Paraguay is a South American country that borders Brazil. One of the country’s landmarks, the Itaipu Dam on the Parana River, is co-owned by both Paraguay and Brazil. With a population of over 6 million and plenty of natural resources, Paraguay may be a great location for your company’s expansion.
If you’re considering opening a company subsidiary or location in Paraguay, Globalization Partners can help. We offer Paraguay payroll outsourcing and an entire suite of global expansion services using our Paraguay PEO. We’ll handle everything from labor laws to paying your employees and offering competitive benefits — you just have to sit back and run your company.
Paraguay’s Taxation Rules for Payroll
Paraguay’s taxation laws set almost all contributions for employees at 10%, including corporate, income, and sales taxes. Individuals in the lowest tax bracket have an income tax requirement of 8%. The only exception is that employers pay 16.5%, and employees pay 9% to social security. The country uses a Pay As You Earn (PAYE) system, so employers are responsible for deducting taxes right from employees’ paychecks.
Paraguay Payroll Options
You can use one of the four common Paraguay payroll options to run your payroll:
- Remote: Some subsidiaries may have a parent company that already runs its own payroll. If this is your situation, you can add your Paraguay employees to that payroll, but they’ll have different regulations than your parent company’s employees.
- Internal: An internal payroll works for large subsidiaries with full HR staffing. However, you need to make sure you have a large budget to undertake setting up your Paraguay payroll.
- Third-party: A Paraguay payroll processing company is another option for businesses that would rather outsource. You won’t have to worry about establishing a payroll with this solution, but you’ll still need to comply with the country’s tax and labor laws.
- Global PEO: Paraguay payroll outsourcing with Globalization Partners is the only sure way to outsource compliance and your payroll. Our team can onboard your employees to our existing, compliant payroll and handle all compliance matters as the Employer of Record.
Requirements to Set up Your Paraguay Payroll
Your Paraguay payroll cannot exist without a registered entity in the country. A subsidiary is necessary to handle everything from your payroll to hiring employees and providing compensation and benefits. However, you won’t need an entity to work with Globalization Partners, as we use our existing subsidiary. You can count on our team to help you stay compliant and save time.
The Entitlement and Termination Terms to Know
One of the most difficult aspects of a global expansion is figuring out how to hire and terminate an employment relationship. You can make sure you and your employees are on the same page by adding entitlement and termination terms to an employment contract before setting up your Paraguay payroll. For example, you must notify all employees of a dismissal in writing, but the notice period depends on how long the employee has worked for your company. Employees are entitled to severance pay in the case of an unjustified dismissal.
Work With Globalization Partners
Globalization Partners envisions a world where your company can work without boundaries. Contact us today to learn more about Paraguay payroll outsourcing and how we can help make your expansion easier.