The Paraguayan taxation system has experienced a substantial reform in the past few years. It has eliminated the levies on foreign exchange submissions, most stamp taxes and the export taxes.

The largest source of tax revenue in Paraguay today,is the consumption based value added tax. The administrative costs decreased thus, giving a lead to an overall increase in tax revenue. In Paraguay, taxes are favorably low i.e. less than 10% of GDP.

Paraguayan Tax System:

Income Tax- Paraguay does not have its own personal income tax. The flat rate of 30% is imposed on the commercial and industrial based activities. From this tax the mutual fund societies and non-profit societies are exempted.

Value added Tax (VAT) - The tax rate for value added tax is 10%. The activities like import of goods,services and transfer of goods are taxed. In order to determine the net liability, any value added tax paid to suppliers of goods and services by individuals or firms is deducted.

Document Tax- The tax rate for document tax varies from 1% to 1.74%. This tax is subjected to domestic or foreign transfer of funds, financial institutions and many more.

Excise Tax- The tax that is applied on domestic sale and import of specific products is excise tax. The excise tax rate for petroleum products is 5%, for tobacco is 7 or 8%, for alcoholic beverages is 8-10%.

Property Tax- The general tax rate is 1%. In Paraguay, the property tax is the annual tax on real estate within the territory that is either owned by nationals or foreigners.

Small Business Turnover Tax- The rate of this tax is in between 1 and 4% and depends upon the category taxed. The income that comes from industrial or commercial activities or services which are not from personal services are subjected to this tax.