Explaining Paraguay’s tax reform

By BKM | Berkemeyer

In an effort to delve deeper into the implications of the new tax law that soon will be apply in Paraguay, BKM held a conference addressed to partners, businessmen and companies, carried out by its lawyer Federico Valinotti.

On June 19, 2019, the Paraguayan Senate approved a tax reform that was enacted on September 25, 2019, (Law No. 6380/19), which replaces the income tax on commercial, industrial and service activities (IRACIS for its Spanish acronym) and the income tax on agricultural activities (IRAGRO for its Spanish acronym) with a 10% business income tax (IRE for its Spanish acronym) that will be applied under two regimes (general and simplified).

The new law also creates a tax on the distribution of dividends, introduces changes on the Personal Income Tax, changes the Value Added Tax and creates a nonresident tax on income, profits or benefits obtained by individuals, corporations and other nonresident entities in Paraguay from the provision of services or investments. The INR rate is 15% and is imposed on the taxpayer’s Paraguayan-source net income by applying presumptive bases of 30%, 50%, 70% and 100%.