constitute tax advice. VAT rules are complex and subject to change. Consult a qualified Paraguayan accountant for advice specific to your business.