On 03/24/22 Paraguayan Tax Administration (hereinafter, “SET” or “Tax Administration”) issued General Resolution No. 114/2022 (the “RG”), which brings the following novelties:
Under the RG, SET repealed the previous regulation on the matter (RG No. 109/2021) and established new requirements for the registration of non-resident digital service providers (the “Register”), in which those non-residents who provide digital services in the country to end consumers (the “B2C Provider”) must register.
The provisions of the RG, in line with Decree No. 6515/2021, affects service providers such as Netflix, HBOgo, Spotify, Amazon Prime, Google, YouTube, Facebook, Instagram, Deezer, PayPal, Twitter, Apple, Airbnb, Uber, Bolt. Nonetheless, when the services are provided to Corporate Income Tax (“IRE”) taxpayers, these must withhold the Non-Resident Income Tax (“INR”).
Therefore, the RG maintains the obligation of the B2C Provider to communicate to SET the beginning of the rendering of its services in the country within a term no longer than 10 days from such moment. For such purpose, the B2C Provider or its representative (the “Representative”) must submit to SET to the e-mail address: inr_serviciosdigitales@set.gov.py, a form that will be enabled for said purpose and the following data:
- Full name or company name and commercial name, depending on whether the B2C Provider is an individual or a legal entity.
- Address of the B2C Provider.
- Representative’s full name.
- E-mail address and telephone number to be declared to SET.
- Digital service provided.
- Country from where the service is provided.
- Identify the URL or hosting, web page, platform, APP or, from where the service is provided.
- Declaration of consent of the taxpayer to provide their personal data through the registration, in Spanish language.
In addition, the following must be attached in PDF format:
- Proof of tax residency of the B2C Provider issued in accordance with the regulations in force in their country of residence.
- Identification document of the B2C Provider in the case of an individual.
- Document(s) proving the existence of the foreign company and the legal representation.
- Power of attorney (“PoA”) registered at the Public Records (“DGRP”).
Among the most important changes, the RG finally clarifies:
(i) That the representative in Paraguay of the B2C Provider must be an individual;
(ii) That the PoA granted must be registered before the DGRP; and,
(iii) That the documents in a language other than Spanish must not be apostilled, being sufficient their translation into Spanish by a certified public translator.
Another novelty is that through the RG it is established that the B2C Provider may choose not to appoint a representative in the country, in which case, it must still register in the Register complying with the requirements and procedures mentioned above and must directly settle and pay the INR through an international wire transfer to the account that the Tax Administration will communicate to it by e-mail, as mentioned below. This is the first time that tax payments can be officially made through international bank transfers.
Furthermore, the RG establishes that the B2C Provider, directly or through its representative, must submit to SET a tax return (“TR”) and pay the INR corresponding to the taxable operations of each month, until the 15th day of the month following the month which is declared.
In addition to filing the TR, the B2C Provider or its representative must inform SET, monthly, via e-mail, the detail of the commissions received, and the amount charged for each service rendered in the country.
If the B2C Provider did not obtain income for its services in Paraguay in each month, it must also inform such situation to SET via e-mail.
Regarding the payment of the tax, it is established that the B2C Provider duly registered, directly or through its representative, must pay the INR to SET from the date on which it started its operations in the country, calculating the amount to be paid to the tax authorities on a monthly basis.
For this purpose, after filing the TR, SET will generate and send the payment receipt to the e-mail address declared in the Register, so that the representative pays the tax, or the B2C Provider makes an international wire transfer to the account indicated by SET, when it does not have a representative in Paraguay.
Another interesting point is that SET clarified that the registration in the Registry does not generate a permanent establishment in the country.
In addition, it is important to note that despite the above-mentioned novelties, SET maintained the previous transitory provision by which the B2C Provider that was already operating in Paraguay as of March 24, 2022, has time to appoint a representative until March 31, 2022.
Finally, we remind that the late filing of the TR and/or payment of the tax, would result in the imposition of penalties to the B2C Provider by the Tax Administration.
For any assistance you may need in this regard, please contact our specialists at mauro.mascareno@berke.com.py, carlos.vargas@berke.com.py, federico.valinotti@berke.com.py, or rodrigo.gomez@berke.com.py.
