Nearshore Americas
Paraguay Tax

Paraguay’s New President Promises to Keep “10-10-10” Tax Regime

Foreign investors in Paraguay are breathing a sigh of relief after newly elected President Santiago Peña confirmed that he will not overhaul the country’s tax system, which has long been a cornerstone of its attractive business environment.

“We are not going to raise taxes on entrepreneurs, or companies, or anyone,” Peña, who took office in mid-August, tweeted.

Paraguay’s tax regime, known as the “10-10-10 Rule”, offers a 10-year tax holiday on income, profitsand dividends for new foreign investors. This percentage is the lowest in all of Latin America for taxes, except for VAT in Panama. To qualify for the program, investors must invest at least US$10 million in Paraguay and create at least 10 new jobs.

Paraguay drew US$1.2 billion in foreign investment in 2022, up from US$325 million in 2013, the year the tax regime was introduced. The program has attracted foreign investors from a variety of countries, mainly the United States, Brazil, Argentina and Spain.

Initially, there were fears that President Peña would remove the 10-10-10 Rule, yielding to pressures to generate more money for social welfare programs. Opposition parties also argued that the tax incentives give foreign investors an unfair advantage over Paraguayan businesses.

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However, the economic data is encouraging. Poverty in Paraguay fell from 31% to 24% between 2012 and 2022, and the gulf between the rich and poor is also narrowing, according to the Gini index.

Narayan Ammachchi

News Editor for Nearshore Americas, Narayan Ammachchi is a career journalist with a decade of experience in politics and international business. He works out of his base in the Indian Silicon City of Bangalore.

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