Paraguay’s Tax Take Hits 11.2% of GDP Without New Taxes

Paraguay's tax authority has put a number on what its own modernization was worth. Presenting three years of results on 5 August 2026 at the Centro de Despachantes de Aduana in Asunción, the Dirección Nacional de Ingresos Tributarios (DNIT) said the merger of the tax and customs administrations has produced roughly US$1,500 million in additional state revenue.

The claim that matters for anyone weighing Paraguay is how that was achieved. According to Braulio Ferreira, DNIT's executive manager, the increase came "organically, without resorting to the creation of new taxes or raising existing rates."

From 9.1% to 11.2% of GDP, and 12% by 2029

The headline metric is tax pressure, meaning tax revenue as a share of the economy. Paraguay averaged 9.1% of GDP across the two decades from 2003 to 2023. At the close of 2025 it stood at 11.2%, a gain of roughly three points achieved without a rate change.

DNIT has set 12% of GDP by 2029 as its next target, alongside a customs modernization roadmap running to the same year, backed financially and technically by the Inter-American Development Bank.

The monthly figures follow the same pattern. July 2026 collections reached ₲4,086,022 million, about US$685 million, up 3.6% year on year, an absolute gain of ₲140,262 million or roughly US$23.5 million. DNIT's director of economic studies, Diego Domínguez, told the program Economía A 1000 on 7 August that the authority projects 4.2% growth for 2026 and 3.5% for 2027, ahead of Argentina, Peru, Uruguay and Colombia, and noted that direct taxes are slowly gaining share against consumption taxes.

How the Extra Revenue Was Actually Collected

The mechanism is unglamorous and worth understanding, because it is the same mechanism a foreign resident will meet. DNIT was created by merging the former tax authority with customs, and its gains have come from digitization and data: the staged rollout of mandatory electronic invoicing, cross-matching of taxpayer records, and a broad push to formalize businesses that previously operated off the books.

That also explains the uneven picture across the year. Internal taxes have grown strongly while customs revenue has fallen more than 10%, dragged down by a much stronger guaraní rather than by weaker trade.

A Former Finance Minister Says the Arithmetic Still Does Not Work

Paraguay's fiscal debate is not settled by these numbers, and it would be misleading to present them as if it were. Speaking in early August after the finance ministry's deficit adjustment, former finance minister Germán Rojas Irigoyen argued that the country faces a structural gap between spending growth and its capacity to generate revenue.

His figures: public spending rising 8% to 10% in nominal terms against a revenue base constrained by informality of around 60%, a permanent structural gap near 2% of GDP, and interest payments consuming 13.1% of revenue against a regional median of 11.8%. He called the 2028 target of a 1.5% deficit "very demanding" and questioned whether it is reachable without concrete reform.

Crucially, Rojas does not think better collection is sufficient. He argues that reviewing exemptions alone will not close the gap and advocates comprehensive tax reform, on the view that Paraguay could raise more while staying regionally competitive.

One technical caveat before those two positions are read as a flat contradiction: Rojas cites tax pressure at 14.3% of GDP while DNIT cites 11.2%. The wider figure includes revenue outside DNIT's own collection, social contributions in particular. The two numbers measure different things, so the disagreement is about sufficiency, not about the facts.

What This Means If You Are Moving to Paraguay

Read this as a signal about direction, not as a change to any rule. Nothing announced this week alters what you owe. Paraguay's territorial system continues to leave foreign-source income outside the local income tax where genuine tax residency exists.

The useful takeaway is which lever the state is currently pulling. Every actor with real influence, DNIT and the IMF included, is pushing on collection, formalization and enforcement rather than on rates or on the territorial principle. That is good news for the headline benefit and less comfortable news for anyone hoping to stay invisible: the same digital infrastructure producing these numbers is what makes a poorly documented setup easier to spot.

Whether the 0% itself is durable is a longer question than a single announcement can answer, and it is the one worth taking seriously if you are relocating for tax reasons. Our assessment of whether Paraguay's 0% will last works through what would actually have to happen, and what the sales pitches leave out covers the conditions attached to the benefit today.

US citizens and green-card holders: none of this changes your position. The United States taxes worldwide income on the basis of citizenship, so Paraguayan collection policy is irrelevant to what you owe the IRS. Speak to a US-qualified adviser before assuming any local advantage applies to you.

Frequently Asked Questions

Is Paraguay planning to tax foreign income?

Nothing announced suggests it. DNIT's stated strategy is to reach 12% of GDP through better collection, explicitly without new taxes or higher rates, and the IMF's 2026 recommendations focus on administration, the tax base and exemptions rather than on the territorial principle. A former finance minister is arguing for broader reform, but that is one voice in a debate, not policy.

Does a higher tax take mean my taxes will go up?

Not by itself. The rise from 9.1% to 11.2% of GDP came from collecting more of what was already owed, largely from businesses that were previously informal. If your foreign-source income is outside the Paraguayan tax net, better enforcement of the domestic net does not pull it in.

What does this mean in practice for a new resident?

Expect a well-documented, digital tax administration rather than a lax one. Electronic invoicing, a RUC where required, and consistent records matter more each year. The practical steps are in our guide to filing taxes and getting a RUC.

Not sure how much structure your situation actually needs? Most people either overbuild it or skip it entirely, and both are expensive. A short call sorts out which applies to you. Get in touch.

Disclaimer: This article is general information, not tax or financial advice. Fiscal figures are revised and policy positions change. Verify current data with DNIT, the Ministry of Economy and Finance, or a qualified adviser before making decisions.

Sources

• ▹ABC Color: DNIT, US$ 1.500 millones en 3 años y hoja de ruta al 2029
• ▹1000 Noticias: DNIT prevé un crecimiento del 4,2% y reportó USD 684 millones de recaudación en julio
• ▹ABC Color: Crecimiento del gasto y baja capacidad de ingresos, el problema estructural que enfrenta Paraguay, según exministro Rojas
• ▹Dirección Nacional de Ingresos Tributarios (DNIT)