The government of Santiago Peña has ruled out raising tax rates or creating new taxes through 2028, but the Ministry of Economy and Finance and the DNIT, Paraguay’s tax and customs authority, have begun reviewing existing exemptions and deductions. The debate is taking place as doctors demand salary increases and Congress examines the 2027 General National Budget.
Minister Óscar Lovera said that value-added tax (VAT), personal income tax (IRP) and corporate income tax (IRE) would not be changed during the current administration. He said studies estimate so-called tax expenditure — revenue the state forgoes through tax benefits — at about US$1 billion. There is no specific proposal yet, but the review seeks to identify incentives that have lost their justification and create room to finance priorities such as health, education, social protection and public works.
Óscar Orué, director of the DNIT, presented the review as a technical and personal possibility, rather than an official decision. The estimates cited range from US$800 million to US$1 billion, depending on the set of exemptions and special regimes considered. He also said revenue had grown 2.4% by the end of August and that about 300,000 taxpayers had been incorporated since the DNIT was created.
One of the regimes under review is maquila, created to promote industrialization and re-exports. Orué said companies operating under the system do not pay VAT, IRE or the tax on dividends and profits (IDU), instead paying 1% on turnover. In his assessment, limited adjustments could generate an additional US$80 million to US$100 million without eliminating the incentives. The official also estimated tax evasion at between 20% and 25% and advocated formalizing the economy as a source of up to US$400 million in revenue, without changing tax rates.
The debate gained momentum after Senator Silvio “Beto” Ovelar, president of the Senate Finance and Budget Committee, supported the possibility of raising taxes on income, tobacco, alcohol and sugary drinks. Representative Hugo Meza also suggested considering taxes on meat and soybean exports and on medicines used to treat diabetes and obesity. The proposals differ from Peña’s pledge not to raise taxes.
Ovelar also said the Senate could reassess the doctors’ salary request and proposed “budget liposuction,” with cuts to hiring, per diem payments and expenses deemed superfluous. Lovera, for his part, said a generalized raise could worsen distortions in the system and advocated progression based on training and specialization rather than applying the same increase to everyone.
The Paraguayan National Chamber of Commerce and Services rejected greater tax pressure and called for spending cuts, transparency and a review of privileges before asking the public for new sacrifices. Economist Arnold Benítez added that the Selective Consumption Tax should prioritize reducing consumption of harmful products, rather than focusing solely on revenue. He warned that increases on fuel or essential goods could be passed on to prices and fuel inflation.