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Paraguay Reveals What Transfer Pricing Study Should Include

26th April 2022

In 2019, Paraguay’s tax authorities released new transfer pricing rules that included a mandatory transfer pricing report that went into effect on January 1, 2021, with the first report due in 2022. The problem? The law didn’t specify exactly what information must be included in the transfer pricing study or an exact date for submission—until now. On April 7, the tax authority released General Resolution No. 115/22, which reveals those important details.  

First off, taxpayers with gross income of more than PYG10 billion (roughly $1.5 million) must submit—not merely prepare—a transfer pricing report. (Of course, even if you’re not required to submit a report, it may make sense to prepare one as the tax authority can always request documentation to support arm’s length transactions.) As for what must be included in the study, there are no real surprises. The study is divided into five mains sections: First, you’ll include general information about your company and related parties, information on the MNE group, specific information about the taxpayer, a functional analysis, which highlights functions, assets, and risks, relevant to the transaction, and an economic analysis that shows how you determined arm’s length pricing. As for when the reports are due, for tax years ending April 30, June 30, or December 31, 2021, the transfer pricing report is due October 31, 2022. For tax years ending April 30, June 30, or December 31, 2022, and onward, the report is due within seven months after the company’s tax year ends. Important details, don’t you think?