Corporate - Deductions

Last reviewed - 31 August 2020

Depreciation and depletion

The maximum allowable depreciation rates range from 2.5% for urban buildings to 25% for computer equipment. Depreciation is calculated using the straight-line method based on the useful life of assets as determined by the Treasurer. The Treasurer may also authorise the use of other depreciation or depletion methods that are deemed to be technically justified and generally accepted.

Fixed assets must be revalued annually based on the increase of the price index. Capital gains derived from the revaluation of fixed assets are not taxable income.


Amortisation of goodwill is not deductible.

Start-up expenses

Amortisation of start-up expenses may occur over three to five years, depending on the taxpayer's decision.

Interest expenses

The interest expenses on loans taken for Paraguayan residents or Paraguayan taxpayers may be considered as deductible expenses.

Additionally, it is important to mention that certain investment projects may be subject to a special exemption of the taxes on the interest, commission, and other expenses for loans taken for banking entities abroad (see Investment incentives in the Tax credits and incentives section).

Extraordinary losses/bad debts

The deduction of extraordinary losses (theft and damage) and bad debts require the meeting of certain conditions (e.g. communication to the tax authority, evaluation of the actual loss in monetary terms, audit review). Regarding bad debts, they can be deductible three years from the date from which they arise.

Charitable contributions

The deduction of a donation is subject to formal registration of the beneficiary entity as a public benefactor before the Treasury Ministry.

Executive remuneration

The deduction of executive remuneration is limited to a percentage defined according to the enterprise's profits. However, in the event that the executive employees are subject to PIT, the deduction of their salaries is not limited for CIT purpose.

Fines and penalties

Fines and penalties are considered as non-deductible expenses for income tax purposes.


In general, all taxes mentioned in the Other taxes section are deductible. Income tax and any fiscal surcharges or fines are not deductible.

Other significant items

General provisions for expenses or other potential losses are not deductible.

Other specific non-deductible items include:

  • Interest on capital, loans, or any other investment by an owner, partner, or shareholder in a business.
  • Personal expenses of an owner, partner, or shareholder, except when they are subject to PIT.
  • Money drawn on account of future earnings.
  • Direct expenses incurred in earning non-taxable income.
  • Earnings from any fiscal period that are retained in the business as capital increases or reserve accounts.

Net operating losses

Net operating losses are not permitted to be carried forward and applied against future years.

Losses may not be carried back in Paraguay. However, a taxpayer may modify one's tax returns at a later date.

Payments to foreign affiliates

There are no limits on the deductibility of payments to foreign affiliates, including management fees, royalties, research and development (R&D), and general and administrative expenses, provided that the taxpayer maintains corresponding legal documentation that includes the country of origin and applies appropriate WHT. See the Withholding taxes section for the applicable WHT rates.