Small Business Taxation in Paraguay: Understanding Your Obligations

Taxpayers Who May Be Considered Small

The following are considered small taxpayers:

• Stores
• Kiosks
• Haberdasheries
• Sellers of drinks and meals
• Small industries (homemade clothing, footwear, woodwork)
• Hairdressers
• Garages
• Car parks
• Bars and restaurants
• Rental property owners

All these aforementioned activities must not exceed an annual income of GS. 100,000,000. If you exceed your income in a year, you should change the form of tax and switch to IRACIS. Similarly, when importing or exporting, you must also pay tax on IRACIS.

Law 2421/04 Fiscal Adequacy

New changes:

• New form formats
• New codification of the RUC
• New pay periods - perpetual calendar
• Enabling new network billing PRONET ¨ SETE
• Internet accessory for paying taxes
• Agent software for data (customers and suppliers)
• Software to record and calculate taxes, fines, and accessories
• Software to request RUC report, receipt of payment, statement, and others

Incurrence of VAT

VAT applies to:

• The sale of goods
• The provision of services
• Imports

Tax Legal Relationship

All tax payments must be established for disposal. Example: payment to the Income Tax (IRACIS).

The Subject of the Tax Liability

The active subject is the state; the taxpayer is the one who pays the tax.

Birth of the Tax Liability of Income Tax

The birth is set at the close of the fiscal year (January to December), so we have:

• For commercial, industrial, and non-personal services, the tax administration set the deadline for this activity as 12/31 of each year.
• For the activities of cooperative sugar mills and those that industrialize agricultural products, the deadline given by the tax authorities for this activity is 04/30 of each year.
• For insurance and reinsurance activities, soft drinks, and beer factories, the deadline given by the tax administration is 06/30 of each year.

Forms of Tribute and Considerations

Total net income for the year, alleged rate, net income, general rate, tax paid.

1. Consulting and supervision of public works, NAC, BINA: 30%
2. Lease of property: 30%
3. Fuel Transport Service: 20%
4. Construction Company: 15%
5. Sale of property and batch system: 15%
6. Broker changes (Small money changers): 3%
7. Tobacco company: 10%

1, 2, 3, 4, 5, 6, and 7, all these advance taxed.

8. Public transport passenger: 10% Income

Urban Service: NO TAX ADVANCE

VAT: 7.5%