Value-added tax (VAT)
VAT applies to all corporations and to individuals or associations of individuals rendering personal services.
The general VAT rate is 10%.
A special VAT rate of 5% applies on the following products and activities:
- 5% (five percent) for the lease of real estate for housing exclusively, including the use and usufruct of such assets.
- 5% (five percent) for the sale of real estate.
- 5% (five percent) for the sale and import of the following products from the family basket: rice, noodles, vegetable oil, mate, milk, eggs, flour and iodized salt.
- 5% (five percent) for the sale and import of the following agricultural, horticultural and fruit products:
- Agricultural products: cotton, rice, oats, canola, sugar cane, barley, sunflower, flax, corn, peanuts, sesame, soybeans, un-denervated leaf tobacco, wheat, yerba mate until the sapecado process, as well as the following primary derivatives: manufacture of flours, crude or degummed oils, expellers, pellets and the like.
- Horticultural products: artichoke, chili, garlic, basil, chard, celery, sweet potato, eggplant, watercress, broccoli, pumpkin, zucchini, thistle, onion, coriander, cauliflower, spinach, asparagus, fennel, ginger, locote, lettuce, cassava , turnip, potato, cucumber, parsley, leek, radish, beet, cabbage, tomato, carrot, pumpkin and so-called medicinal plants and spices.
- Fruit products: avocado, blueberry, banana, custard apple, plum, coconut, peach, strawberries, strawberries, pomegranate, guava, kiwi, lime, lemon, mamón, mandarin, mango, apple, mburucuyá, melon, quince, blackberry, orange , pear, pineapple, grapefruit, watermelon and grape.
- 5% (five percent) for the sale and import of the following livestock products: live cattle, equine, goat, buffalo, sheep, fish and poultry fauna, as well as pigs and rabbits; and its following primary derivatives: meat and offal; wool, leather and bristles; antlers and bones, provided they have not undergone any type of alteration or transformation, except those necessary for their conservation.
- 5% (Five percent) for the sale and import of products that are registered as medicines for human use before the Ministry of Public Health and Social Welfare
As products are introduced into Paraguay directly by the local importer, the importer is responsible for payment of the related taxes (VAT on imports) before clearing the goods from Paraguayan customs, apart from customs tariffs. The other expenses involved in the import of products are the following:
- Port rates (between 0.65% and 1.50% of customs valuation).
- Customs valuation service (0.5% of customs valuation).
- Consular fee (approximately 50 United States dollars [USD] for each commercial document receiving a visa or legalisation from the Paraguayan consulate at the originating country).
- Indian contribution fee (7% on consular fee).
- IT system utilisation fee (between USD 15 and USD 50 according to importation value).
Other expenses should be added to the above, such as photocopying, handling fees, customs agent fees, etc.
The excise tax, called the selective tax on consumption, is assessed on local goods and imported products listed, either specifically or generically, in the legislation. The importation of goods listed and the first sale in the "gate of the plant" of goods produced in Paraguay are taxed. The selective tax on consumption is collected independently of customs duty.
Some goods subject to this tax include whiskey and other alcoholic beverages, beer, tobacco products, petroleum, etc.
The Tax Reform has included an additional rate on:
The assets that are established below will be subject to a tax rate of 2%:
Packaged products from the food industry that exceed 500 Kcal per 100 gr. Except oils and fats of animal and vegetable origin, as well as seeds in their natural state
Real estate tax
Real estate tax is levied annually at 1% of the fiscal value of the property, which is generally less than actual value (or market value). A tax rate of 0.5% applies if the area of rural property is smaller than five hectares and is used for agricultural or cattle ranching. In certain areas, an additional tax is levied on the fiscal value of vacant and semi-vacant land when the area of the built-up portion falls within certain determined percentage limits. Large tracts of land in rural areas are subject to an additional tax determined on a percentage basis and to a proportional tax of 0.5% to 1% on the fiscal value of tracts with areas ranging from 10,000 to 60,000 or more hectares.
The 1992 Paraguayan Constitution established that municipalities and departments are entitled to the tax revenues directly related to real estate. Collection of these taxes is the responsibility of municipal governments.
There are no stamp taxes in Paraguay.
There are no payroll taxes other than social security contributions (see below).
Social security contributions
In Paraguay, there is a compulsory social security system through which it is required that the employers register their employees.
The calculation basis constitutes every wage item, in cash or goods, except the annual mandatory bonus and family allowance.
The monthly rates are as follows:
|Contribution||Commercial entity (%)||Financial entity (%)|
The employee’s contribution is withheld from salary by the employer, which is a designated withholding agent. The employer’s contributions are computed on total payroll and are paid together with the employee’s withholding to the Social Security Institute.