Paraguay legal and accounting and tax considerations in 2024

1. The standard corporate income tax rate in Paraguay is 10%. An additional 5% tax is levied on the net amount credited or paid to partners, owners or shareholders when profits are being distributed;
2. Dividends distributed to non-residents individuals and entities are subject to a 15% withholding tax;
3. The VAT rate is levied at a standard rate of 10% and the returns are to be filed on a monthly basis. All businesses established in Paraguay are required by law to register for VAT;
4. Employers are required to remit a total of 16.5% of the total income of an employee towards the employee’s social security. The employers are also obligated to withhold the 9% employee portion;
5. Real property in Paraguay is subject to a 1% annual tax of the cadastral valuation, collected by the local authorities. Surtaxes also apply for specific types of property at an annual rate of 0.3% on the transfer of immobile property;
6. Withholding tax rates on payments to resident companies are i) 15% on dividends ii) 15% on royalties iii) 15% on interests;
7. A Paraguayan company is exempt from i) payroll tax ii) capital duty iii) foreign tax credit iv) stamp duty;
8. The Paraguayan fiscal year is simultaneous with the calendar year. Companies are required to submit their tax returns within 4 months after the end of the fiscal year. Defaulters are subject to a penalty of 4% to 14% of their total tax due;
9. It is important our Clients’ are aware of their personal and corporate tax obligations in their country of residence and domicile; and they will fulfill those obligations annually. Let us know if you need Healy Consultants’ help to clarify your annual reporting obligations.