Corporate Tax in Paraguay
Corporate tax, known as IRACIS (Impuesto a la Renta de Actividades Comerciales, Industriales y de Servicios) in Paraguay, is a tax levied on the net profits of companies and businesses. It applies to commercial, industrial, and service activities conducted within the country.
How It Works in Paraguay
Paraguay levies a flat 10% corporate income tax (IRACIS) on net profits derived from activities within the country. Only Paraguayan-source income is taxable. Businesses can deduct legitimate expenses including salaries, rent, depreciation, and interest. Companies must file annual returns with the SET and make monthly advance payments. Small businesses with revenues below certain thresholds may qualify for simplified regimes like IRPC or RESIMPLE.
Global Comparison
Paraguay's 10% corporate tax rate is among the lowest in the world. The global average corporate tax rate is approximately 23%, with countries like the United States at 21%, Germany at roughly 30%, and Brazil at 34%. Even compared to regional neighbors, Paraguay is significantly lower than Argentina (35%) and Chile (27%).
Frequently Asked Questions
Is foreign-source income taxable for Paraguayan companies?
No. Under Paraguay's territorial tax system, only income generated from activities within Paraguay is subject to corporate tax. Revenue earned from exports of services, foreign subsidiaries, or overseas operations is not taxed in Paraguay, provided it qualifies as foreign-source income.
What deductions are available for corporate tax in Paraguay?
Businesses can deduct all expenses that are necessary, documented, and directly related to generating taxable income. Common deductions include employee salaries and benefits, rent, utilities, depreciation of assets, interest on business loans, professional fees, and bad debts. All deductions must be supported by proper invoices and documentation.
What is the difference between IRACIS and IRPC?
IRACIS applies to medium and large businesses with annual revenues above PYG 2 billion (approximately $280,000). IRPC (Impuesto a la Renta del Pequeño Contribuyente) is a simplified regime for small businesses with revenues below that threshold, taxed at an effective rate of about 10% on 30% of gross income. There is also RESIMPLE for micro-businesses.
Need Help With Corporate Tax?
Our team of Paraguay tax experts can help you navigate the specifics and optimize your tax position.
Last reviewed: February 2026