Actualidad Paraguay

Social security sistem for micro-entrepreneurs

Bill setting up a specific benefits system

In July Paraguay’s Congress approved the draft of a law to regulate the inclusion of owners and/or officers in charge of micro-enterprises* in the social security system.

By virtue of this bill, owners and/or those in charge of the micro-enterprises joining the Social Security system will have to pay 23% of their taxable income (defined in the bill as the highest monthly wage declared and paid to their employees, that in no event may be less than the legal minimum for non-specific diverse activities). In return, the social welfare institute, Instituto de Previsión Social (IPS), will provide cover for risks, accidents, common and occupational illness, maternity, disablement, old age and death.

The draft law aims to create a set of incentives that will provide micro-entrepreneurs with the legal certainties and protection they need to take the next step forward in setting up and expanding new companies and creating more jobs.

The bill is currently being revised again, this time in the Chamber of Deputies, having been approved by the Senate with some modifications due to the rate stipulated (23%) and its mandatory nature, which some thought might place an excessive burden on micro-entrepreneurs.

Once the bill has passed, it will come into force after 90 days have elapsed.


* Art. 5 of Act 4457/12 on MSMEs specifies that a micro-enterprise is defined as having a maximum of 10 people, where the owner and/or the family members work themselves, and turnover is equivalent to PYG 500 million (about USD90,000).