VAT (IVA) in Paraguay
Value Added Tax (VAT), called IVA (Impuesto al Valor Agregado) in Paraguay, is a consumption tax applied at each stage of the supply chain on the value added to goods and services. The final consumer bears the tax burden, while businesses collect and remit it to the government.
How It Works in Paraguay
Paraguay applies a standard IVA rate of 10% on most goods and services. A reduced rate of 5% applies to basic necessities including unprocessed food products, pharmaceutical products, and interest on certain loans. Some items are IVA-exempt, including exports (zero-rated), educational services, and certain financial transactions. Businesses registered for IVA can deduct input VAT (IVA paid on purchases) from output VAT (IVA collected on sales), remitting only the difference to the SET monthly.
Global Comparison
Paraguay's 10% standard VAT rate is low by global standards. The EU average is approximately 21%, with some countries like Hungary at 27%. Regional neighbors also charge more: Argentina at 21%, Brazil effectively 17-25% depending on state, and Uruguay at 22%. Paraguay's rate is comparable to low-VAT countries like Switzerland (8.1%) and Japan (10%).
Frequently Asked Questions
Who needs to register for IVA in Paraguay?
All businesses and individuals engaged in commercial activities in Paraguay must register for IVA as part of their RUC registration. This includes companies under IRACIS, small businesses under IRPC, and individuals providing professional services. The only exception is micro-businesses under the RESIMPLE regime, which pay a simplified tax that includes IVA.
Are exports subject to IVA in Paraguay?
No. Exports from Paraguay are zero-rated for IVA purposes. This means exporters charge 0% IVA on their export sales but can still claim credits for the IVA they paid on inputs used to produce the exported goods or services. This mechanism ensures Paraguayan exports are competitive internationally.
How often must IVA returns be filed?
IVA returns must be filed monthly through the SET's Marangatu online system. The filing deadline depends on the last digit of your RUC number, with different dates assigned throughout the month. Payment of any net IVA owed is due at the same time as the filing. Late filing incurs penalties and interest.
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Last reviewed: February 2026