A recent joint report by OECD, CEPAL, CIAT and BID (August 2025) confirms: Paraguay ranks second in Latin America with the lowest value-added tax (VAT). While many neighboring countries apply VAT rates between 16% and 21%, Paraguay maintains a standard VAT rate of just 10%.
The “Triple 10” System
Paraguay is renowned for its “Triple 10” system, which brings clarity and efficiency to its tax structure:
10% VAT (IVA): Standard rate for most goods and services.
10% Corporate Income Tax (IRACIS): Uniform rate on business profits.
10% Personal Income Tax (IRP): Unified rate for individuals above a certain income threshold.
The Reduced 5% VAT Rate
In addition to the 10% standard rate, Paraguay also applies a reduced VAT rate of 5% to certain essential goods and services. This measure eases the burden on households and creates unique opportunities for real estate investors.
Examples of 5% VAT applications:
Sale and rental of residential properties
Transfer of usage rights to residential real estate
Sale and import of basic food items (e.g., rice, oil, milk, eggs, flour, salt)
Real Estate and New Developments
One of the most attractive sectors for investors is real estate:
Residential property sales and rentals are subject to only 5% VAT.
New housing projects may also benefit if they are demonstrably intended for residential use.
Example: An apartment is sold for USD 100,000 → 5% VAT = USD 5,000 → Total price = USD 105,000. In many other countries with 19% or 21% VAT, the tax burden would be more than double.
Key advantages
Paraguay’s low VAT rate brings several key advantages:
More purchasing power for local residents.
Stable investment conditions.
Low entry costs in the real estate sector.
Conclusion
With the second-lowest VAT in Latin America and a transparent Triple 10 tax system, Paraguay stands out as one of the most fiscally attractive countries in the region. The possibility to acquire certain goods and services with only 5% VAT enhances this appeal even further.