Paraguay approves a Audiovisual Promotion Law

By Berkemeyer Attorneys & Counselors

On July 5, 2018, the Paraguayan government approved the Audiovisual Promotion Law (No. 6,106), which aims to "promote the development and consolidation of audiovisual activity and the growth of cinematographic culture, as components of the cultural, social and economic development of the country”.

As part of strengthening Paraguay’s cultural policies, the law looks to collect taxes from over-the-top media services and music streaming services like Netflix and Spotify. The idea is that upon receiving monthly payments from their users such services automatically receive a tax withholding for the Value Added Tax (VAT).

Since last year lawmakers throughout the world are considering creating new taxes on digital-streaming services. In the United States several states like Georgia and Illinois have pushed for “Netflix tax” legislations to offset declining sales taxes and other revenue shortfalls. 

In Paraguay, Liz Del Padre Maciel, deputy minister of the national revenue agency (SAT), explained that the future VAT too be applied on Internet services doesn’t necessarily correlate on an increase of the services subscription. “That’s up to each company”, she said.