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Employer costs, taxes, minimum wage and leave rules for hiring here, plus the faster route: hire a contractor with Ontop, no local entity needed.
2026
Currency
PYG Gs. (Paraguayan Guarani)
Employer contributions
~16.5% employer IPS
Minimum wage
PYG 3,044,000/month (2026) ≈ $520/month
Payment frequency
Monthly / Bi-weekly
Calendar year (Jan 1 - Dec 31)
Capital
Asuncion
Timezone
PYT (GMT-4)
Short answer: The minimum wage in Paraguay in 2026 is PYG 3,044,000 a month (about $520). A typical full-time salary is around PYG 4,000,000 a month ($683). Professionals paid as contractors through Ontop earn a median of $1,710 a month (99 active contracts, September 2026).
| 2026 figure | Local currency | USD |
|---|---|---|
| Minimum wage, monthly | PYG 3,044,000 | $520 |
| Minimum wage, hourly | PYG 14,635.00 | $2.50 |
| Average salary, monthly (approx.) | PYG 4,000,000 | $683 |
| Median contractor pay through Ontop, monthly | n/a | $1,710 |
Minimum wage details: Decreto 6225/2026, 5% adjustment announced by President Pena in June 2026, in force 2026-07-01 per press (~USD 500). Daily wage (jornal) 117,077 Gs. Single national private-sector minimum (reglamentado by MTESS).. USD figures use exchange rates from 1 October 2026. Updated October 2026.
Next step: compare contractor rates in Paraguay with other countries or estimate the full cost of an employee.
Paraguay keeps personal income tax low, but the payroll bill is not. Employers contribute about 16.5% of every salary to IPS, the social security institute, and the cost of letting someone go doubles once they pass ten years of service. Those are the two numbers to weigh before you hire.
The talent market is also wider than it looks. The professionals foreign companies engage here range from early-career specialists to senior engineers billing at international rates, which means the contract model matters as much as the price.
At a gross salary of PYG 6,000,000 a month, employer IPS adds roughly PYG 990,000, for a monthly cost near PYG 6,990,000. Then come the obligations that build over time:
Paraguayan law covers independent services through the Contrato de Locacion de Servicios. Companies paying contractors in Paraguay through Ontop pay a median of $1,710 a month (the middle half earn between $719 and $3,500), across 99 active contracts in September 2026. That is Ontop's own payment data, not a market survey, and the wide range is the point: budget by role and seniority, not by a country average.
With Ontop as contractor of record, you engage contractors with a compliant contract (yours or an Ontop template), get classification support and pay them all in one run. They receive USD in their Ontop Global Account instead of waiting on a guarani transfer. There is no local entity to set up, no IPS registration, and pricing starts at $49 per contractor per month. Estimate a specific role with the contractor cost calculator for each country.
If you plan to keep someone for years on a fixed schedule, working only for you under your direction, Paraguay will treat that as employment, and the severance clock is already running. Hire them as an employee from day one. Ontop does not offer employer of record and never becomes the legal employer, so that path requires your own entity or a local employer. For independent professionals, learn how an EOR alternative for contractors covers what you need.
Employee or contractor
If the work is project-based or you need to move fast, a contractor gets you the same talent with a fraction of the paperwork.
Employee
~PYG 6,990,000 total
/month
For a gross salary of
PYG 6,000,000 gross/month
Setup
Local entity or employer of record, plus tax and social security registration
Employer contributions
~16.5% employer IPS
Mandatory extras
Aguinaldo
Monthly admin
Monthly payroll - IPS by month-end - IRP withholding - annual March return
Contractor with Ontop
No local entity
$49
/contractor/month
The agreed rate, plus Ontop from $49 per contractor per month.
Sign a contract, yours or an Ontop template. No local registration on your side.
No employer contributions: the contractor handles their own taxes and social security.
One payment per invoice, in one payroll run.
Paid into their Ontop Global Account in USD.
See the full side-by-side comparison
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A contractor's rate usually covers their own taxes, so compare total cost, not just gross pay. Run your numbers in the contractor vs employee calculator.
Hiring here: the full breakdown
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Payroll guide
Employer costs come on top of gross pay. Use these figures to budget a hire and to compare it with a contractor rate.
Total monthly cost
~PYG 6,990,000 total
Example gross salary
PYG 6,000,000 gross/month
~PYG 4,410,000 net
Net pay to the employee
Tax and employee contributions
Withheld from gross pay
~PYG 990,000 IPS
Employer contributions on that salary
Employer contributions
~16.5% employer IPS
Employee contributions
~9% employee IPS + income tax (IRP)
Total cost above gross
~16.5% above gross (IPS)
Figures are estimates for planning. Rates change with each budget and can vary by sector, so confirm them before you make an offer.
What people earn here, from the legal floor to the main cities, plus the extra pay most employers budget for.
National average
~PYG 4,000,000
Per month
Asuncion
PYG 5,000,000 - 18,000,000
~40%
Ciudad del Este
PYG 5,500,000 - 20,000,000
~45%
Monthly gross. National average salary per year:
~PYG 48,000,000
Minimum wage
PYG 3,044,000/month (2026) ≈ $520/month
Paid:
Monthly
Extra pay
Aguinaldo
1 month salary mandatory
December
Collective agreements can set sector minimums above the national one. Check whether one applies to the role before you set the salary. Next step: estimate the full cost of an employee.
Who collects what, how often, and what happens when a payment is late.
Income tax brackets
0% up to PYG 50,000,000 / 8% / 10%
Tax year:
Calendar year (Jan 1 - Dec 31)
Filing calendar
Monthly by last day
Social security payments
March 31 (annual IRP return)
Income tax
By January 31
Employee tax certificate
Certificado de Retenciones
March 31
Annual return
Declaracion Jurada IRP
Late payment penalties
Late IPS: 2% monthly; late IRP: 0.1% daily + penalties
Who collects what
SET
Income tax (IRP)
IPS
Social security
Ministerio del Trabajo, Empleo y Seguridad Social (MTESS)
Labour law
The time off and paid leave every employee is entitled to by law. Budget for it when you compare an employee with a contractor.
Annual leave
Vacaciones
12 working days (1-5 yrs) / 18 days (5-10 yrs) / 30 days (10+ yrs)
Public holidays
~12 public holidays
Sick leave
Licencia por Enfermedad
IPS pays from day 4 at 50%
Maternity leave
18 weeks (126 days) maternity + 2 weeks paternity
Full pay IPS
The contracts you can use, and what ending an employment relationship costs.
Permanent
Contrato de Trabajo por Tiempo Indefinido
Fixed term
Contrato a Plazo Determinado
Independent contractor
Contrato de Locacion de Servicios
Collective agreements
Convenio Colectivo de Condiciones de Trabajo
Ending employment
Indemnizacion por Despido Injustificado
How it is calculated
15 days/year (under 10 years) / 30 days/year (over 10 years)
Calling someone a contractor does not make them one. If the role works like employment in practice, local authorities can reclassify it, with back contributions and penalties.
The errors that most often trigger back payments and penalties here, and what to do instead.
IPS Contribution on Total Remuneration
Risk Level: HIGH
Paraguay's IPS contributions apply to ordinary salary including all fixed allowances (housing, transport, food). Many employers contribute only on basic salary. IPS auditors use employment contract values to assess full contribution base, issuing retroactive demands.
Vacation Leave Calculation with Annual Salary Increase
Risk Level: MEDIUM
Paraguay's vacation pay must be calculated on the current salary at the time the leave is taken - not the salary at the time of accrual. Post-accrual salary increases must be applied to vacation payments. Employers who pay vacation at the accrual-period salary underpay.
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FAQ
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Ontop works with contractors, not employees. As Contractor of Record, Ontop handles contracts, compliance documents and payments for contractors in 150+ countries. To employ someone, you need a local entity or an employer of record. Ontop doesn't act as your employer of record.
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Employers pay contributions on top of gross salary. The cost table on this page shows the rates that apply here and a worked monthly example. A contractor with Ontop costs the agreed rate plus Ontop from $49 per contractor per month.
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Many countries require an extra month or an annual bonus for employees. The salaries section on this page shows the one that applies here and when it is usually paid. Contractors are paid what you agree in the contract.
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Employers withhold income tax and the employee's social security share every pay run, then pay them to the local authorities. The taxes section on this page lists the brackets, rates and filing deadlines that apply here.
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Yes. The contractor vs employee calculator compares the full cost of an employee, employer contributions included, with a contractor rate plus Ontop's monthly fee.
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When the work is project-based, you need to start fast or you don't have a local entity. If the person will work fixed hours, under your direction and only for you, local law may treat them as an employee, so hire them as one.
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Misclassifying employees as contractors, missing tax and social security deadlines, and ignoring collective agreements that set higher wage floors. The mistakes section on this page covers the ones that come up most often here.
Compare employer costs, taxes and contractor rules in nearby countries:
Ready to hire? See Ontop pricing or learn how to build a global team without an employer of record.
Ready to hire? See Ontop pricing or learn how to build a global team without an employer of record.