{"id":2342,"date":"2019-12-23T17:47:05","date_gmt":"2019-12-23T17:47:05","guid":{"rendered":"https:\/\/tucanoprod.com\/?p=2342"},"modified":"2019-12-23T17:59:21","modified_gmt":"2019-12-23T17:59:21","slug":"paraguay-tax-reform-2020-rates","status":"publish","type":"post","link":"https:\/\/tucanoprod.com\/en\/paraguay-tax-reform-2020-rates\/","title":{"rendered":"Paraguay Tax Reform 2020"},"content":{"rendered":"<p><span data-preserver-spaces=\"true\">To comply with the international tax transparency standards and to evade critics, Paraguay reformed its tax system; the amended rules will enter in force from January 2020.\u00a0<\/span><\/p>\n<h2><span data-preserver-spaces=\"true\">The Paraguay Tax Reform Law<\/span><\/h2>\n<p><span data-preserver-spaces=\"true\">The related law is the &#8220;Convenio Convencional No 6380\/19 Sobre Modernizaci\u00f3n y Simplificaci\u00f3n del Sistema Tributario&#8221;, also known as the &#8220;Tax Reform Law&#8221;. With the help of the new legislation, the Paraguayan tax system is in line with the guidelines issued by international organizations (as the Organization for Economic Cooperation and Development &#8211; OECD).<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">This law unifies criteria and establishes an adequate structure for the direct taxes, simplifying the process of determining the burdens and incorporating benefits for companies of loss carryover. A crucial point is the incorporation of valuation standards or the transfer pricing to adapt Paraguayan legislation to the international organizations&#8217; requirements to ensure transparency in global operations, according to Deloitte&#8217;s analysis.<\/span><\/p>\n<h2>Paraguay Business Income Tax IRE<\/h2>\n<p><span data-preserver-spaces=\"true\">The reform enhances the payment of direct taxes, like in the case of Business income tax (Impuesto a la Renta Empresarial-<\/span><strong><span data-preserver-spaces=\"true\">IRE<\/span><\/strong><span data-preserver-spaces=\"true\">) which joins three different tax types from 1 January 2020:\u00a0<\/span><\/p>\n<ul>\n<li><span data-preserver-spaces=\"true\">Commercial, Industrial or Services Income Tax (<\/span><strong><span data-preserver-spaces=\"true\">IRACIS<\/span><\/strong><span data-preserver-spaces=\"true\">), Tax on the Income of the Agricultural Activities (<\/span><strong><span data-preserver-spaces=\"true\">IRAGRO<\/span><\/strong><span data-preserver-spaces=\"true\">)\u00a0<\/span><\/li>\n<li><span data-preserver-spaces=\"true\">and the Income Tax of the Small Taxpayer (<\/span><strong><span data-preserver-spaces=\"true\">IRPC<\/span><\/strong><span data-preserver-spaces=\"true\">)<\/span><\/li>\n<\/ul>\n<p><span data-preserver-spaces=\"true\">Within this same category (<\/span><strong><span data-preserver-spaces=\"true\">IRE<\/span><\/strong><span data-preserver-spaces=\"true\">) is the Simplified Regime for Medium Enterprises (<\/span><strong><span data-preserver-spaces=\"true\">Simple<\/span><\/strong><span data-preserver-spaces=\"true\">) and the Simplified Regime of Small Companies (<\/span><strong><span data-preserver-spaces=\"true\">Resimple*<\/span><\/strong><span data-preserver-spaces=\"true\">) that will be applied according to the level of turnover of the companies, to facilitate the operations of MSMEs and encourage formalization, according to the <a href=\"https:\/\/infonegocios.com.py\/plus\/estos-son-los-cambios-que-se-vienen-con-la-nueva-reforma-tributaria\" target=\"_blank\" rel=\"noopener noreferrer\">Info Negocios<\/a>.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">The general tax rate of the IRE is ten per cent (10%) which is applied over the net income of the fiscal year. Moreover, the &#8220;new IRE partially replaces the source system currently in force by the worldwide system of taxation&#8221;.<\/span><\/p>\n<h3>Paraguay Income Tax<\/h3>\n<p><span data-preserver-spaces=\"true\">The Paraguayan Personal Income Tax (<\/span><strong><span data-preserver-spaces=\"true\">IRP<\/span><\/strong><span data-preserver-spaces=\"true\">) will have progressive rates of 8, 9 and 10% when the gross income of the taxpayer exceeds 80 million guaran\u00edes in the year.\u00a0<\/span><\/p>\n<h2><span data-preserver-spaces=\"true\">Paraguay Tax on Dividends and Utilities (<\/span><strong><span data-preserver-spaces=\"true\">IDU<\/span><\/strong><span data-preserver-spaces=\"true\">)<\/span><\/h2>\n<p><span data-preserver-spaces=\"true\">The reform created the Tax on Dividends and Utilities (<\/span><strong><span data-preserver-spaces=\"true\">IDU<\/span><\/strong><span data-preserver-spaces=\"true\">), the tax rate is 8% on the distribution of profits for Paraguayan residents, but if the firms do not distribute profits, they will not pay this tax. Moreover, non-Paraguayan residents will pay a 15% rate. The effective tax rate for the distribution and remittance of dividends for non-Paraguayan residents is decreased, from 27.32 per cent to 23.50 per cent. Important to notice that companies with a turnover that exceeds G. 2 billion in billing will have to contribute to the IDU.<\/span><\/p>\n<h3>Paraguay VAT 2020<\/h3>\n<p><span data-preserver-spaces=\"true\">The Paraguayan Value Added Tax (VAT, Impuesto de Valor Agregado &#8211;\u00a0<\/span><strong><span data-preserver-spaces=\"true\">IVA<\/span><\/strong><span data-preserver-spaces=\"true\">) will not change significantly. The payment of IVA to public transport companies is still tax-exempt, to maintain the ticket price and the tax rate of office rent increases from 5% to 10%. (The general IVA rate in Paraguay is 10%, but there is a decreased 5% rate on essential food products, medicines and the rent of the family home. A deduction of up to 30% of the tax credit is allowed for personal service providers to buy vehicles.). The new legislation eliminates the VAT refund for agro-exporters.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">The government will also implement the Non-Resident Income Tax (<\/span><strong><span data-preserver-spaces=\"true\">INR<\/span><\/strong><span data-preserver-spaces=\"true\">) &#8211; for companies like Uber, Netflix, Spotify, etc. &#8211; the foreign digital product providers will pay a 15% fee. The Personal Income Tax (<\/span><strong><span data-preserver-spaces=\"true\">IRP<\/span><\/strong><span data-preserver-spaces=\"true\">) will have an 8% rate of income and capital gains, and between 8% to 10% on income on providing services.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">The Selective Consumption Tax (ISC) is increased for tobacco, and its scope reached the import of the aircraft and vessels with a value over USD 30,000 and several packaged foods products with additional high calories.<\/span><\/p>\n<h3><span data-preserver-spaces=\"true\">The objective of the Paraguay Tax Reform 2020<\/span><\/h3>\n<p><span data-preserver-spaces=\"true\">The economically active population is 3,500,000 people in Paraguay. However, there are only about 871,000 registered taxpayers. When the new system is fully implemented, the State will receive about 300 million USD more, according to the estimates of the Cabinet.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">*Resimple: For sole proprietorships (unipersonal companies) that reached a gross income below G. 80,000,000 in the previous fiscal year.<\/span><\/p>\n<p><a href=\"https:\/\/tucanoprod.com\/en\/paraguay-income-tax-personal-corporate\/\" target=\"_blank\" rel=\"noopener noreferrer\">You can read here all the essential information on the Paraguayan Taxes!<\/a><\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>To comply with the international tax transparency standards and to  [&#8230;]<\/p>\n","protected":false},"author":1,"featured_media":2343,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[401,402],"class_list":["post-2342","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-second-passport","tag-paraguay-business-income-tax-ire","tag-paraguay-dividend-tax-idu"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Paraguay Tax Reform 2020 - New Taxes and Rates<\/title>\n<meta name=\"description\" content=\"Paraguay tax reform in 2020: all the new taxes and rates, detailed information. 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