Paraguay operates one of the most favourable personal income tax regimes in South America. The IRP (Impuesto a la Renta Personal) is a progressive tax with rates of just 8%, 9%, and 10%. Critically, individuals whose annual income from personal services, after the 9% employee IPS contribution, does not exceed PYG 80 million (~$14,000) are exempt from the IRP — covering many lower-income workers entirely. Paraguay applies the territorial taxation principle: income sourced from outside Paraguay is generally not subject to Paraguayan income tax, making it exceptionally attractive for remote workers, digital nomads, and entrepreneurs with international income streams. Capital gains are taxed at 8%. The IPS (Social Security Institute) social contribution for employees is approximately 9%. Paraguay offers one of the easiest residence-by-investment programmes in Latin America (minimum $70,000 investment or proof of income), and Asunción provides a very affordable cost of living at ~$700-1,000/month.
This hub links to every Paraguay tax guide and calculator on CountryTaxCalc — covering income tax rates, expat obligations, and tools to calculate your take-home pay.
Detailed Paraguay tax guides on CountryTaxCalc:
Paraguay's income tax uses Progressive IRP (personal income tax): 8% up to PYG 50M/year, 9% on PYG 50M-150M, 10% above PYG 150M. Exempt if income (net of the 9% employee IPS) is below PYG 80M. Territorial taxation. Capital gains 8%. IPS social 9% (employee). Asunción is Latin America's most affordable capital.. Use the calculator to estimate your take-home pay after income tax:
| Income | Rate |
|---|---|
| Annual income, net of employee IPS, below PYG 80M (~$14,000) | 0% (exempt from IRP) |
| PYG 0 – 50,000,000/year (~$8,800) | 8% |
| PYG 50,000,001 – 150,000,000/year (~$8,800-$26,300) | 9% |
| Above PYG 150,000,000/year (~$26,300+) | 10% |
| Capital gains | 8% |
| Social contributions (IPS — employee) | ~9% of gross salary |
Paraguay tax connects with these hubs on CountryTaxCalc:
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