Comparative study of the structure of the personal income tax of individuals in the countries of Paraguay and Brazil

Abstract

The Personal Income Tax affects individuals in Paraguay and Brazil. While Brazil has a complex tax system divided into the Union, States, Federal District, and Municipalities, Paraguay has a simpler system that also includes this tax. This comparative study analyzes the structure of the Personal Income Tax in both countries during 2021. A qualitative approach was used with a non-experimental and descriptive design, employing documentary research and literature review. For data analysis, the categorization of tax obligation elements and grounded theory were applied. The main results demonstrate that there are similarities between Paraguay's Personal Income Tax and Brazil's Individual Income Tax. Both identify the individual as the taxpayer, tax the income earned by them, and are levied on income generated within the country. The tax due is determined annually, with the taxable base resulting from the difference between income earned and expenses incurred. In both countries, tax rates are progressive, proportional to net income. However, there are differences in the amounts established for tax liability. In Brazil, the threshold starts at 22,847.77 reais (approximately 29,702,000 guaraníes), while in Paraguay it is set at 80,000,001 guaraníes for personal services and 20,000,001 guaraníes for capital gains from the sale of movable assets. In Brazil, employers practice withholding tax from dependent service providers monthly, according to an income scale, while independent workers do this through the carnê-leão, among other methods.