Paraguay is frequently called "the land of water" or "the heart of South America". It's a great environment for independent contractors to enjoy the breaks between gigs and explore Paraguay's untouched nature, such as Koi and Chorori Hills, multiple waterfalls, and many other enchanting places. Here's how to start doing business as an independent contractor in Paraguay.
Disclaimer: Be aware that this article is not a substitute for legal advice. Please always check official websites or seek legal advice before you take action.
El Registro Único del Contribuyente (RUC) registration process
RUC is the Unique Taxpayer Registry that identifies all individuals, whether natural or legal (companies, associations, societies) that carry out activities in Paraguay.
Independent and self-employed workers should obtain the RUC and register electronically on the SET website. To register for the taxpayer number, you need to complete the following steps:
- Enclose any identification document such as a passport, migration card, or ID
- Complete the form with the required fields such as name, surname, date of birth, email, etc.
- Fill in the information about your address and phone number
In the "operaciones" section, select the activity you carry out, which will be your main business activity. Later you will be able to incorporate up to five secondary activities. Carefully review and submit your request. Upon attaching the requested documentation, the SET will contact you through email within three business days. After you have received the confirmation email, your work is legitimate, and you are subject to the taxation system.
Taxation process in Paraguay
Paraguay's tax system places a tax on autonomous and independent persons. These are treated in the different tax schemes.
Freelancers in Paraguay are subject to both the Personal Income Tax and the Value Added Tax (I.V.A in Spanish).
Personal Income Tax
Personal Income Tax applies to individuals, independent or not, whose annual income exceeds 80 million guaraníes, which is about $ 11,560. The tax rate varies between 8% and 10%.
VAT (I.V.A.) in Paraguay
The VAT in Paraguay (I.V.A.) applies to the commercialization and acquisition of goods and services. Independent workers and freelancers fall into this category and so need to declare VAT tax. The VAT must be reflected in the issuance of invoices for goods and services. The VAT rate is 10% for the provision of services and the acquisition of goods.
