Why entrepreneurs and investors are eyeing Latin America’s most straightforward tax system in 2025
A Flat Tax Model That’s Turning Heads
While many countries across the Americas are locked in debates about tax reform, Paraguay is quietly operating with one of the most predictable and simplified tax systems in the Western Hemisphere. Known as the 10-10-10 model, this system is attracting foreign investors, entrepreneurs, and digital nomads looking for a low-bureaucracy, business-friendly environment.
What Is the 10-10-10 System?
Paraguay’s tax code is built on a simple triad of flat rates:
- 10% Personal Income Tax (IRPF)
- 10% Corporate Income Tax (IRPJ)
- 10% Value-Added Tax (IVA)
This model applies broadly, with few exceptions or complicated tiers. The result is a tax system that is easy to understand, predict, and comply with.
A Continental Comparison
When compared to its neighbors, Paraguay stands out for both low rates and efficiency.
| Country | Income Tax | Corporate Tax | VAT | Tax Burden (% GDP) |
| Paraguay | 10% | 10% | 10% | ~12.1% |
| Brazil | 27.5% | 34% | 17-25% | ~33% |
| Argentina | Up to 35% | 30% | 21% | ~29% |
| Mexico | Up to 35% | 30% | 16% | ~16.5% |
| Panama | 0-25% | 25% | 7% | ~15.3% |
Paraguay offers one of the lowest overall tax burdens in the Americas with a model that is easy to manage and legally favorable to investors.
Why Entrepreneurs Are Paying Attention
- 💰 Lower Operational Costs: Startups and small businesses can maximize profitability under Paraguay’s low-tax structure.
- 🏢 Ease of Company Formation: Incorporation is fast, and foreign ownership is allowed.
- 🛫 Open to Immigration: Entrepreneurs can easily obtain permanent residency, making relocation attractive.
- 📉 Less Bureaucracy: Compared to many Latin American countries, Paraguay offers a cleaner regulatory environment.
Challenges Still Remain
- 🚧 Infrastructure: Internet, transport, and utilities are still developing in rural areas.
- 🩺 Healthcare and Education: Public services are limited; private options are recommended.
- 🗣️ Language Barrier: Spanish and Guarani are essential for doing business effectively.
- 🏦 Banking: Financial services can be bureaucratic and slower for foreigners without guidance.
Conclusion: A Business Haven in South America?
Paraguay may not be the most famous destination on the map, but for savvy entrepreneurs seeking low taxes, easy residency, and minimal red tape, it’s quickly becoming one of the most promising places to launch or relocate a business.
Simple. Predictable. Affordable. Three words that describe Paraguay’s 10-10-10 model—and why it deserves a closer look in 2025.