Crypto Taxation in Paraguay

Paraguay in 2025 had already made itself a leading crypto-friendly destination with 0% capital gains tax and income tax on personal crypto transactions. Businesses, including exchanges and mining farms, fall under the normal 10% corporate tax rate, while individuals work tax-free for trading, staking, and mining (unless done commercially). Compliance is done under the SET (Subsecretaría de Tributación), with no VAT on crypto transactions. Paraguay is particularly popular with miners due to cheap hydroelectric power, but its formal legislation remains in limbo. The government is in favor of blockchain adoption, but firms have to keep themselves updated with the changes in tax terms to remain compliant in this low-tax-high-potential crypto regime.

Tax Authorities & Regulations

Taxation in Paraguay is handled by the SET. As it stands, there is no specific tax legislation on cryptocurrencies, but the general tax principles are applicable. Bitcoins are not considered as legal tender; however, they are treated as a digital asset for tax purposes. Recent reports say that Paraguay is thinking about a crypto regulatory framework, but no such law has officially been passed as of the middle of 2025.

Key points:

• No capital gains for investments made in cryptocurrencies (for individuals). 
• No income tax on earnings from crypto (if not included in business activity).
• No VAT/GST on crypto transactions.

Types of Crypto Taxes in Paraguay

• Capital Gains Tax (CGT) is 0% for individuals if not engaged in frequent trading as a business. 
• Income tax applies only if such crypto is considered business income (e.g., mining, trading as a profession). 
• VAT or GST is not charged on any kind of purchase or sale of crypto.
• Corporate Tax is only 10% if crypto is part of a company’s revenue.

Tax Rates & Brackets

For Individuals:

• 0% CGT on crypto profits.
• 0% income tax on casual crypto earnings (airdrops, staking rewards).

For Businesses:

• 10% corporate tax if crypto is part of business income.

For Tax Exemptions:

• No taxes on personal crypto investments.
• No taxes on crypto-to-crypto swaps.

Crypto Transactions & Tax Treatment

• Buying/Selling Crypto: Not taxable for individuals.
• Mining & Staking: Tax-free unless done as a business activity.
• Crypto Salaries/Payments: Taxed as ordinary income (if received as payment).
• Crypto-to-Crypto Trades: Not a taxable event.
• DeFi/Yield Farming: No clear regulations; probably not taxable unless they are deemed business income.
• NFTs: No specific tax rules; treated like other crypto assets.

Crypto Tax Reporting & Compliance

While individuals are free to make cryptocurrency investments without any reporting requirements due to a 0% capital gains tax in Paraguay, such is not the case for business entities engaged in cryptocurrencies, because they have to declare their crypto-related earnings in their annual tax filings. Individuals may find it recommended to keep exhaustive transaction and wallet address records in case of audits. The tax deadlines generally coincide with Paraguay’s fiscal calendar and fall between March and July. Regulatory compliance mandates an organized mode, trusting the pending changes in this crypto-friendly domain.

Tax Deductions & Exemptions

Paraguay’s crypto tax framework offers straightforward benefits for investors. Since personal crypto gains are tax-exempt, no deductions are needed for individual traders. However, crypto businesses can deduct operational expenses like mining equipment or exchange fees against their taxable income. One notable limitation is that crypto losses cannot offset other income – a reasonable trade-off for the country’s generous 0% capital gains policy. This is in contrast to requiring registration, which keeps compliance simple for individuals but allows commercial crypto activities to have fair taxation.

Enforcement & Penalties for Non-Compliance

Cryptocurrency tax is the key factor subject to adjustment by Paraguay. The country’s tax authority has implemented clear monitoring mechanisms while preserving its crypto-friendly environment.

• SET monitors crypto exchanges via KYC compliance.
• Tax evasion (for businesses) can lead to fines or audits.
• No strict enforcement for individual investors.

Primarily, the structure is intended to ensure transparency in the commercial operations of crypto while allowing individual traders access to tax exemption policies of the country. This dual approach favors growing the digital economy in Paraguay while providing necessary financial oversight.

Future of Crypto Taxation in Paraguay

Paraguay maintains its crypto-friendly stance with no major tax changes expected before 2026. The 0% capital gains tax for individuals and 10% corporate rate remain, while clearer regulations may emerge. With average crypto revenue per user at US$30.60 (2025), Paraguay’s market shows growth potential. The government may introduce blockchain incentives, reinforcing its appeal for miners using affordable hydro power. While modest compared to the US (US$16.1bn), Paraguay’s crypto sector continues evolving. Investors should watch for updates while enjoying one of Latin America’s most favorable tax regimes.

Conclusion

In 2025, the means for taxing cryptocurrencies in Paraguay is hailed as one of the most  advantageous frameworks in Latin America, with a 0% capital gains tax for individuals but a reasonable 10% corporate rate on businesses. The crypto-friendly legislation of the country, partnered with the abundance of renewable energy, continues to woo miners and investors. It is generally “loose” in terms of implementation of enforcement for transactions for personal purposes. But companies are subject to such regulations to avoid having audits or penalties. Changes in regulations make it very imperative to keep advising stakeholders about proper documentation and the latest developments. Specifically, it is advised to consult a tax professional in the field of digital asset law in Paraguay regarding ensuring compliance and better planning.

FAQs

1. Does Paraguay have tax treaties affecting crypto taxation with other countries?

Paraguay’s limited tax treaties don’t specifically address cryptocurrency, creating potential dual taxation issues for some investors.

2. Are there any tax incentives for crypto startups?

While no crypto-specific incentives exist, tech startups may qualify for Paraguay’s general investment promotion laws.

3. Does Paraguay tax crypto staking rewards or airdrops?

No, Paraguay currently treats staking rewards and airdrops as tax-free for individual investors, provided they’re not received as part of business activities.

4. How does Paraguay treat crypto transactions conducted abroad by residents?

Paraguayan tax residents must declare worldwide income, but crypto gains remain tax-exempt under current personal taxation rules.

5. Are there reporting requirements for crypto held in foreign exchanges?

Paraguay currently has no specific reporting requirements for offshore-held crypto, even for tax residents.