US Company Formation from Paraguay (2026): US LLC or C-Corp, Paraguay's Territorial Tax After Law 6380, Maquila Exporters and Foreign Residents

Paraguay has become known for two things that rarely appear together: some of the lowest tax rates in the Americas, and some of the cheapest clean electricity in the world, from the Itaipú and Yacyretá dams. Together they have drawn maquila manufacturers, data centres, agribusiness exporters and a steady stream of foreign residents. Asunción's software and services firms sell more and more to US clients. For many of them, a US company is the natural way to sign US contracts, receive US payments or own US-facing operations, and it can be formed from Paraguay without travelling.

Paraguay's tax system is territorial. Law 6380 of 2019 modernised it, set the business income tax (IRE) at 10%, and introduced a personal income tax (IRP) with rates of 8% and 10%. It also set out which income from abroad is taxable. The USA and Paraguay have no income tax treaty. This guide explains what that means for a US company owned from Paraguay, then compares US LLC formation with US C-Corp formation.

In short: Paraguayans and residents of Paraguay can own 100% of a US LLC or C-Corporation, formed remotely. Paraguay taxes Paraguayan-source income: income from activities carried on in Paraguay, assets located there and rights used there. Services performed in Paraguay are therefore Paraguayan-source whoever invoices them. Law 6380 also treats certain income from abroad as taxable, notably interest and yields on money placed with foreign banks for IRE taxpayers. Business income pays IRE at 10%, personal income IRP at 8–10%, and dividends from Paraguayan companies 8% for residents. There is no US–Paraguay treaty, so US corporate dividends carry 30% withholding. With UCB, a Wyoming LLC with EIN is $249 and a Delaware corporation with EIN is $358, all-in.

Who can form a US company from Paraguay

Ownership of a US company is open to anyone. No state checks nationality or residence. A Paraguayan citizen, a foreigner with Paraguayan residence, or a Paraguayan sociedad anónima, S.R.L. or EAS can own a US company outright, and one owner can serve as its only manager or director. There is no need for a US visa, Social Security number, US address or trip. The company appoints a registered agent in its state, included for the first year in every UCB formation (see registered agent explained), and obtains an EIN, issued to foreign owners without an SSN or ITIN (see EIN for non-residents).

For identity, use a passport. The cédula de identidad is not accepted by US banks on its own, and that includes the cédula a foreign resident receives. For proof of address, an ANDE electricity bill, a Tigo, Personal or Claro bill, or a bank statement, translated. A Paraguayan company owner should have its RUC and its articles registered with the Dirección General de los Registros Públicos ready, with translations.

How Paraguay taxes income connected to a US company

The source rule

Law 6380 defines Paraguayan-source income as income from activities carried on in the Republic, from goods located there and from rights economically used there. For an owner in Paraguay:

• Work you do from Paraguay, such as software, design, consulting or support, is an activity carried on in Paraguay, so its income is Paraguayan-source even if the client is in the USA.
• Income the US company earns from genuine operations in the USA, with US staff, a US warehouse or US property, is foreign-source at the company level.
• Money placed abroad. The law lists interest and yields on money deposited with foreign banks and financial institutions among the items treated as Paraguayan-source for IRE taxpayers. A Paraguayan company that parks cash in a US account and earns interest should expect that interest to be taxable.

How dividends received from a foreign company are treated depends on who receives them and in what capacity, and practitioners have taken different views. Ask your Paraguayan contador before you plan around them.

The rates

• IRE (business income tax): 10% of net income, with simplified regimes for small businesses.
• IRP (personal income tax): 8% and 10% on services income, and 8% on capital income and gains, for residents above the thresholds.
• Dividend tax (IDU): 8% on dividends from Paraguayan companies to residents, 15% to non-residents.
• IVA: 10% generally. Exports of services can be exempt or zero-rated if the conditions are met.

A credit for foreign tax is available to IRE taxpayers, up to the Paraguayan tax on the same income.

US LLC formation from Paraguay

US tax treatment

For a non-resident owner, the IRS disregards a single-member LLC and treats its income as the owner's. An owner running the business from Paraguay, with no US office, employees or contract-signing agents, generally has no income connected with a US trade or business, and owes no US income tax (see effectively connected income explained). Because the LLC is not a corporation, payments to you are not dividends, and the missing treaty costs nothing. What the LLC does owe the IRS is an annual Form 5472 attached to a pro forma Form 1120. Missing it costs $25,000 (see Form 5472 explained).

A guaraní example

These are illustrative figures, not a client case, at ₲7,800 to the dollar.

Sebastián runs a small Shopify development agency in Asunción. His clients are US e-commerce brands. He forms a Wyoming LLC because his clients want a US vendor and payment by ACH, and in 2026 the LLC bills US$130,000.

The LLC pays his Paraguayan EAS US$120,000 for the development work, about ₲936 million. The EAS pays IRE at 10% on its net profit, and its exported services are treated as exempt from IVA under the export rules. The LLC keeps US$10,000 for US apps and advertising.

In the USA, the LLC files Form 5472 and a pro forma 1120 and owes no income tax. In Paraguay, the work is done and taxed where it happens, at a 10% rate that is low by any comparison. When the EAS later distributes profits to Sebastián, he pays 8% dividend tax as a resident.

US C-Corp formation from Paraguay

US tax treatment

A US C-Corporation pays federal tax of 21% on its profits, plus state tax where it does business, and files Form 1120 and Form 5472 every year (see the 21% corporate tax explained and the C-Corp guide for non-residents). With no treaty, dividends, royalties and related-party interest paid to Paraguay are withheld at 30%. Profit paid out to Paraguay loses about 44.7% to US federal tax, which is far more than Paraguay's own rates. So corporations owned from Paraguay usually reinvest in the USA rather than distribute.

Maquila exporters and US subsidiaries

Paraguay's maquila regime lets companies that manufacture or assemble for export pay a single 1% tax on the value added in Paraguay. Auto parts, textiles, plastics and pharmaceuticals are among the main products. For a maquila company that sells to the USA, a US corporation can act as importer of record and distributor. It buys from the maquila at arm's-length prices and pays US tax on its own distribution margin, while the maquila keeps its regime in Paraguay. A disregarded LLC owned by the Paraguayan company would be the wrong vehicle: it would make the Paraguayan company the US taxpayer on the US business. See US subsidiary for a foreign company.

Data centres and digital infrastructure

Cheap hydroelectric power has brought data centre and computing operations to Paraguay. Their customers are often in the USA, and they commonly use a US company to contract with US customers, buy US equipment and hold US-dollar revenue. The operating income from equipment physically running in Paraguay is Paraguayan-source, and the pricing between the US company and the Paraguayan operator should reflect where the assets and staff are.

A corporation is also right for start-ups raising US investment (see raising US investment as a foreign founder).

Foreign residents of Paraguay

Paraguay's residence programme and low rates attract foreigners, many of whom already own a US LLC. Some points apply to them in particular:

• Paraguayan tax follows the source rule above. If you work from Paraguay, your work produces Paraguayan-source income, even if a US LLC invoices it.
• Residence permits and tax residence are separate. Holding a Paraguayan residence permit does not on its own end your tax residence in your home country. Many European countries look at where your home and family are and where you spend your time.
• US citizens and green card holders remain taxable in the USA on worldwide income, and a US LLC is not "foreign-owned" for them.

Which state

• Wyoming or New Mexico for a service business run from Paraguay.
• Delaware for a corporation raising investment or signing enterprise contracts.
• Florida or Texas for an importer or distributor with US premises.

See best state for non-residents and the state selector.

What it costs

UCB's formation prices include state fees and the first year of registered agent service:

• A Wyoming LLC with EIN costs $249, or $348 with a US bank account application.
• A Delaware corporation with EIN costs $358.
• A Florida LLC with EIN costs $299.

Keeping a Wyoming LLC active is $121 a year, or $421 including the annual federal return. A US business address with your own suite number is $60 a year. See what a US LLC costs every year.

Banking

US banks and fintechs generally accept companies owned from Paraguay. Paraguay has strengthened its anti-money-laundering framework in recent years, but applications still get careful review. Prepare:

• A specific business description.
• An English website.
• Clear ownership documents, especially for a Paraguayan company owner.
• A US business address with your own suite number.

Transfers to Paraguayan banks arrive as international wires, and Paraguayan banks offer US-dollar accounts. Keep invoices and contracts ready for questions about the source of funds. See US business bank accounts for non-residents, why banks reject non-resident applications and Stripe for non-residents.

Common mistakes

• Treating income for work done in Paraguay as foreign because a US LLC invoiced it.
• Leaving a Paraguayan company's cash earning interest abroad without expecting Paraguayan tax on the interest.
• Paying dividends from a US corporation to Paraguay at 30% when Paraguay's own rates are 8–10%.
• Running a maquila's US distribution through a disregarded LLC.
• Missing Form 5472 in a year when no US tax was due.

Frequently asked questions

Can a Paraguayan citizen own 100% of a US company? Yes, without visiting the USA or holding a US visa.

Does Paraguay tax income from my US LLC? Income for work carried on in Paraguay is Paraguayan-source and taxable, at 10% IRE or 8–10% IRP. Some income from abroad, such as interest on foreign deposits for IRE taxpayers, is also taxable.

Is there a US–Paraguay tax treaty? No. US dividends, royalties and related-party interest paid to Paraguay are withheld at 30%.

Does my US LLC pay US tax? Not if it has no office, staff or agents in the USA. It files Form 5472 and a pro forma 1120 every year.

Should a maquila company use a US LLC or a corporation? A corporation, for a US distribution business with US stock or staff.

How UCB can help

We handle US company formation from Paraguay remotely: the state filing, EIN, registered agent, US business address and bank application. Each year we file the federal return through our US tax filing service. Your Paraguayan contador handles filings with the DNIT, and we supply the US records they need. See our formation, EIN and bank account package and the Latin America guide.

Setting up a US company from Paraguay? WhatsApp us at +1 315 961 2956 or email enquiries@ucbsolutions.com.