What is the point of indicating one's RUC (Registro Único de Contribuyentes) when making purchases in Paraguay?

RUC = ID number for tax purposes. Most invoices on which one's RUC is indicated can be used to deduct the invoice's amount from one's taxable income.

MikaelSvensson explains it in more details:

[RUC] is your ID number for tax purposes. That’s why for people (as opposed to legal entities) your RUC is your ID number followed by an additional one (which could be from 0 to 9).

So, say your ID number is 1.234.567, your RUC would be 1234567-0. I’m using 0 as an example, tax accountants and the tax authority follow a “formula” to determine the additional number, called “dígito verificador”.

You can only declare purchases with your RUC on those invoices. Otherwise we would just use any invoice and pay less taxes, if at all.

Regarding the impact on taxes:

In Paraguay you pay personal tax income on the net income, not the gross (which I think happens in the US).

I’ll try to illustrate...

Think you’re an employee working for another company, meaning that you are not a legal entity but a physical entity (persona física vs. persona jurídica).

You make 1.000 a month, which at the end of the year amounts to 12.000. Now, imagine you never asked for single invoice with your RUC on them. For tax purposes, and the tax authority, you have incurred in 0 purchases over the year. That means that you’ll pay 1.200 in personal tax income (the rate is 10%).

Now, imagine you make 1.000 a month and have purchases for 500 a month as well, all invoices with your RUC on them. By the end of the year you would have accumulated 12.000 of income and 6.000 of expenses.

12.000 (gross income) - 6.000 (expenses) = 6.000 (net income) x 10% = 600 of taxes you would have to pay to the tax authority.

For personal income tax is that straight, as you can deduct everything except for some big purchases like cars and land, if I’m not mistaken.

For corporate tax income is a different story and you can’t deduct all your expenses 100%.