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- Basic Facts
- Statutory Labor Requirements
- Employee Income Tax In Brazil
- Employee Social Security In Brazil
- Deductible Expenses In Brazil
- Immigration In Brazil
- Value Added Tax (VAT) In Brazil
- Withholding Tax In Brazil
- Terminating Employee In Brazil
- Statutory Employee Benefits In Brazil
- Payroll In Brazil
- Ease Of Doing Business In Brazil
- Business Opportunities In Brazil Section
- Why Use Global Expansion To Hire Your Employees In Brazil
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BASIC COUNTRY FACTS
Republic of Paraguay
Asunción
- Spanish
- Guaraní
6.956 million
Paraguayan guaraní
.py
+595
Paraguayan guaraní
STATUTORY LABOR REQUIREMENTS
Probation Period
- Unskilled workers have a trial period of 30 days, while skilled workers have a trial of 60 days.
- For highly skilled employees, the probation period is presumed to be six months, though the exact terms may be negotiated by employee and employer prior to finalizing their contract.
Annual Leave
- In Paraguay, vacation days are earned after working for one year for the employer.
- Employees earn 12 days if they worked from one to five years, 18 days for five to 10 years and 30 days for 10 years of employment.
Public Holidays
- New Year's Day (1st January)
- Heroes' Day (1st March)
- Maundy Thursday (9th April)
- Good Friday (10th April)
- Labor Day (1st May)
- Independence Day (of Paraguay) (14th to 15th May)
- Chaco Armistice
- Founding of Asunción (15th August)
- Boqueron Battle Victory Day (29th September)
- Virgin of Caacupe Day (8th December)
- Christmas Day (25th December)
Maternity Leave
- In Paraguay, maternity lasts for 18 weeks and is paid at a rate of 100% of the gross salary by IPS.
- In the event of multiple births, the woman receives an additional 30 days per child.
Paternity Leave
- A new father can take 2 weeks' paid paternity leave after the delivery of the child.
Sick Leave
- In terms of sick leave, workers that have a justified illness are entitled to take medical leave, with 50% of their salary paid by the government.
Work Hours
- The standard work week in Paraguay is 48 hours
- For employees who work nights, the work week is 42 hours.
Overtime
- Overtime is paid at different rates:
- 150% of the regular pay rate for overtime during daytime hours
200% of the regular pay for overtime during night hours and public holidays.
Notice Period
- In Paraguay, notice of termination must be delivered to the employee in writing.
- Mandatory notice period is 1 day.
Severance
- If the cause for termination is justified (misconduct or poor performance), the employee is not entitled to severance pay.
- An employee who is terminated without cause is entitled to 15 days of severance pay for every year of service.
- For an employee who has over 10 years of employment with a company- If an employer is not able to prove a just cause to a labor court, the employee might either be reinstated or would have the right to double the regular severance pay.
13th Month Salary in Brazil
- Yes (Mandatory)
- There is a statutory requirement to pay the 13th month.
- This is a Christmas bonus usually paid in December called Aguinaldo.
INCOME TAX
- Individuals with residence in Paraguay and/or abroad are taxable on Paraguayan-source income.
- The personal income tax is imposed on Paraguayan source income derived from services rendered by individuals and on other certain types of income
- The personal income tax calculation is based on the difference between the actual income received and expenses incurred in Paraguay (cash basis) during the fiscal year (January through December).
- The general PIT rate is 10% for individuals with residence in Paraguay who obtain an annual income equal to or higher than 36 monthly minimum salaries (approximately 13,000 United States Dollars [USD] annually).
- The salary to be used is that which is in force on 1 January of every year.
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Income Tax |
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Flat Rate |
10%* |
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*if annual income equal to or higher than 36 monthly minimum salaries (approximately 13,000 United States Dollars [USD] annually). |
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DEDUCTIBLE EXPENSES
- Travel expenses and other similar payments are deductible, as long as they are necessary to produce such taxable income and comply with certain conditions established in the regulations.
- Donations to the state, municipalities, and religious entities recognized by competent authorities are deductible, as well as donations to legally constituted entities dedicated to social welfare, education, cultural development, charity, or philanthropy previously recognized by the administration as public service organizations.
- Individuals who do not contribute to the social security system can deduct up to 15% of the gross income placed in:
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- A saving account at financial and banking entities regulated by law 861/96.
- Cooperatives that carry on activities of saving and credit.
- Investments in nominated shares in entities with open capital in the country.
- Private retirement or pension funds in the country with at least 500 active payers.
- Family expenses and personal investments, such as education, health, clothing, housing, and own and family entertainment, are deductible as long as the titular is not a taxpayer of any other tax in which the expenses have already been deducted.
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Deductible Expenses |
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Employment Deductions: - |
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Personal Deductions: - |
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Charitable Contributions |
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Savings Deduction |
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Family Expenses |
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IMMIGRATION
- All foreigners wishing to maintain residency in Paraguay must obtain residence permits.
- The Paraguayan migratory legislation does not provide for work visas.
- Individuals may enter as tourists for a maximum period of 90 days (renewable).
- During this period, they can start the process to obtain temporary or permanent residence permits.
- Temporary residence permits allow their holders to reside in Paraguay.
- They are valid for a period of one year and may be renewed for a period of up to six years.
- The generally required documents to reside in Paraguay are the following:
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- Identity card or passport from the country of origin
- Birth certificate
- Marriage certificate or divorce decree (to demonstrate civil status)
- Police or criminal records (from the age of 14) from the country of origin or residence during the previous five years
- Police records certificate for foreigners issued by the Department of Informatics of the National Police (from the age of 14)
- Health certificate from the Ministry of Health, mentioning psycho-physical health and confirming absence of infectious diseases
- Certificate of life and residence, issued by the police department of the country of origin
- Certificate of entrance and permanence in Paraguay
- Consular visa for countries that require it (verified by the Paraguayan Ministry of Foreign Affairs)
- Two passport-size photos (2.5 cm x 2.5 cm) in color
- Work promise, mentioning the salary, with a signature certified before a notary public
- Commercial patent, Tax Identification Number and identity card of the employer
- Professional and/or technical title (legalized) or an official education certificate
- Proof of maintenance (for adults)
- An individual with temporary residence must renew his or her permit each year.
- For obtaining permanent residence, the following additional documents are required:
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- Proof of economic solvency, which is USD5,000 or the equivalent in a bank, credit union or financial entity, or a university title with a work promise mentioning the salary to be received (same as for temporary residence; see above).
- Signed affidavit with the promise to obey Paraguayan laws, signed before a notary public.
- Permanent residence permits are valid for 10 years and may be renewed.
- Neither permanent nor temporary residents need to obtain a work permit in Paraguay.
- The residence permit is sufficient for performing gainful activities in the country
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Type of Visa/ Permit |
Documentation |
Validity |
Eligibility |
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Temporary Residence Permit |
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1 year (can be renewed for up to 6 years) |
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Permanent Residence Permit |
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10 years (may be renewed) |
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VALUE ADDED TAX
- The standard rate of VAT is 10 percent, a differential (reduced) VAT rate of 5 percent applies to:
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- lease and transfer of properties
- transfer of agricultural products, fruits, horticultural products in their natural state and live animals; products obtained from hunting and fishing, live or not; vegetable oil, virgin or crude degummed; certain products from the ‘family basket’: rice, noodles, mate (yerba mate), edible oils, milk, eggs, raw meat, flour and iodized salt
- transfer of pharmaceutical products.
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VAT |
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Standard Rate |
10% |
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Reduced Rate |
5% |
WITHHOLDING TAX
Dividends
- Dividends distributed to residents and nonresidents are subject to withholding tax at rates of 8% and 15%, respectively
Interest
- A 15% withholding tax rate applies on 30% of the gross amount of interest or commissions on loans or credit operations paid to unrelated nonresident public or private entities and multilateral credit organizations, including interest from the placement of bonds abroad through recognized stock markets.
Royalties
- Royalties paid to residents and nonresidents are subject to withholding tax at rates of 8% and 15%, respectively.
Fees for Technical Services
- A 15% withholding tax applies to the gross amount of payments to non-residents
Branch Remittance Tax
- A 15% withholding tax applies to gross amounts made available, remitted or paid to partners, shareholders, a parent company, or other related companies/ entities.
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WHT |
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Dividends |
Residents |
8% |
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Nonresidents |
15% |
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Interest |
15% |
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Royalties |
15% |
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Fees for Technical Services |
15% |
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Branch Remittance Tax |
15% |
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TERMINATION
- In Paraguay, notice of termination must be delivered to the employee in writing.
- Mandatory notice period is 1 day.
- If the cause for termination is justified (misconduct or poor performance), the employee is not entitled to severance pay.
- An employee who is terminated without cause is entitled to 15 days of severance pay for every year of service.
- For an employee who has over 10 years of employment with a company- If an employer is not able to prove a just cause to a labor court, the employee might either be reinstated or would have the right to double the regular severance pay.
STATUTORY BENEFITS
- These are mandatory benefits as postulated by law
- This includes probationary period, annual leave, public holidays, maternity leave, paternity, sick leave, overtime pay, notice period, severance pay, and 13th month pay
- Statutory benefits also include social security benefits
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Statutory Benefits |
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Probationary Period |
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Annual Leave |
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Public Holidays |
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Maternity Leave |
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Paternity Leave |
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Sick Leave |
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Overtime Pay |
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Notice Period |
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Severance Pay |
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13th Month Pay |
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Social Security Benefits |
PAYMENTS AND INVOICING
- The tax year in Paraguay is the calendar year (1 January through 31 December).
- Individuals must file a tax return by March of the following year.
- The exact date depends on the taxpayer’s Tax Identification Number.
- Joint filing is not allowed.
- Each person must file a tax return individual income exceeds the threshold
EASE OF DOING BUSINESS
- The ease of doing business index is an index created by Simeon Djankov, an economist at the Central and Eastern Europe sector of the World Bank Group.
- Higher rankings (a low numerical value) indicate better, usually simpler, regulations for businesses and stronger protections of property rights.
- According to the World Bank Paraguay ranked 125th in the World in 2019 in terms of ease of doing business.
