VAT in Paraguay: How Does It Work in 2026?
Paraguay is known for its simple tax system, and VAT (Value Added Tax) is one of its main pillars. This guide explains how the 5% and 10% VAT rates work and what foreigners should know.
What Is VAT in Paraguay?
VAT is a tax applied to the sale of goods and the provision of services. In Paraguay, the system is straightforward, with limited rates and clear rules.
VAT Rates in Paraguay
- 10% standard rate for most goods and services
- 5% reduced rate for specific activities defined by law
Activities Subject to the 5% VAT Rate
- Residential and commercial property rentals
- Some agricultural products
- Specific essential services
VAT-Exempt Activities
Certain activities are exempt from VAT, including some financial operations and regulated services.
Who Must Pay VAT in Paraguay?
Any individual or company carrying out habitual economic activity may be subject to VAT, provided they are registered with the tax authorities.
VAT and Foreigners
Foreign residents and entrepreneurs are subject to the same VAT rules as Paraguayan citizens, as long as they have an active RUC.
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Start your residency →Quick Summary
- Standard VAT rate of 10%
- Reduced VAT rate of 5% for specific activities
- Simple and predictable tax system
- Foreigners follow the same VAT rules
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