Accounting and taxes for a company in Paraguay: what to organize from the first month

1. Start with the RUC, not with a generic list of taxes

Two companies with the same legal form can have different obligations.

DNIT records the taxpayer’s activity and tax obligations in the RUC. Before preparing a calendar, it is worth checking what is actually active and whether it matches what the company really does.

Corporate Income Tax (IRE), for example, has different assessment regimes. DNIT distinguishes, among others, IRE General, SIMPLE and RESIMPLE. The applicable regime should not be assumed from the apparent size of the company: it must be checked against the current data and rules.

VAT also depends on taxable transactions. DNIT currently publishes rates of 5% and 10%, with a general rate of 10% and specific cases for the reduced rate.

A website can explain the map. The obligations of an individual company are confirmed against its own tax position.

2. What the accountant needs does not begin with the tax form

The return is the end result of information generated during the month.

Depending on the business, a normal accounting routine needs visibility over:

Sales

• invoices and other documents issued;
• credit or debit notes;
• cancelled sales;
• credit sales;
• collections received;
• unusual transactions.

Purchases and expenses

• supplier invoices;
• supporting documents for services;
• expenses paid personally by shareholders or employees;
• purchases of assets;
• imports, where applicable;
• contracts explaining significant payments.

Banks and cash

• complete bank statements;
• transfers;
• deposits;
• cards;
• cash;
• differences between bank movements and what appears in the documents.

Shareholders

• capital contributions;
• loans;
• reimbursements;
• withdrawals;
• personal expenses paid by the company;
• profit-distribution decisions.

Personnel

Where there are employees, accounting also needs to connect with payroll, contributions, IPS, MTESS and any related employment obligations.

The exact list depends on the company. What matters is that a movement with an economic effect is not left without an explanation.

3. What happens during an accounting month

A healthy routine can be pictured as:

documents → classification → reconciliation → recording → tax review → returns → outstanding items → archive

Documents

First, the evidence of transactions has to be gathered.

Classification

Not every payment is an expense, and not every receipt of money is the same type of income. An equipment purchase, a loan received and a sale can all move money into or out of the bank account, but they have different accounting meanings.

Reconciliation

The records should be capable of comparison with banks, cash, invoicing and outstanding balances. If the bank shows a movement that nobody can explain, the problem does not disappear because the tax return has been filed.

Tax review

Once the information is organized, it is possible to determine which transactions affect the active obligations and which documents are still missing.

Outstanding items

A good routine is not simply “month closed.” It also produces a short list of questions: a missing invoice, an unidentified collection, a balance with a shareholder, a supplier difference or a transaction that needs support.

4. IRE: corporate income tax

IRE taxes Paraguayan-source income, profits or gains arising from business activities covered by the law.

DNIT publishes different assessment regimes. For IRE General and SIMPLE, the rate currently indicated is 10%. RESIMPLE operates under a different mechanism and is intended for small taxpayers that meet its conditions.

For a business owner, the practical conclusion should not be “my tax is 10%.” First it is necessary to know:

• which regime applies;
• which income and expenses are recognized;
• what documentation supports them;
• which tax adjustments may be necessary;
• which returns and advance payments are active.

The percentage is the simple part. The quality of the base on which it is calculated is the real accounting work.

5. VAT: a monthly obligation that lives in the documents

DNIT describes VAT as a tax applicable, among other cases, to the sale of goods, the provision of services and imports.

Rates of 5% and 10% currently exist, depending on the transaction.

For a company, this makes document quality very concrete. A purchase without a valid tax document, an incorrectly issued invoice or a mismatch between sales and records can affect VAT treatment.

That is why “sending the invoices” is not an administrative task separate from tax. It is part of how the return is built.

6. Profit, cash and distributions are not synonyms

Suppose a company invoices a sale today and will collect it in 45 days.

The transaction may generate income even though the money is not yet available in the bank.

Now suppose the company buys a machine and pays for it immediately. Cash falls, but for accounting purposes the full amount does not necessarily appear as an expense in the same month.

That is why “there is money in the account” and “the company made money” answer different questions.

There is a third question: can the shareholders take that money out?

When a company distributes profits, the Dividend and Profit Tax (IDU) comes into play. DNIT currently states a rate of 8% where the recipient is resident and 15% where the recipient is non-resident.

This makes it especially important to distinguish between:

• payment of a company expense;
• documented reimbursement of money;
• loan between shareholder and company;
• capital contribution;
• remuneration;
• profit distribution.

Calling everything a “shareholder withdrawal” is a good way to create problems that later have to be reconstructed.

7. Electronic invoicing: no longer a topic for “later”

DNIT required that, from 1 April 2025, legal entities newly registered as taxpayers in the RUC issue their tax documents electronically, within the systems and exceptions provided by the rules.

In addition, incorporation into SIFEN continues to advance by taxpayer groups, and specific rules exist for certain taxpayers such as suppliers to the State.

The practical consequence is that a new company should think about invoicing from the outset:

• which system it will use;
• who will issue documents;
• how errors will be corrected;
• how the information will integrate with accounting;
• and how documents will be retained.

Do not wait until the first customer arrives to discover the process.

8. Shareholder money and company money must be distinguishable

In a small company it is common for the owner to pay something personally, transfer funds to cover a need or withdraw money.

That can be perfectly explainable. The problem begins when nobody records what each movement actually was.

A transfer from the shareholder’s personal account could be a contribution, a loan or the temporary payment of a company obligation. The correct accounting entry and required documentation depend on the reality of the transaction.

The same applies in the other direction.

The practical rule is simple: if another person looks at the bank movement six months later, they should be able to understand why it happened and find its support.

9. Monthly checklist for the business owner

Before treating a month as closed, ask:

• Were all sales and purchases provided?
• Are the bank statements complete?
• Are there movements that remain unidentified?
• Were payments made personally by shareholders documented?
• Were loans, contributions or withdrawals reported?
• Are there cancelled invoices, credit notes or exceptional transactions?
• Were the main balances reconciled?
• Are documents still outstanding?
• Were the required returns prepared or filed?
• Are there upcoming payments or deadlines?
• Did anything change in the activity, address, shareholders, management or personnel that needs to be communicated?

10. Five useful questions to ask your accountant

Instead of asking only “Is everything up to date?”, try:

1. What documentation is still missing this month?
This turns a general answer into a concrete list.

2. Are there differences between the banks, invoicing and accounting?
This helps detect problems before they accumulate.

3. Which obligations are active in our RUC and what is due next?
This avoids running the business on a generic calendar.

4. Are there balances with shareholders, customers or suppliers that need explanation?
Old balances often hide errors, missing documents or decisions that were never formalized.

5. Which transaction this month deserves attention before closing?
A large sale, a loan, an asset purchase or a distribution may need special treatment.