Paraguay

Registrations and Establishing an Entity

To process payroll in Paraguay, companies must register with the Tax Authority (SET) to obtain a RUC (Tax Identification Number) and with the Social Security Institute (IPS). Payroll processing requires compliance with tax withholding, contributions, and monthly filings.

Banking

Local and international banks operate in Paraguay. Payments to employees and authorities are made in guaraníes or US dollars. Bank hours vary but are typically open Monday to Friday during standard business hours.

Working Week

The standard work week is 48 hours across six days (Monday to Saturday). Night shifts are capped at 42 hours weekly. Overtime is limited to 3 hours per day and 9 hours per week.

Employment Law

Holiday Accrual
Employees are entitled to:

• 12 days (up to 5 years’ service)
• 18 days (5–10 years)
• 30 days (10+ years)

Unused leave is paid out upon termination.

Maternity Leave
18 weeks total: 2 weeks prenatal and 16 weeks postnatal, extendable for special cases. Leave is fully paid and job-protected.

Paternity Leave
Two weeks paid leave is available to fathers, requested 30 days in advance.

Sick Leave
Sick leave is provided for up to 26 weeks (extendable by 24). Benefits equal 50% of the employee’s average wage. Reduced by half if the employee has no dependents. A minimum of 36 days of prior employment is required.

National Service
There is no mandatory national military service in Paraguay.

Tax & Social Security

The tax year runs from 1 January to 31 December.

Income Tax
Personal income tax is levied progressively:

• 8% for income up to ₲50 million
  
  
• 9% from ₲50–150 million
  
  
• 10% over ₲150 million
  
  

Social Security Contributions

The employer contributes 14% plus 2.5% for additional coverages.

Payroll

Employers can issue online payslips via the Marangatu System. Payroll must comply with monthly submissions to IPS and SET.

Reports

Payroll records must be retained for five years. Monthly reports include wage, contribution, and employment data. Annual personal income tax returns are filed in March.

Payslip Example

(Local language sample: not included)

Reporting

Monthly contributions are filed electronically. Employers must submit IRP filings annually and maintain updated employee data across systems.

New Employees

Employers must register with the Labour Authority within 60 days of hiring. Contracts must be written for wages above minimum levels. Contracts include work terms, payment details, and working hours. A PAN-style information pack is required from the employee.

Leavers

Final settlements must be paid within 10 business days of termination. Employers must notify the Labour Ministry with termination details.

Employee Benefits

Employers can offer health insurance, transport, and mobility allowances. These are tax-advantaged if properly documented.

Expenses

Allowances and expenses must be declared and justified per tax guidelines to avoid penalties. Christmas bonuses are mandatory and equal to one-twelfth of annual earnings.

Visa processing takes 5–30 business days. Required documents:

• Completed form
  
  
• Passport
  
  
• Recent photo
  
  
• Proof of funds and accommodation
  
  
• Employer invitation
  
  
• Visa fee
  
  

Work permits are valid up to 90 days. Changing employers requires reapplication. Family members must apply separately.

Paraguay applies specific surcharges for night and holiday work. Public holidays and employment bonuses are strictly regulated. Employment contracts involving compensation above the minimum wage must be in writing. Employer records are subject to audits under commerce law.

Further Information

For more information, or assistance with Paraguay Tax inquiries please contact: gi@activpayroll.com

About This Payroll and Tax Overview

Please note that this document gives general guidance only and should not be regarded as an authoritative or complete statement of the law, regulations or tax position in any country. You should always seek specific advice for each specific situation. This document should not be relied upon as professional advice and activpayroll accepts no liability for reliance on its contents.