After years of postponement, a personal income tax was finally introduced in 2012, at the rate of 10%. This tax seems more of a token measure than anything else—it is aimed at the Paraguayan upper-classes, who are, in any case, likely to structure their affairs so as to avoid paying.

The tax does not apply to worldwide income—it only applies to income generated in Paraguay. So, for example, if you own property in Paraguay and receive a rental income, or if you receive a salary from a local company, you are liable to pay income tax.

But if you live in Paraguay off income earned outside the country, you are exempt from income tax and there is no obligation to file a return.

Many retirees or Internet-based workers are taking advantage of this, along with the low living costs, to enjoy life in Paraguay.