Paraguay Tax Residency and Exemptions: The 2026 Guide
The 120-day myth, the Law 60/90 that ceased to exist in 2025, and what the DNIT actually requires for the tax residency certificate — with the rules cited.
One number appears in almost every article about tax residency in Paraguay: 120 days.
The claim is always the same — that you must spend 120 days a year in the country to become, or remain, a Paraguayan tax resident. It is repeated so often that it has become received wisdom.
That rule does not exist in the Paraguayan Tax Code. The 120 days are a procedural tool the National Directorate of Tax Revenue (DNIT) uses to assign domicile on its own initiative where a declared address appears fraudulent — not a presence requirement for acquiring or maintaining tax residency.
That is just one of the points most available coverage gets wrong. This article establishes, with the rules cited, what actually governs tax residency, the territorial regime, and — the most significant change of the year — the complete replacement of Law 60/90.
Tax residency under Law 6380/2019: what the law says, and what it does not
Law No. 6,380/2019 — which established the current tax system — sets out no standalone definition of tax residency for individuals. It defines residency only for entities (Article 5). For individuals, the status of “resident in national territory” (Article 49, in the personal income tax chapter) rests on implicit criteria — permanent domicile, substantial ties to the country — and Article 72 addresses non-resident designation.
In practice, two documents serve as administrative evidence of status:
- The RUC (taxpayer registration number) — but the RUC alone is not legal proof of tax residency.
- The Tax Residency Certificate, governed by DNIT General Resolution No. 65/2020, which requires an active RUC, current tax compliance and a migration movement certificate — without setting any annual presence threshold.
It is this absence of a formal presence floor that feeds the 120-day confusion. Anyone building a plan on the assumption that they must meet a day quota — or the opposite, that physical presence can be ignored entirely — is starting from a premise the rules do not support.
Note on scope: the absence of a formal presence requirement does not mean the absence of risk. The DNIT retains the power to reclassify tax domicile where it concludes that a declared address is not genuine. Consistent documentation — contracts, banking activity, invoices — remains what sustains the status under review.
The territorial system and personal income tax
Paraguay operates one of the most territorial tax systems in the region. Personal income tax (IRP), governed by Law 6,380/2019, applies exclusively to Paraguayan-source income:
- Personal services income of Paraguayan source: a progressive scale of 8%, 9% and 10%, with an exemption for annual gross income below PYG 80 million (at the February 2026 rate of 1 USD ≈ PYG 6,586, that places the exemption near US$12,000).
- Investment income of Paraguayan source (interest, royalties, rents, capital gains): a flat 8%.
- Foreign-source income: outside the scope of personal income tax.
The territorial boundary is not absolute, however. Income generated through a Paraguayan corporate structure, or paid by a Paraguayan client for a service delivered inside the country, is treated as Paraguayan-source even where the recipient lives abroad. Substance and the place of the activity matter — territorial sourcing does not hold up merely because the contract was signed outside Paraguay.
Even with no taxable income, a tax resident retains obligations: the annual personal income tax return by 31 March of the following year, and the duty to declare foreign-source income in the annual sworn return — not to tax it, but to substantiate wealth and avoid a presumption of unexplained enrichment.
A recent obligation: crypto-asset transactions above US$5,000 must be reported through the Marangatú system, under DNIT General Resolution No. 47/2026 — even where the underlying income is foreign-source and non-taxable.
Double taxation treaties
Paraguay has widened its treaty network in recent years. Until recently it held only two comprehensive treaties — with Chile and Taiwan — alongside specific freight conventions. Between 2018 and 2019 three further agreements were approved, with Uruguay, the United Arab Emirates and Qatar, entering into force more recently.
Brazil is not on that list. A Brazil–Paraguay convention was signed in 2000 and approved by the Brazilian Congress in 2003 (Legislative Decree No. 762/2003), but public documentation does not unambiguously confirm its full entry into force as a bilateral instrument. For anyone with Brazilian ties, that changes the foreign tax credit analysis compared with, say, a Uruguayan structure.
Law 60/90 no longer exists: Law 7,548/2025 has arrived
Here is the most significant change for anyone researching tax incentives in Paraguay — and the one least recorded in available coverage.
Law No. 60/90, in force since 1990, was the country’s principal tax incentive regime for domestic and foreign capital investment for 35 years. It no longer exists. It was repealed in full by Law No. 7,548/2025, passed by Congress and promulgated by the executive on 9 September 2025, which expressly repealed Decree-Law No. 27/1990 and Law 60/90 itself.
Before and after
| Benefit | Law 60/90 (until 2025) | Law 7,548/2025 (in force) |
|---|---|---|
| Exemption from customs duties and VAT on capital goods imports | Yes | Retained |
| VAT exemption on local purchase of capital goods | Yes | Retained, including between regime beneficiaries |
| Exemption from the Dividends Tax (IDU) for up to 10 years | Foreign-origin capital only, investment ≥ US$13 million | Extended to domestic-origin capital at the same investment threshold |
| Exemption from Non-Resident Income Tax on commissions and charges remitted abroad | Not provided for | Provided for, on financing of projects ≥ US$13 million |
| Transfer of capital goods between regime beneficiaries | Not provided for | Permitted, free of tax |
| Tourism sector | Excluded from the income tax exemption | Now exempt from duties and VAT on capital goods acquisitions |
| Projects already approved under the previous law | — | Retain the conditions of the bi-ministerial resolution that granted the benefit, as at the time it was granted |
An Investment Council was created to advise on applying the new regime, and projects with investment above US$13 million still require a consultant registered with the MIC.
Note on scope: Law 7,548/2025 is recent, and part of its operational implementation (forms, detailed administrative deadlines by category) was still bedding in at the last verification. Before structuring an investment project under the new regime, we confirm current requirements with the MIC and the DNIT.
What this changes in practice
Tax residency does not depend on counting days. It depends on effective domicile and on consistent documentation sustaining the territorial source of the income before the DNIT — not on a presence quota the law does not impose.
The investment incentives regime changed name and content. Anyone planning a substantial corporate structure in Paraguay while citing “Law 60/90” is citing a repealed statute. The correct reference, since September 2025, is Law 7,548/2025.
The absence of a fully confirmed treaty with Brazil is a real variable. Unlike jurisdictions with a recognised bilateral treaty in force, a credit for tax paid in Paraguay against Brazilian tax cannot be assumed from a treaty.
Frequently asked questions
Do I need to spend 120 days a year in Paraguay to be a tax resident?
No such requirement exists in Law 6,380/2019. The tax residency certificate (DNIT GR 65/2020) requires an active RUC and tax compliance, without setting a minimum presence.
Is income received abroad taxed in Paraguay?
No, under the territorial principle of personal income tax — with the caveat that the income must genuinely arise outside the country, not merely be received abroad while the activity takes place inside Paraguay.
Can Law 60/90 still be used for new projects?
No. It was repealed by Law 7,548/2025, in force since September 2025. Projects already approved under the previous law retain the conditions of the resolution that granted the benefit.
Is there automatic protection against double taxation with Brazil?
It should not be assumed. Unlike Uruguay, the status of the Brazil–Paraguay convention signed in 2000 is not clearly confirmed as fully in force in the available public documentation.
How to verify for yourself
- Law No. 6,380/2019 and DNIT General Resolution No. 65/2020 — National Directorate of Tax Revenue.
- Law No. 7,548/2025 — Biblioteca y Archivo Central del Congreso Nacional (BACN).
- DNIT General Resolution No. 47/2026 (crypto-asset reporting) — DNIT, Marangatú system.
- Legislative Decree No. 762/2003 — Brazilian Federal Senate.
The starting point
Paraguay remains, in essence, a territorial system favourable to anyone who correctly organises the source of their income. What changed in 2025 and 2026 was the architecture of capital incentives and the way tax status is evidenced — not the underlying principle.
If you are assessing Paraguay as a tax destination, the next step is to look at your actual income mix: how much is genuinely foreign-source, how much depends on a local structure, and what still ties you to your home country’s tax system.
One conversation is enough to know whether it makes sense to proceed.
Informational content. It does not constitute legal, tax, accounting or investment advice. The rules cited were verified against the official sources indicated in July 2026 and may be amended or further regulated. Individual situations produce different outcomes and should be analysed case by case.