Payroll compliance in Paraguay

Paraguay is an attractive destination for both investors and businesses, with a relatively straightforward regulatory environment and low tax rates. Paraguay ranks 58th for the complexity of its business environment, according to TMF Group’s 2022 Global Business Complexity Index, making it one of the easiest countries in which to do business in Latin America.

• Paraguay sets almost all tax contributions at 10%, including corporate, income, and sales taxes, with low-earning employees paying only 8% income tax. Social security contributions are 16.5% for employers and 9% for employees.
• Paraguay’s main labour law – the Labour Code of 1993 – governs the major terms and conditions of employment, including working hours, minimum wage levels, paid leave and statutory holidays, overtime, termination of employment and severance compensation.
• Salaries must be paid at least monthly in Paraguay, but may also be paid weekly or bi-monthly. Paraguay labour laws mandate a 13th salary payment to employees, which is paid in December and is equal to one-twelfth of total remuneration during the year.

If you’re doing business in Paraguay and are looking to learn more about Paraguay’s labour laws, incorporation procedures, tax implications and compliance requirements, request a copy of our full country profile, Doing business in Paraguay.

Payroll compliance guide

The global payroll compliance landscape can be a difficult one to navigate and interpret. Overseas businesses can be subject to greater scrutiny on the part of local governments, regulators and tax authorities.

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