Taxes in Paraguay in 2026: Is the Fiscal Model Sustainable After the Guaraní’s Appreciation?

• Key takeaways of this update in 1 minute:
• ✔ Robust currency: The appreciation of the guaraní against the dollar artificially reduces customs revenue, but makes importing machinery cheaper.
• ✔ Rising tributes: Internal taxes grew by a solid 10.6%, demonstrating the strength of local consumption and activity in 2026.
• ✔ Low public spending: With state spending below 20% of GDP, the country maintains one of the most agile state structures in the region.

Is it safe to move your assets to a South American country today? While most Western governments resort to aggressive tax hikes to fund out-of-control budgets, Paraguay maintains a different direction. The country stands out for its macroeconomic discipline, although the recent evolution of its currency raises technical questions that every investor must understand.

The stability of taxes in Paraguay is no temporary coincidence. It is the direct result of limited public spending and a regulatory framework designed to attract international capital. Let’s analyze what is really happening with public accounts and how this scenario influences your relocation or investment strategy.

The duality of the Paraguayan economy: Controlled spending and manageable pressure

The latest report from Moody’s Ratings confirms that Paraguay is among the nations with the lowest level of public spending in Latin America. During the recent period, total government spending has remained in a very moderate range, hovering between 17% and 18% of the Gross Domestic Product (GDP). Only Guatemala shows a smaller state apparatus.

For you, as an entrepreneur, this data is fundamental. A state that spends little has fewer incentives to confiscate your wealth through emergency tax reforms. However, not everything is simple in the design of state budgets. The rigidity of public accounts has increased slightly, moving from 13% of GDP in 2019 to 14% in 2024. This increase is mainly due to fixed commitments such as public sector salaries and current transfers.

“Paraguay’s strength lies in its ability to absorb external crises. With public debt projected to stabilize near 37% of GDP in the medium term, the country has a financial shield far superior to regional giants like Brazil or Argentina.”

The exchange rate impact on state accounts: The paradox of the strong guaraní

The revenue accumulated by the National Directorate of Tax Revenues (DNIT) through July 2026 shows a unique economic phenomenon: the gap between internal tax collection and customs revenue due to the strength of the guaraní.

While revenue from internal commercial activities grew by double digits, income from customs tariffs suffered a contraction. This does not mean that Paraguay is importing fewer goods. On the contrary, foreign trade operations remain dynamic. What is happening is a purely accounting adjustment: as the national currency appreciates, the dollar value of imported products translates into fewer guaraníes at the border, reducing the tax base upon which import VAT is calculated.

To understand the magnitude of this tax behavior, let’s analyze the official figures accumulated from January to July 2026 compared to the previous year:

This divergence shows that the domestic economy is advancing steadily. The 10.6% growth in internal taxes confirms that companies and individuals continue to consume, invest, and generate value within the national territory.

How does this situation benefit the foreign investor?

If you are evaluating how to set up a company in Paraguay, this context favors you in two specific ways:

• Cheaper capital importation: If your business model requires importing technology, vehicles, or raw materials, the strength of the guaraní significantly lowers your acquisition costs abroad.
• Internal price stability: A solid currency acts as a natural brake against imported inflationary pressures, keeping local operating costs predictable.

The robustness of the Fiscal Responsibility Law framework ensures that temporary exchange rate fluctuations do not trigger unexpected turns in the rules of the game. Paraguay remains committed to a simple taxation scheme, based on 10% rates for Corporate Income Tax (IRE), Personal Income Tax (IRP), and Value Added Tax (VAT).

The ParaguayWay perspective: How does this impact your wealth?

From our perspective as corporate advisors, Paraguay’s current fiscal situation is highly positive. While other jurisdictions in the region resort to excessive borrowing or the creation of new wealth taxes, Paraguay maintains its discipline. The lower dependence on customs revenues, offset by the robustness of internal tax collection, consolidates a much more mature and predictable fiscal system.

Last week, a European client asked us about how the 2026 exchange rate trend affected the cost structure of their future assembly plant under the Maquila regime. Thanks to our 360º comprehensive service, we were able to demonstrate that the guaraní’s appreciation not only made the import of their industrial machinery cheaper, but that the stability of local tax rates allowed them to project a very clear return on investment, without fear of fiscal surprises at the border.

Planning your tax relocation is not just about looking for low tax rates; it requires understanding the macroeconomic structure that sustains those rates in the long term. Paraguay proves, year after year, that it has the right foundations to protect wealth creators.

Establishing your residency and structuring your assets in a new country requires legal precision and deep knowledge of the local terrain. If you want to secure your future and that of your company in the safest environment in the region, let’s analyze your relocation case with no obligation today.