Tax Guide Paraguay

Personal Income Taxation in Paraguay

Individuals that have a residency status in Paraguay are supposed to pay personal income tax on the income that has been sourced from within Paraguay. On the other hand, individuals that are non-residents are also supposed to pay taxes on income that has been sourced from within Paraguay.

Personal Income Taxes in Paraguay

Personal Income Taxes in Paraguay are contingent on the residency status of the given individual.

• For residents in Paraguay: The generally accepted Personal Income Tax Rate is set at 10%. This is for individuals that have an annual income greater than or equal to 36 months of minimum salaries. This is equivalent to USD 13,000 on an annual basis.
• For residents living abroad: For individuals residing abroad, the applicable rate of PIT is 20%. This is primarily for residents living abroad, but have activities within Paraguay. However, this rate is applied over and above the net income at a rate of 50% of the perceived income. Therefore, the effective tax rate is equivalent to 10%.

Corporate Income Taxation in Paraguay  

Under the Corporate Income Tax regime, business income tax is created under which all Paraguayan income, and profits are taxed. This mostly comes from all given types of economic activities. Examples include agricultural, commercial as well as industrial activities.

For companies that are certified as medium sized organizations, and small companies, there are different tax laws in place, contingent on the overall income that they earn over the course of time.

Other Taxation in Paraguay

• Value Added Tax (VAT): VAT is applicable as a consumption tax at a rate of 10%. However, a special rate of VAT is levied at a rate of 5%. This reduced rate is mostly applicable on real estate deals, as well as on commodities that are regarded as essential items. Examples include staple food items like eggs, cereal, food and milk. Additionally, this is also levied on sale and import of all agriculture related commodities.
• Custom Duties: Custom Duties are levied on almost all imported goods and services. They are levied at the following rates:
  • Port Rates – they are levied at rates varying between 0.65% and 1.50% of custom valuation.
  • Custom Rates – this is levied at 0.5% of the customs valuation.
  • IT system utilization fee – this is between USD 15 and USD 50 depending on the imported value.
• Excise Taxes: Excise Taxes are levied on certain goods and services, including imported goods and services within Paraguay.
• Real Estate Tax: Real Estate Tax is levied at a rate of 1% of the fiscal (or official) value of the property. This is normally lesser than the actual market value. However, a rate of 0.5% is levied in case of rural properties.
• Social Security Contributions: Under the social security system in Paraguay, the following contributions are made by both, employers and employees:
  • For employees: In case of commercial entities, the applicable social security contribution is 9%, whereas for financial entities, the applicable rate is 11%.
  • For employers: In case of commercial entities, the applicable social security contribution is 16.5%, whereas for financial entities, the applicable rate is 17%.

Therefore, the total contribution in lieu of social security contribution by the employer and the employee, is 25.5% for commercial entities, whereas for financial entities, the applicable rate is 28%.

Other than Social Security Contributions, there are no other payroll taxes applicable in Paraguay.

• Stamp Taxes: There are no stamp taxes applicable in Paraguay.