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October 29, 2021

Paraguayan Tax Authority issues new transfer pricing rules

The resolution establishes new rules for performing a transfer pricing analysis and clarifies “related parties.”

The Paraguayan Tax Authority (Subsecretaría de Estado de Tributación) issued General Resolution No. 96/2021, which establishes new rules for applying the transfer pricing methods in Paraguay, among other things.


Law No. 6380, enacted in 2019, established transfer pricing rules as part of a major tax reform in Paraguay. The rules went into effect 1 January 2021. The rules included provisions on the arm’s-length principle for transactions between related parties, and thus preventing tax base erosions.

Decree No. 4644/20, issued 30 December 2020, regulated the transfer pricing regime. The decree clarified the transfer pricing methods.

General Resolution No. 96/2021

General Resolution No. 96/21 establishes new rules taxpayers should consider when performing a transfer pricing analysis, such as rejecting comparables with operational losses.

The resolution also limits taxpayers to information that relates to a non-controlled operation (i.e., an operation between two unrelated parties that is comparable to the controlled operation under examination) and corresponds to several tax years when (1) they need to analyze business cycles, or (2) atypical circumstances affect the sector or industry in the tax year under analysis.

Additionally, the resolution clarifies the definition of “related parties” by highlighting cases in which the parties are considered related based on a functional influence (i.e., influence over commercial decisions, contracts or any other decision-making) between them.


For additional information with respect to this Alert, please contact the following:

Ernst & Young Paraguay - Auditores y Asesores de Negocios, Asunción

Ernst & Young LLP (United States), Latin American Business Center, New York

Ernst & Young Abogados, Latin America Business Center, Madrid

Ernst & Young LLP (United Kingdom), Latin American Business Center, London

Ernst & Young Tax Co., Latin American Business Center, Japan & Asia Pacific


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