The Transfer Pricing Regime In Paraguay

March 8, 2021

The transfer pricing regime in Paraguay is established in Law 6380 on “Modernization and Simplification of the National Tax System” (hereinafter, the Law), as well as in the Regulation of Chapter III “Special Rules for Valuation of Transactions” established by Decree No. 4644, in January 2021.

The latter introduces specifications regarding transfer pricing rules, such as those related to taxpayers, countries or jurisdictions considered of low or no taxation, as well as those related to formal obligations in such matter, among others.

The purpose of this article is to present the main aspects of this regime in Paraguay.

Scope of application of transfer pricing

Taxpayers that carry out the following transactions are under the scope of the transfer pricing rules in Paraguay:

  • Transactions with related parties who are residents abroad, or in case they reside in the country, the transactions are considered as exempt from income tax for either of the two parties.
  • Transactions carried out with parties residing in countries considered as low or zero taxation countries.

Transfer pricing methodology in Paraguay

In Paraguay there are seven transfer pricing methodologies, which are detailed below:

  • Uncontrolled Comparable Price Method.
  • Resale Price Method.
  • Added Cost Method.
  • Profit Sharing Method.
  • Residual Profit Sharing Method.
  • Transaction Operating Profit Margin Method.
  • Internationally Traded Goods Method.

Formal transfer pricing obligations

According to Article 37 of the Law, taxpayers within the scope of transfer pricing must submit a Technical Study if:

  • Their gross income in the immediately preceding fiscal year has exceeded G. 10,000,000,000,000 (Ten billion guaranies). In case transactions have been carried out with parties domiciled in jurisdictions considered low or no taxation, even if it does not exceed such threshold, taxpayers are obliged to do so.

Regarding the minimum content of this report, the Law states that it must include the identification of the taxpayer, the related parties, information on functions, assets and risks, information on related transactions and analysis methodology.

In addition, Article 27 of the Regulations states that the Technical Study must contain the following information:

  • Analysis and documentation supporting related party transactions.
  • Information on the multinational group and its structure.
  • Financial and tax situation of the multinational group where the members of the group operate, provided that this information cannot be obtained from an exchange of tax information.

However, the regulation does not establish a deadline for its presentation, so it must be available upon request of the Tax Administration.


According to Article 29 of the Regulations, the infraction established in Law N°125/91 may be applied for not submitting documentation when requested in a control process by the Tax Administration, which may lead to a fine of between Gs. 50,000 (Fifty thousand guaraníes) and Gs.1,000,000 (one million guaraníes).