Paraguay: Digital Services by Foreign Suppliers Subject to VAT Withholding in 2020

The Paraguayan congress approved the law N° 6380/19 which among other things mandates local credit card companies to collect and pay to the tax administration the VAT applicable to sales of digital services when the supplier is a foreign company and the service is considered as provided in the country. For that purpose, the law considers a service consumed in the country when the IP address or the SIM card of the electronic device used to consume the service is located in Paraguay. Also, the service will be considered consumed in Paraguay when the address of the client is located in Paraguay or the bank account or the financial entity used to pay the service is located in the country. The law provides that when the payment is made via banks, financial entities, exchange houses, payment processors, or similar entities, they will be responsible for the perception and payment of the applicable VAT to the tax administration. Finally, the law provides that the tax administration will issue the regulations necessary for the application of these changes.   

You may find the law N° 6380/19 at this link. 

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Author

Ramón Frias

Ramón is a Tax Counsel on the Regulatory Analysis team at Sovos. He is licensed to practice law in the Dominican Republic and is a member of the Dominican Bar Association. He has a Certificate Degree from Harvard University as well as a J.D. from the Universidad Autonoma de Santo Domingo. Ramon has written a number of essays about tax administration and has won the first prize in the international essays contest sponsored by the Inter American Center of Tax Administrations (CIAT). Prior to joining Sovos, Ramon worked for more than 10 years in the Department of Revenue of the Dominican Republic where he served as Deputy Director. He is proficient in French and Spanish.
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