Paraguay offers very affordable living costs, with a Cost of Living Index of 28.9 compared to NYC (100). Groceries (28.96) and restaurant prices (26.78) are also notably low.

The housing market is considered expensive relative to income, with a Property Price to Income Ratio of 12.44 years. However, the Rent Index is very low at 8.93, indicating more affordable rental options.

The Purchasing Power Index of 56.02 (NYC = 100) indicates a low average income relative to living costs in a high-income city like New York. This suggests that while costs are low, local purchasing power is also limited.

Paraguay operates a territorial tax system, taxing only Paraguayan-sourced income. Personal income tax rates are progressive, at 8% for income between PYG 36M and 120M, and 10% for income above PYG 120M. Corporate tax is a flat 10%, and the standard VAT rate is 10%, with a reduced rate of 5% for essential goods. Property tax is notably low, typically around 1% of the cadastral value annually.

Paraguay's business environment has shown significant improvement, ranking 55th globally in the 2026 Index of Economic Freedom. The country offers pro-business policies, a low corporate tax rate of 10%, and various investment incentives. While a growing startup ecosystem exists, particularly in Asunción, challenges like bureaucracy and regulatory frameworks that can lag behind global standards are still present.

Paraguay's social security system, managed by the Instituto de Previsión Social (IPS), provides coverage for employed persons, including healthcare, old-age, disability, and survivor pensions, as well as maternity benefits. Employee contributions are 9% of gross monthly earnings, with employers contributing 16.5%. However, there is currently no unemployment insurance program. A non-contributory old-age pension is available for needy citizens.

Paraguay has a formal deposit guarantee framework through the Fondo de Garantia de Depositos, which covers deposits up to 75 times the monthly minimum salary. As of February 2026, this equates to approximately PYG 224,654,400 (around USD 29,529). The banking sector is generally sound, well-capitalized, liquid, and profitable, with oversight from the Central Bank of Paraguay. Efforts are ongoing to strengthen AML/CFT frameworks.