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Paraguay is a South American nation that is officially known as the Republic of Paraguay (Spanish: Repblica del Paraguay; Guarani: Tet Paraguái). Argentina borders it on the south and southwest, Brazil on the east and northeast, and Bolivia on the northwest. It has a population of 7 million people, about 3 million of whom reside in Asunción, the capital and biggest city, and its surrounding metropolis. Despite being one of only two landlocked nations in South America (the other being Bolivia), Paraguay has ports on the Paraguay and Paraná rivers that provide access to the Atlantic Ocean through the Paraná-Paraguay Waterway.
Spanish conquistadors came in 1524 and constructed Asunción, the first capital of the Governorate of the Rio de la Plata, in 1537. During the 17th century, Paraguay was a hub of Jesuit missions, where local Guarans were converted to Christianity and exposed to European culture. Following the expulsion of the Jesuits from Spanish lands in 1767, Paraguay devolved into a peripheral province with few urban centers and populations. Following its independence from Spain in the early nineteenth century, Paraguay was controlled by a succession of authoritarian regimes that pursued nationalist, isolationist, and protectionist policies. This era culminated in the devastating Paraguayan War (1864–70), during which the nation lost half of its prewar population and about 25–33 percent of its land to the Triple Alliance of Argentina, Brazil, and Uruguay. In the twentieth century, Paraguay experienced another significant international struggle, the Chaco War (1932–35), which it won. Following that, the nation was subjected to a series of military dictators, culminating in Alfredo Stroessner's 35-year rule, which lasted until his removal in 1989 by an internal military coup. This marked the beginning of the democratic period in Paraguay, which continues to this day.
Paraguay is a developing nation. Mercosur, the United Nations, the Organization of American States, the Non-Aligned Movement, and the Lima Group are all founder members. Furthermore, the South American Football Confederation is headquartered in Luque, a suburb of Asuncion.
The bulk of Paraguay's seven million inhabitants are mestizo, and Guarani culture is still actively practiced; more than 90 percent of the population speaks Guarani dialects in addition to Spanish. Despite a history of poverty and political persecution, Paraguay was named the "world's happiest location" in a 2017 Positive Experience Index based on worldwide polling data.
Annual leave allowance depends on how long an employee has been employed:
1 year of employment- 12 days of leave
At least 5 years of employment- 18 days of leave
At least 10 years of employment- 30 days of leave
Paraguay recognizes thirteen public holidays.
When an employee becomes unwell, they are entitled to sick leave and are paid 50% of their usual wages by social security (IPS), with the remaining 50% covered by the employer.
In Paraguay, maternity lasts for 18 weeks and is paid at a rate of 100% of the gross salary by IPS. In the event of multiple births, the woman receives an additional 30 days per child.
After the birth of the kid, a new father is entitled to two weeks of paid paternity leave. IPS also pays paternity leave at a rate of 100 percent of the gross wage.
There are no statutory laws regarding parental leave in Paraguay.
An employee is entitled to three days of bereavement leave if a member of their immediate family dies.
In Paraguay, an employee must get written notice of termination. For example, an employee who has worked for the company for more than ten years cannot be terminated for unjust reasons; they must be terminated for a legitimate reason.
Mandatory notice period is 1 day.
For unqualified employees or domestic workers, the probationary period is 30 days; for qualified employees or apprentices, the probationary period is 60 days.
If the termination is justified (for example, due to misconduct or substandard performance), the employee is not entitled to severance pay. It is critical to note, however, that if an employee believes they were terminated unfairly due to the employer's just cause or misconduct and the employer is unable to prove the reason for termination in a labor court, the employee is entitled to severance pay (15 days of wages for each year worked or up to half a year's wages) as well as back pay from the date of termination. Without cause, an employee is entitled to 15 days of severance pay for each year of service. For an employee who has worked for a company for more than ten years, if the employer is unable to establish just cause in a labor court, the employee may be reinstated or be entitled to double the regular severance pay.
The standard workweek is 48 hours and the daytime work period is 8 hours. Night work, defined as work performed between the hours of 8 p.m. and 6 a.m., cannot exceed 42 hours per week or seven hours per day. Working a combination of day and night shifts is limited to 45 hours per week. For nighttime work, employees are entitled to a 30% premium over the standard rate.
Overtime hours are limited to 57 per week and three per day. Overtime pay is typically 50% above the hourly rate. When overtime is performed at night, the rate is multiplied by one hundred percent. Overtime on public holidays is paid at the standard rate plus 100%.
Employees are entitled to at least 30 minutes of rest during the workday and a Sunday rest day. Those who work on a rest day are compensated with an additional rest day.
Paraguay’s compensation laws include a minimum wage of 1,824,055 Paraguayan Guarani per month. However, domestic workers have a special minimum wage of 40 percent of the regular minimum wage and should get deductions for housing and food.
Although the Ministry of Public Health and Social Welfare network provides basic health care, workers may choose to purchase private insurance.
Mandatory benefits postulated by law include a probationary period, pay on annual leaves, public holidays, sick leaves, maternity leave, paternity leave, and overtime pay. Statutory benefits also include social security benefits
The Business Income Tax will tax all Paraguayan income, profits, or earnings derived from any economic, primary, secondary, and tertiary activities, including agricultural, commercial, industrial, or service money, except income taxed by the IRP.
The income produced by assets, rights, and obligations, as well as the actions of disposition of these, as well as any growth in the taxpayer's patrimonial, are all taxable events.
The Law establishes a Simplified Regime for Medium-sized Companies (Its acronyms in Spanish IRE SIMPLE), which is applicable to certain taxpayers who carry out activities taxed by the IRE and who may choose this Regime if their income in the previous fiscal year does not exceed G 2,000,000,000 (Two billion guaranes), or approximately US$ 295,000.
These taxpayers may pay this tax by calculating their net income on a real or assumed basis, whichever is smaller.
Furthermore, the Tax Law establishes a Simplified Regime for Small Businesses (RESIMPLE), which is intended for sole proprietorships that carry out activities taxed by the IRE and may elect this Regime if their gross income accrued in the previous fiscal year is equal to or less than G 80,000,000 (eighty million guaranies), or approximately US$ 12,000.
This regime's taxpayers will pay a monthly amount equal in guaranies, according to the Tax Administration's payment schedule. The tax amount ranges from 20.000 Guaranies (US$ 3) to 80,000 Guaranies (US$ 12), depending on the yearly income.
The Tax Administration may determine that such payments be accumulated on a quarterly, semi-annual, or yearly basis for their efficacy.
Individuals having Paraguayan and/or foreign residency are taxed on Paraguayan-source income.
Individuals with a domicile in Paraguay who earn an annual income equal to or more than 36 monthly minimum wages are subject to a 10% PIT rate (approximately 13,000 United States Dollars [USD] annually). The salary to be utilized is the one in effect on January 1st of each year.
Individuals residing abroad who derive profits from operations conducted inside Paraguayan territory face a PIT rate of 20% over net income of 50% of perceived income (price of services), resulting in an effective tax rate of 10%.
VAT is levied on all businesses as well as individuals and organizations of people that provide personal services.
The standard VAT rate is 10%.
The following goods and activities are subject to a special VAT rate of 5%:
(1) 5% (five percent) for the lease of real estate for housing exclusively, including the use and usufruct of such assets;
(2) 5% (five percent) for the sale of real estate;
(3) 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;
(4) 5% (five percent) for the sale and import of agricultural, horticultural and fruit products; and
(5) 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.
People coming to Paraguay for employment must get a business visa in order to enter the nation, unless their home country is free from visa requirements.
A Provisional Residence Permit is valid for six months and may be renewed for another six months. It is meant for workers who work for international firms for brief periods of time.
A Temporary Resident Permit is valid for one year and may be renewed up to six times, depending on the occupation and grounds for the extension. An employment contract with a Paraguayan company must be included in the application.
A Permanent Residence Permit permits the holder to live and work in Paraguay forever.
It is possible that the application procedure may take up to 90 days.
The business visa is valid for six months and may be extended for another six months. During this period, the applicant must apply for a residency permit, which permits him or her to work. The application must contain proof of employment.
Employment contracts may be either written or verbal. If either side is unable to sign, an employment contract may be signed on their behalf by another person. In this situation, the signature must be obtained from the jurisdiction's judge of the peace, a notary public, or the secretary-general of the particular union, if any.
Each page of the employment contracts must include a stamp, as well as the signatures of the employer and employee.
It is vital to highlight that in the lack of a formal employment contract, the existence of the purported employment connection will be inferred until there is proof to the contrary.
There is no set length for assignments. This is usually indicated in the employment contract for fixed-term employments.
Paraguayan GuaranÍ
Instead of rushing into the establishment of your Paraguay subsidiary, you can make the process smoother by examining a few key aspects beforehand. Begin by choosing on a location for your office. Subsidiary regulations in Paraguay might differ by area or city, thus it's critical to choose a decent location that welcomes international incorporation. If you're unsure whether location is ideal for you, try hiring a consultant or another third party to assist you.
Next, think about what sort of activities you intend to do in the nation, since your job may influence the kind of entity you pick. In Paraguay, you may form a limited liability company (LLC), a public limited company, a branch office, or a representative office. Various entities often have their own constraints, tax regulations, share capital requirements, and other obligations.
The LLC is the most common kind of subsidiary for businesses that want to function similarly to a resident company. The following stages are involved in establishing your Paraguay subsidiary as an LLC:
1. Creating corporate bylaws
2. Obtaining incorporation documents
3. Obtaining a certificate from a competent government authority or the Chamber of Commerce in your own country
4. Providing proof of the legality of your head office in the country of origin
5. Providing information from a meeting with the Board of Directors, such as the desire to establish the company, the allocation of nominal capital to the company, the establishment of a fiscal address, the designation of the person(s) who will manage the office, and the delegation of power to the person managing the office.
Subsidiary laws in Paraguay might vary based on the kind of company used for formation. For example, LLCs must have at least two stockholders, one of which must be a Paraguayan native, and one director. All three persons must be Paraguayan residents, either temporarily or permanently.
You must also include the letters S de RL in your name. There are no minimum capital requirements, however the capital of the firm shall be split into $1 nominal quotas. Keep in mind that forming an LLC typically takes 10 to 12 weeks if you follow Paraguay's subsidiary requirements and prevent further delays or penalties.
