From the year 2021 it has been in force the “Regime of Transfer Pricing” in Paraguay, by virtue of which, starting from the year 2022, the taxpayers affected by the Entrepreneurial Income Tax (“IRE”) affected to such regime must comply with the formal obligations that we detailed in this report.
The taxpayers affected by the Regime of Transfer Pricing that are forced to file the Technical Study of Transfer Pricing (“ETPT”)* for the fiscal year 2021 are:
| Taxpayers affected by the Regime of Transfer Pricing | ||
| Requirements | Gross Income higher than | Equivalent in USD |
| Those who have performed operations with related parties resident in a foreign country. | G 10,000,000,000 | Approx. USD 1,400,000 |
| Those who have executed operations in 2021 with related parties in the country, when the operation for one of the parties is exonerated, exempted, or not affected by the IRE. | G 10,000,000,000 | Approx. USD 1,400,000 |
| Those who have performed operations with maquila companies or users of free trade zone and who have not been detracted from the assumption of binding. | N/A | N/A |
*They are exempted from the obligation those taxpayers who settle the IRE under the SIMPLE or RESIMPLE Regime.
- Formal obligations of the Taxpayer affected by the Regime
I. Technical Study of Transfer Pricing (Local File)
An ETPT shall be filed to the Undersecretary of Taxes (SET) that shall consist in an detailed analysis of the operations subject to the regime of Transfer Pricing, which shall contain the description of the Taxpayer and the multinational group to which it belongs, the details of the operations with or between related parties and if there is an economic analysis, among other issues arranged by the rule.
In case the Taxpayer is engaged in exports of the goods subject to the special method for certain commodities according to the dispositions established by numeral 7 of the Article 38 of the Law (the “Numeral 7”), everything related specifically to such operations shall not have to be part of the ETPT, because it shall have to be reported through a special Affidavit.
However, the Taxpayer does have to indicate in the ETPT the amount corresponding to such exports within the total of the transactions conducted with its binding or related parties as well as the type of binding they have.
The Technical Study shall have to be filed in pdf format and the work papers used for the development of the analyses shall have to be filed in Excel format with the formulas that were applied in order to allow the verification of the calculations or relations used or applied.
- Masters File and Country by Country Report
It is important to point out that, even though the effective rule does not establish the obligation to file documents such as the Masters File or the Country by Country Report in the ETPT it shall be informed on the multinational group and its structure, as well as the fiscal and the financial situation of the same one.
- Informative Affidavit DJI-Num 7
Through the Affidavit form DJI-Num 7, those Taxpayers that conduct export operations of soybean; of products derivatives from soybean (oils, flours, pellets and expellers); corn; rice and wheat, affected by the Numeral 7, must declare the exports conducted on these goods in every month
Information shall have to be rendered on the date of shipping fulfilled, quantity exported, price of reference, among other information.
II. Expiration of the presentations to the Tax Administration
- Technical Study of Transfer Pricing
It must be filed annually according to the closing of the fiscal year of the Taxpayers of the IRE.
In the fiscal year of 2022, exceptionally, the Taxpayers of the IRE with the closing of the fiscal year by 30/04/2021, 30/06/2021 and 31/12/2021 shall be able to file the ETPT until the date 31/10/2022.
Starting from the year 2023, the presentation of the ETPT referring to the previous fiscal year shall be made according to the following:
| Closing of the fiscal year of the obliged subject | Month of filing | ||
| 31 December | July of the next fiscal year following the year declared | ||
| 30 April | November of the fiscal year that is declared | ||
| 30 June | January of the next fiscal year following the year declared. |
The SET shall consider as complied the obligation to file the ETPT once the same receives the confirmation by the Authorized Professional of Transfer Pricing recorded at the Registrar (“PAPT”) through the Marangatú System using their own password of confidential access for users. To that effect, it shall be taken into account the date of presentation made by the obliged subject.
- Payment of the difference in favor of the Tax Authority by adjustments related to Transfer Pricing
In case there is a difference in favor of the Tax Authority arising from the adjustments exposed in the ETPT, the Taxpayer shall have to file a letter in which this situation is explained, enclosing a pro forma declaration.
Exceptionally for the previously indicated fiscal years, the deadline to file such letter extends until the date 31/10/2022 and the expiration for the payment of the cited difference according to the ETPT shall be until the date 30/11/2022.
- Communication of Detraction from alleged binding
In order to detract the alleged binding between the Taxpayer of the IRE and the party residing in a foreign country, when this is in a country or jurisdiction of low or null taxes, of if it is usury from free trade zone or maquila company, the Taxpayer shall file to the SET the documents established by the regulation in force within the following deadlines:
| Closing of the fiscal year of the obliged subject | Month of filing | ||
| 31 December | March of the next fiscal year following the year declared | ||
| 30 April | July of the fiscal year that is declared | ||
| 30 June | September of the fiscal year that is declared. |
Exceptionally, for the Taxpayers that have the closing of the fiscal year by the dates 30/04/2021, 30/06/2021, 31/12/2021, 30/04/2022 and 30/06/2022, the documents of reference shall be filed to the SET within the following deadlines:
| Closing of the fiscal year of the obliged subject | Month of filing | ||
| 30 April, 2021 30 June, 2021 31 December |
May/2022 | ||
| 30 April | July/2022 | ||
| 30 June | September/2022 |
- Affidavit DJI-Numeral 7
The Taxpayer must file every month to the SET this Affidavit detailing the exports of the previous months of the goods subject to Numeral 7, even in those months in which there were no exports made.
Dates of exceptional expirations of the obligation to inform the exports of goods subject to the numeral 7:
| Exports made in | Month of Filing | ||
| January, February, March | September 2022 | ||
| April, May, June | October 2022 | ||
| July, August, September | November 2022 | ||
| October, November | December 2022 |
- Registrar of contracts of purchase-sale of goods subject to Numeral 7
The registration form shall be completed within the next 15 working days of the next month following the month of its execution, update, modification or quotation of price of the respective contract.
Once the contract is registered, it shall have to be filed in pdf format and within the next 5 calendar days, the contracts and updates properly subscribed by the parties by handwriting or by means of digital signature.
All that shall have to be filed through the System of Tax Management Marangatú, through the Password of Confidential Access of User.
III. Regime of APAs (joint determinations of prices of international operations)
Los APAS or correlative adjustments could be made within the framework of the Agreements to Avoid the Double Impositions in force or in the future that Paraguay may subscribe.
IV. Professionals for the elaboration of the ETPT
From BKM | Berkemeyer we assist our clients in the initial advising for the introduction of policies of transfer pricing, as well as in the elaboration and presentation of the ETPT to the SET, in addition of rendering regular advise in the preventive revision of inter-company operations. For any assistance needed on this matter you may contact our specialists to: mauro.mascareno@berke.com.py, carlos.vargas@berke.com.py, federico.valinotti@berke.com.py o, rodrigo.gomez@berke.com.py.
