Paraguay's tax authority published its January-to-July figures this week, and they contain an unusual problem: the country is collecting less at its borders because its currency is doing well. Customs revenue fell 10.4% against the same period of 2025, while internal taxes rose 10.6%. Total collection grew just 2.1%, to ₲25.81 trillion.
Why a Strong Currency Shrinks the Tax Take
The mechanism is arithmetic rather than economic decline. Import duties and the taxes charged on imports are assessed on a value that has to be converted into guaraníes. When the guaraní strengthens, the same shipment converts into fewer local currency units, so the taxable base shrinks even if nothing about the trade itself has changed.
That is precisely what happened. The DNIT attributes the drop to the guaraní's appreciation against the dollar, which reached 19.7% in July compared with the same month a year earlier. Import volumes in dollar terms stayed broadly stable. The goods kept crossing; the guaraní figure attached to them got smaller.
The Split Is the Real Story
Look past the headline and the two halves of Paraguay's revenue are moving in opposite directions. Internal taxes reached ₲16.61 trillion and grew 10.6%, comfortably ahead of inflation. Customs went backwards by 10.4%.
That divergence says something about where the state's tax capacity is actually being built. The internal side is where formalization and enforcement bite, and it is growing strongly at a moment when nothing about the rates has changed. The mandatory electronic invoicing rollout is one visible piece of that machinery.
The border side, by contrast, is exposed to a variable no tax administration controls. A revenue model that leans on imports is hostage to the exchange rate, and this year the exchange rate has not cooperated.
It also sharpens the fiscal picture we looked at on Friday. The widening deficit was driven partly by income growing only 0.5% in the first half; these July figures show the same squeeze continuing, with the customs line as the identifiable cause.
What a Firmer Guaraní Means If You Earn Abroad
This is the part that matters directly to anyone living in Paraguay on foreign income, and it is rarely spelled out. A guaraní that is nearly a fifth stronger than a year ago is, for you, the single largest change to your real cost of living in 2026, and it runs against you.
Your dollars, euros or pounds convert into meaningfully fewer guaraníes than they did last year, while rent, groceries and school fees are quoted in guaraníes. Nothing in Paraguay has to get more expensive in local terms for your effective cost of living to rise noticeably. Our cost of living guide quotes figures in dollars for comparability, and that is exactly the number a currency move like this quietly erodes.
Two practical consequences follow. Budget in guaraníes rather than in your home currency if you want a stable picture, because a dollar-denominated budget hides the exposure. And when moving larger sums, the exchange rate now matters more than the transfer fee, which reverses the usual advice; our money transfer guide covers the mechanics.
None of this changes the tax treatment. Foreign-source income remains outside Paraguayan income tax under the territorial system, and a currency move affects purchasing power, not liability.
US citizens and green-card holders: the exchange rate does not alter your filing position either. The United States taxes worldwide income on the basis of citizenship, so Paraguayan residency does not exempt you regardless of what the guaraní does.
Frequently Asked Questions
Is a strong guaraní good or bad for Paraguay?
Both, depending on where you sit. It lowers the cost of imports and helps contain inflation, which is good for consumers. It reduces customs revenue and squeezes exporters' local-currency earnings, which is bad for the treasury and for agriculture. The current figures show the fiscal side of that trade-off.
Does this make Paraguay more expensive for foreigners?
In practice, yes, if your income arrives in another currency. Local prices have not jumped, but your foreign currency buys fewer guaraníes than a year ago, so your effective cost of living rises. The effect is invisible in guaraní-quoted prices and obvious in your own bank statement.
Could this lead to tax increases?
The government has explicitly ruled that out, saying it will pursue broader compliance rather than higher rates. The internal-tax growth of 10.6% suggests that approach is producing results, which weakens the argument for rate rises rather than strengthening it.
Planning a move and unsure how currency exposure fits your budget? A short call can map the practical side alongside the residency and tax questions. Get in touch.
Disclaimer: This article is general information, not tax, financial or currency advice. Exchange rates move and fiscal data is revised. Confirm current figures with the DNIT or a qualified adviser before acting on them.
Sources
About the author
Yannick Schroth
Founder · Paraguay relocation advisor
Lives in Asunción and guides international nomads, entrepreneurs and investors toward residency, a cédula and a tax-efficient structure in Paraguay.
