Paraguay

Individuals with residence in Paraguay and/or abroad are taxable on Paraguayan-source income.

Personal income tax (PIT) is applicable to the following:

• Income from the provision of personal services.
• Capital gains, excluding those taxed by the Tax on Dividends and Profits (IDU).

See the Income determination section for more information.

The tax on these incomes is settled separately.

The Paraguayan-source income from activities carried out in the Republic, from assets located or of rights used financially therein, shall be affected by this tax. The following shall also be considered to be from a Paraguayan source:

• The returns of the investment income originating from deposits, loans, and, in general, any placement of capital or credit of any nature in the country.
• Remuneration for the provision of personal services, as an employee or not, that the State pays or credits to taxpayers of this tax.
• The remuneration for the provision of personal services of any nature performed outside the country by taxpayers of this tax, provided that such services are provided to IRE or IRP taxpayers.

Nationals or foreign individuals residing in the country shall be taxpayers.

Likewise, the following shall be taxpayers:

• Undivided inheritances.
• Parents, guardians, or curators for the income earned by those under their legal custody, guardianship, or curatorship.
• Paraguayan nationals for their status as:
  • Members of Paraguayan diplomatic missions, including the head of the mission and members of the diplomatic, administrative, technical, or service personnel thereof.
  • Members of Paraguayan consular offices, including the head of the consular offices and the services official or personnel. Honorary consuls or consular agents and their dependent staff are exempted.
  • Members of delegations and permanent representations of Paraguay, certified before international bodies or part of delegations or observer missions abroad.
  • Officials or contracted personnel who provide services abroad, who are not diplomatic or consular, unless they prove their tax residence in the country where they serve.

Foreigners who meet the conditions established in this item and who have their usual residence in the country shall not be taxpayers of this tax on the condition of international reciprocity,

Personal income tax rates

The income tax from the provision of personal services shall be determined by the application of progressive rates linked to a net income scale. For this purpose, the rate corresponding to every bracket of the scale shall be applied to the share of net income included in each bracket of said scale:

• 8% up to 50 million Paraguayan guaranies (PYG).
• 9% from PYG 50,000,001 to PYG 150 million.
• 10% equal to or greater than PYG 150,000,001.

The tax payable will be determined by the sum of all amounts resulting from the application of the fees.

If the taxpayer's gross income from the provision of personal services does not exceed PYG 80 million, they will not be required to pay the tax.

The PIT rate on capital gains is 8%.