For the last year, half the people I talk to have told me the same thing: “Marek, I’m moving to Paraguay. Zero tax on foreign income. Why would I pick the Dominican Republic?”

I nodded politely. Then this week happened.

The week Paraguay stopped being a tax story

On Tuesday, Paraguay’s central bank seized Ueno Bank, a digital lender with more than 3 million customers in a country of 6.4 million. Regulators say it lent too much to companies tied to its own controlling shareholder. About $800 million in deposits froze, including money from the state pension and health funds. Nearly half the country could not touch its savings.

By Thursday, the president, Santiago Peña, announced his resignation on video. Minutes later, 78 deputies voted unanimously to impeach him anyway. Both chambers declined to accept the resignation and pressed ahead with a trial. On Friday he was under house arrest. People marched through Asunción shouting “give us our money back” and got tear gas for it.

This is still moving as I write, so check the headlines before you quote me.

Notice what did not fail. The tax code works fine. Zero percent on foreign income is still zero percent. A tax rate is a promise made on paper. The people who hold the paper are the problem.

1. A tax haven is only as good as the government that wrote it

A low rate is one line in a spreadsheet. Stability is the spreadsheet. If the person who signed your 0% can be impeached on a Thursday and under house arrest by Friday, how long do you trust the 0%?

I am not picking on Paraguay for sport. Look at the record:

• 1954 to 1989: Alfredo Stroessner takes power in a coup and rules for 35 years. He is removed by another coup, led by his own close associate.
• 1996: General Lino Oviedo attempts a coup.
• March 1999: the vice president is assassinated. Days later the president resigns, and eight student protesters are killed.
• 2012: President Fernando Lugo is impeached.
• 2017: mass protests stop a push to change the constitution so the president can run again.
• November 2026: a bank run takes the presidency down with it.

That is not one bad week. That is a pattern.

2. The Dominican Republic had every reason to fail

Here is where the lazy argument says “but every Latin American country has coups.” Fine. Let’s look at the Dominican Republic, which had better reasons than most to go off the rails.

Rafael Trujillo ran the country for decades until he was assassinated on 30 May 1961. The textbook says what happens next: chaos, coups, strongmen taking turns.

And we did get a taste of it. Juan Bosch won the election in December 1962 and was overthrown by the military in September 1963. In April 1965 a civil war broke out, and U.S. troops landed within days. In 1966 Joaquín Balaguer won and held on for most of the next three decades.

That is the dark chapter. I am not hiding it. But look at what came after.

3. Boring is the product

Since the mid-1990s, power in the Dominican Republic has moved between different parties through elections: Leonel Fernández, Hipólito Mejía, Danilo Medina, Luis Abinader, who was re-elected in 2024. Even the ugly episodes got fixed on paper. After the disputed 1994 vote, the parties signed a Pact for Democracy and Balaguer’s term was cut from four years to two. The system took the hit and corrected itself.

Nobody writes a thrilling headline about that. Good. When you park your savings and your house in a country, you want the news to be dull.

4. And the incentives are not a consolation prize

Here is the part my Paraguay friends skip. The Dominican Republic is not the expensive, stable option you pay a premium for. The incentives are real.

• Foreign income. The Dominican system taxes income earned in the country. Under the general regime, foreign-source income is generally not taxed for the first three years of residency, and some residency categories are treated as territorial from day one. Rules differ by category, so get a Dominican tax advisor before you plan around it.
• Real estate under CONFOTUR. In a certified tourism project, the 3% transfer tax is waived at closing and the annual property tax (IPI) is waived for up to 15 years. Ask for the resolution number and check it with the tourism ministry. The benefit does not pass automatically to the next buyer, and it does not cover legal fees, registration or capital gains.

So the honest comparison is not “Paraguay saves me taxes, the Dominican Republic gives me stability.” It is “Paraguay saves me taxes, and the Dominican Republic saves me taxes too.”

5. Three questions before you move for a tax rate

1. Who can change the rate? Look at how the last three governments ended, not at how the brochure begins.
2. Where does your money sit? A territorial tax system does nothing for you if the bank or the court holding your assets is the weak link.
3. What happens when the president is gone? If the answer is “nobody knows,” that is your answer.

I am not telling you Paraguay is doomed. I am telling you that this week reminded everyone what a tax haven is made of. Tax breaks are the paint. Institutions are the house.

Full disclosure: I build in Samaná, so discount me accordingly. Then go check the facts yourself. They hold up.

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Sources, all checked on 7 November 2026: ABC News on the Ueno Bank collapse · History of Paraguay · Dominican history · Politics of the Dominican Republic · CONFOTUR Law 158-01 explained · Tax residency in the Dominican Republic · Paraguay tax residency guide