Do you want to incorporate in Paraguay? Reading this will help you becoming knowlegeable on the specific tax laws and rates for a LLC which is the most common legal entity in Paraguay.
Paraguay taxes corporate income on a territorial basis. This means that income accrued offshore, from our research, and these things do change, is not subject to taxation. However, income from interest, commissions, and capital gains accrued outside the country, are considered local-source income and subject to Corporate Income Tax. Taxes are low in Paraguay because the income corporate tax rate is 10%. This ranks Paraguay as 34th overall in terms of corporate tax rate worldwide.
The value added tax (VAT) rate is 10.00%, which ranks Paraguay as 47th overall in terms of VAT taxation rate internationally. In terms of other taxation, an employer will contribute 16.5% to the equivalent of a social security fund and an employee will contribute 9.00%. The overall complexity of the tax system is medium. This is measured by average time to comply with a country's labor tax requirements is as it is 96hours. Contributing to this is the number of yearly labor tax payments, which is 1 in PY.
Thin capitalization laws are not in effect. This refers to any sort of laws on companies' debt-to-asset ratios.
Distribution of dividends is subject to a 5% additional tax charged on source. Dividends received are usually not considered taxable income. Stock dividends are not considered taxable income, except when represent more than 30% of taxable income of an investor. Dividends are payments of a company profit, voted on by the board, to shareholders. Dividends can be issued as shares of stock, cash payments, or other property.
Capital Gains are considered business income and therefore taxed at a flat rate of 10%. A capital gains tax is levied on the profits that a corporation or natural person realizes when he or she sells sells a capital asset for a price that is higher than the purchase price.
The interest withholding tax rate is estimated at 15%. This should be interpreted that the taxman expects relevant legal entities to withhold 15% of interests paid abroad. The dividends withholding tax rate is 15%. This should be interpreted that the tax authorities expects LLC's to withhold 15% of dividends remitted abroad. The royalties withholding tax rate 15%. This means that the taxman expects companies to withhold 15% of payments abroad on royalties.
There is no known tax on wealth in Paraguay. There are no inheritance and transfer taxes. There is a real property tax. There are many well known credits for innovation, certain economic activities and free trade areas that include tax exemptions and incentives in Paraguay.
The above is not tax or legal advice for your particular circumstances. We are able to help you to find a tax advisor in Paraguay who can give you the proper advice and help you need. Ready to get started? Click the free consultation button above or press incorporate now if you are in a hurry.
It takes approximately 138 hours to file and prepare documents for a Paraguay Civil law (Napoleonic).
The corporate tax is approximately 10% which is 35 in the world.
Owners of a company in Paraguay are not allowed to carry back a loss .
The vat rate in Paraguay is 10% which ranks 46 in the world.
The underlying legal code in Paraguay is civil law (napoleonic) law. You will want to get some local advice as to how to best structure a company in Paraguay. One is permitted to electronically sign documents.
The abbreviation PY is for Paraguay and the most common company structure in Paraguay is a LLC.
The average time to incorporate is 8 weeks to put together the paperwork and file a LLC in PY. The min share capitalization is 0, This means you don't have any minimum share capital. The types of currencies you can use to capitalize your company is frequently PYG, USD, EUR, BRL, ARS, and any legal currency.
Yes, one is allowed to re-domicile a LLC from PY. You are usually allowed to change the jurisdiction of the company, pending certain procedures.
There must be at least 1 shareholder. This makes it possible for you to own a LLC in PY by yourself. Corporate Shareholders are permitted, which means you can have a legal entity as a shareholder. Foreign ownership is allowed, up to 100% of the ownership of the legal entity.
A legal entity is only required to have one director. Furthermore, corporate directors are not permitted. Directors should not have an expectation of privacy, as they are not kept private in Paraguay. There is a body of law which requires companies to hold an annual meetings of shareholders.
A registered office is a requirement, whom the company will pay yearly, for an office which can receive any lawsuit papers on behalf of the business. However, a corporate secretary is not required in PY, which can save the company money if you can perform basic corporate governance internally.
There is a requirement to file accounts to relevant authorities. On that note, there is oftentimes a requirement to have these accounts audited.
Thin capitalization rules are not in effect.
A corporate director is not permitted, meaning this country is not a good option if you are setting up a structure where you want to protect director liability.
The directors are disclosed in the public registry of Paraguay, Intuit Management Consultancy. Shareholders are disclosed in the Intuit Management Consultancy.
Typically companies take 8 weeks to setup and there are 1 director(s) required and 1 shareholder(s) required at the time of incorporation.
Overall we think Paraguay is a good option and have given it a score of 77 as an IO score, using the Incorporations.IO proprietary formula.
We can help you form a company in Paraguay. Click the button above for a no-obligation quote. We will provide you with all the necessary documents to open a bank account as well as a registered office in Paraguay, which is required by law.