Paraguay

The country profile includes data on the income taxes paid by workers, their social security contributions, the family benefits they receive in the form of cash transfers as well as the social security contributions and payroll taxes paid by the employers. Results reported include the average and marginal tax burdens for eight different family types.

It also describes the personal income tax systems, all compulsory social security contribution schemes and universal cash transfers as well as recent changes in the tax/benefit system.

Paraguay 2013
Tax / benefit of single persons
		Wage level (% of average wage)	67	100	167	67
		Number of children	0	0	0	2
1.	Gross wage earnings		23 666 005	35 322 396	58 988 401	23 666 005
2.	Standard tax allowances		2 129 940	3 179016	5 308 956	2 129 940
	Basic allowance		0	0	0	0
	Married or head of family		0	0	0	0
	Dependent children		0	0	0	0
	Deduction for social security contributions and income taxes		2 129 940	3 179016	5 308 956	2 129 940
	Work-related expenses		0	0	0	0
	Other		0	0	0	0

3.	Tax credits or cash transfers included in taxable income		0	0	0	0
4.	Central government taxable income (1-2+3)		21 536 065	32 143 380	53 679 445	21 536 065

5.	Central government income tax liability (exclusive of tax credits)		0	0	0	0
6.	Tax credits		0	0	0	0
	Basic credit		0	0	0	0
	Married or head of family		0	0	0	0
	Children		0	0	0	0
	Other		0	0	0	0

7.	Central government income tax finally paid (5-6)		0	0	0	0
8.	State and local taxes		0	0	0	0
9.	Employees’ compulsory social security contributions
	Gross earnings		2 129 940	3 179 016	5 308 956	2 129 940

10.	Total payments to general government (7+8+9)		2 129 940	3 179 016	5 308 956	2 129 940
11.	Cash transfers from general government		0	0	0	0
	For head of family		0	0	0	0
	For two children		0	0	0	0

12.	Take-home pay (1-10+11)		21 536 065	32 143 380	53 679 445	21 536 065
13.	Employer’s compulsory social security contributions		3 549 901	5 298 359	8 848 260	3 549 901
14.	Average rates
	Income tax (7 / 1)		0.0%	0.0%	0.0%	0.0%
	Employees’ social security contributions (9 / 1)		9.0%	9.0%	9.0%	9.0%
	Total payments less cash transfers [(10-11) / 1]		9.0%	9.0%	9.0%	9.0%
	Total tax wedge including employer’s social security contributions [(10+13-11) / (1+13)]		20.9%	20.9%	20.9%	20.9%
15.	Marginal rates
	Total payments less cash transfers: principal earner		9.0%	9.0%	9.0%	9.0%
	Total payments less cash transfers: spouse		N.A.	N.A.	N.A.	N.A.
	Total tax wedge: principal earner		20.9%	20.9%	20.9%	20.9%
	Total tax wedge: spouse		N.A.	N.A.	N.A.	N.A.

Paraguay 2013
Tax / benefit of married couples
		Wage level (% of average wage)	100-0	100-33	100-67	100-33
		Number of children	2	2	2	0
1.	Gross wage earnings		35 322 396	46 978 787	58 988 401	46 978 787
2.	Standard tax allowances		3 179 016	3 179 016	5 308 956	3 179 016
	Basic allowance		0	0	0	0
	Married or head of family		0	0	0	0
	Dependent children		0	0	0	0
	Deduction for social security contributions and income taxes		3 179 016	3 179 016	5 308 956	3 179 016
	Work-related expenses		0	0	0	0
	Other		0	0	0	0

3.	Tax credits or cash transfers included in taxable income		0	0	0	0
4.	Central government taxable income (1 - 2 + 3)		32 143 380	43 799 771	53 679 445	43 799 771

5.	Central government income tax liability (exclusive of tax credits)		0	0	0	0
6.	Tax credits		0	0	0	0
	Basic credit		0	0	0	0
	Married or head of family		0	0	0	0
	Children		0	0	0	0
	Other		0	0	0	0

7.	Central government income tax finally paid (5-6)		0	0	0	0
8.	State and local taxes		0	0	0	0
9.	Employees’ compulsory social security contributions
	Gross earnings		3 179 016	3 179 016	5 308 956	3 179 016

10.	Total payments to general government (7 + 8 + 9)		3 179 016	3 179 016	5 308 956	3 179 016
11.	Cash transfers from general government		0	0	0	0
	For head of family		0	0	0	0
	For two children		0	0	0	0

12.	Take-home pay (1-10+11)		32 143 380	43 799 771	53 679 445	43 799 771
13.	Employer’s compulsory social security contributions		5 298 359	5 414 923	8 848 260	5 414 923
14.	Average rates
	Income tax (7 / 1)		0.0%	0.0%	0.0%	0.0%
	Employees’ social security contributions (9 / 1)		9.0%	6.8%	9.0%	6.8%
	Total payments less cash transfers [(10-11) / 1]		9.0%	6.8%	9.0%	6.8%
	Total tax wedge including employer’s social security contributions [(10+13-11) / (1+ 13)]		20.9%	16.4%	20.9%	16.4%
15.	Marginal rates
	Total payments less cash transfers: principal earner		9.0%	9.0%	9.0%	9.0%
	Total payments less cash transfers: spouse		0.0%	0.0%	9.0%	0.0%
	Total tax wedge: principal earner		20.9%	20.9%	20.9%	20.9%
	Total tax wedge: spouse		1.0%	1.0%	20.9%	1.0%

The national currency is the Guarani (PYG). In 2013, the average exchange rate was PYG 4 357.61 to USD 1. In that year, the average worker earned PYG 35 322 396.

The Report includes estimates of the tax wedge over the whole of the income distribution ordered by deciles of total labour income of formal wage earners derived from the household surveys.

	Deciles of Incomes
	1	2	3	4	5	6	7	8	9	10
Local currency (thousands of PYG)	14 355	18 818	20 211	22 811	25 232	29 543	34 394	40 611	52 385	96 048
USD1	3 294	4 318	4 638	5 235	5 790	6 780	7 893	9 320	12 021	22 041
Dollars in PPP2	6 341	8 312	8 927	10 076	11 145	13 050	15 192	17 938	23 139	42 426
Ratio to the minimum wage3	0.7	0.9	1.0	1.1	1.3	1.5	1.7	2.0	2.6	4.8
← 1. Average official exchange rates published by the central bank.
← 2. Calculated using the implied conversion rate (National currency per current international dollar in purchasing power parity) published by the IMF in the World Economic Outlook dataset.
← 3. Ratio of the income decile to the official minimum wage of the country.

1. Personal income tax system

The fiscal year is the calendar year.

1.1. Central government income tax

The personal income tax in Paraguay dates from a law enacted in 2004 that was enforced in 2012. The tax is applied to all income from employment or self-employment earned in Paraguay by both residents and non-residents. It also applies to dividends, interest, profits and capital gains.

1.1.1. Tax unit

Members of the family are taxed separately.

1.1.2. Tax allowances and tax credits

1.1.2.1. Standard tax allowances and tax credits

Social security contributions.

1.1.2.2. Main non-standard tax allowances and tax credits

Personal and family expenses in the country relating to food, drink and household goods, education, health, housing or leisure activities of the taxpayer or her dependents.
Donations to the state, municipalities and religious institutions that are properly recognized by the competent authorities.
Contributions to pension plans.

1.1.3. Tax schedule

The annual personal income tax liability was calculated on the taxable income according to the following schedule in 2013:

Income (PYG) up to	Marginal rate (%)
179 089 056	0.0
198 987 840	8.0
above	10.0

The minimum wage in Paraguay for 2013 was PYG 1 658 232 per month.

1.2. State and local taxes

No state or local taxes are levied on wages.

2. Compulsory social security contribution to schemes operated within the government sector

2.1. Employee contributions

Program	Marginal rate (%)
Old age, disability and death program	9.0

The employee contributions are levied on gross wages. The lower earnings threshold is the minimum wage, PYG 19 898 784 in 2013, and there is no upper ceiling on the contributions.

2.2. Employer contributions

Employers are required to contribute to the following public programs.

Program	Marginal rate (%)
Old age program	14.0
National System for Labour Training	1.0

The employer contributions are levied on the payroll.

3. Universal cash transfer

3.1. Amount for spouse and for dependent children

None.

4. Main changes in tax/benefit since 2013

From 2014, the threshold for paying personal income tax is being reduced by an amount of 12 times the minimum wage each year until it reaches 36 times the minimum wage. In 2016, the minimum threshold was PYG 131 331 960 (72 times the minimum wage).

5. Memorandum items

5.1. Identification of an AW

The data refer to the earnings of workers within the formal sector. The average worker’s wage was calculated using microdata from the national household surveys.