Worldwide Corporate Tax Guide 2022
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Paraguay ey.com/GlobalTaxGuides
Asunción EY Mail address: Casilla de Correos 2481 Asunción Paraguay
GMT -3 +595 (21) 664-308 Fax: +595 (21) 608-985
Street address: Edificio Citicenter Av. Mcal. López 3794 esq. Cruz del Chaco Piso 6 Asunción Paraguay Principal Tax Contacts
Gustavo Colman Alvaro Hoeckle Tanya Moreno Sven Ratzlaff
+595 (21) 664-308 Mobile: +595 (971) 942-222 Email: gustavo.colman@py.ey.com +595 (21) 664-308 Mobile: +595 (985) 107-210 Email: alvaro.hoeckle@py.ey.com +595 (21) 664-308 Mobile: +595 (981) 183-616 Email: tanya.moreno@py.ey.com +595 (21) 664-308 Mobile: +595 (972) 223-226 Email: sven.ratzlaff@py.ey.com
A. At a glance Business Income Tax Rate (%) Capital Gains Tax Rate (%) Withholding Tax (%) Dividends Interest Paid to Foreign Financial Institutions Royalties from Patents, Know-how, etc. Insurance and Reinsurance Personal Transportation Fares, Telephone Charges and Internet Charges Paid from Paraguay International News Agencies Freight Charges Other Payments Not Specified Above Net Operating Losses (Years) Carryback Carryforward
10 10 (a) 15 (b) 4.5 15 4.5 4.5 4.5 4.5 15 0 5
(a) The Paraguayan tax law does not have a separate capital gains tax. Capital gains are subject to the general regime for business income tax and accordingly are taxed at the same rate of 10%. (b) The 15% withholding tax applies to dividends paid abroad to nonresidents.
B. Taxes on corporate income and gains Business income tax. Tax is levied on Paraguay-source income
of corporations and commercial enterprises. Income is consid-
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ered to be from a source in Paraguay if it is derived from capital, property or rights in Paraguay or from a business in Paraguay. For companies domiciled in Paraguay, income derived from capital invested abroad is considered Paraguayan-source income and, accordingly, subject to business income tax. Income earned from farming activities in Paraguay is also subject to business income tax under the rules established by Law 6380/19. Rate of business income tax. Under Law 6380/19, the business
income tax rate is 10%.
The Paraguay incentive tax law provides an exemption from the 15% withholding tax mentioned above if an investment of greater than USD5 million is made in industrial activities through a specific Bi-Ministerial Tax Resolution. Capital gains. The Paraguayan tax law does not have a separate
capital gains tax. Capital gains are subject to the general regime for business income tax and accordingly are taxed at the business income tax rate of 10%.
Administration. The tax year is the calendar year. Returns must be filed within four months after the end of the financial year. Penalties are imposed for failure to comply with these rules. Dividends. The distribution of dividends is subject to dividend tax of 15% for non-Paraguayan entities and 8% for local entities.
C. Determination of trading income General. Taxable income is based on profits from the financial
statements after tax adjustments. Expenses are generally deductible if they are incurred for the purposes of the business and in the production of taxable income. Inventories. Inventory is valued at the cost of production or
acquisition. The cost may be calculated under the average-cost or first-in, first-out (FIFO) methods. After choosing a method, a corporation may not change it without prior authorization.
Tax depreciation. Depreciation must be calculated using the straight-line method. Relief for losses. The tax law allows losses to be carried forward
for a five-year-period.
Groups of companies. Paraguayan law does not contain any mea-
sures for filing consolidated returns or for relieving losses within a group.
D. Other significant taxes The following table summarizes other significant taxes. Nature of tax
Value-added tax; imposed on goods sold, including imports, and services rendered in Paraguay; exports are exempt; in certain circumstances, payments of royalties are subject to the tax Standard rate
Rate (%)
10
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Basic consumer food items, pharmaceutical products, and the leasing and sale of real estate for the family home Excise tax on certain manufactured and imported goods, such as cigarettes, liquor and petroleum products, among others Social security contributions for nonbank institutions, on payroll; paid by Employer Employee
Rate (%)
5 1 to 50 16.5 9
E. Foreign-exchange controls The central bank does not control the foreign-exchange market. A free-market rate of exchange prevails.
F. Tax treaties Paraguay has entered into double tax treaties with Chile, Qatar, Taiwan, the United Arab Emirates and Uruguay. It has also entered into a tax treaty on international freight with Argentina and tax treaties on international air freight with Belgium and Germany.