The new requirement imposed by the National Tax Revenue Service regarding corporate reserves comes at a time of mounting pressure on public finances, slowing growth in customs revenue, and limited political leeway to push through tax increases.
The administration’s change in strategy does not, for the time being, involve creating new taxes but rather increasing the government’s ability to monitor corporate structures. In this context, tax compliance is no longer merely a formal matter but has become a tool for protecting businesses.
The Paraguayan tax system is based on an attractive premise: low rates and a broad tax base. The logic is correct in theory, but it requires that all of its conditions be met at the same time: that tax rates do not deter investment, that the tax base is genuinely broadened, and that public spending is efficient enough to justify the tax burden. When one of them fails, revenue falls short, creating a shortfall that must be made up somehow.
That is exactly what we are seeing in Paraguay. The numbers speak for themselves. Although 2025 ended with an 8.5% increase in tax revenue, the first two months of 2026 saw an 1% year-over-year decline, primarily due to the sharp appreciation of the guaraní against the dollar, which reduced the tax base for customs duties. And in terms of the tax burden, the year 2025 closed at 11.2% of GDP, while the official target of the National Tax Revenue Directorate (DNIT) is to reach 12% by 2029, and the Latin American average is around 23%.
Put simply, these numbers mean one thing: a need for cash to continue meeting our commitments.
There are three structural ways to increase cash flow. The first is to raise taxes, But this comes at a political cost that few governments are willing to bear, especially when the quality of public spending continues to be the subject of legitimate scrutiny. The second is debt, However, although it is technically possible, public debt already exceeds 41% of GDP—having grown by 12.9% in the last year alone—and the Fiscal Responsibility Act limits the available margin. The third is inflation, Although, fortunately, it has the BCP as a safety net, which has demonstrated the institutional independence needed to keep it under control.
With those options ruled out or limited, there remains a fourth, quieter but equally effective one: tighten controls on those who are already in the system. And this seems to be the strategy chosen for now.
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