CIAT visited the Deputy Minister of the State Secretariat of Taxation of Paraguay

On May 18, 2022, Mr. Gonzalo Arias, CIAT’s Director of International Cooperation and Taxation met with Mr. Oscar Orué, Vice Minister of the State Secretariat of Taxation of Paraguay (SET) to review SET’s achievements and best practices, the challenges in the field of international taxation and discuss cooperation opportunities.

In recent years, characterized by the crisis caused by COVID, the institution’s strategic focus has focused on facilitating tax compliance, taxpayer assistance and the protection of officials and citizens, through several good local and international practices. During the pandemic, Paraguay implemented 100% of the tax measures recommended by international organizations, which have made it possible to increase resources to address health emergencies in a timely manner, temporarily protect the income of vulnerable households and the liquidity of companies affected by the crisis, strengthen the government’s capacity to continue spending and provide basic services during the crisis, and begin to outline a post-pandemic economic, social and fiscal recovery plan. Thanks to these measures, during the years of the pandemic it has been possible to maintain a reasonable level of tax collection despite the decline in the country’s activity, going from 13,920,201 million guarani in 2019 to 15,514,400 million guarani in 2021 (in cash). Currently, the trend in tax revenues remains positive.

In addition, and in spite of the adversities in the last years, the Paraguayan tax administration was able keep implementing the Electronic Invoicing, surpassing 20 million electronic invoices issued and taking firm steps towards its massification. In addition, the tax administration has continued updating and implementing new facilities for taxpayers in its Marangatu Tax Management System and the tax controls are constantly evolving with the application of innovative technological tools, which have yield excellent results.

At the international level, Paraguay has made great strides in recent years. It has adhered to the Multilateral Convention on Mutual Administrative Assistance in Tax Matters of the OECD, which allows cooperating with more than 100 jurisdictions through a variety of methodologies; acceded to the Declaration of Punta del Este (currently, the Deputy minister of the SET is the vice-president of the initiative), whose objective is to make progress on new forms of cooperation, to make effective use of the information exchanged, and use it for various purposes, such as to combat tax evasion, corruption and money laundering, among others. Likewise, a rule for the control of transfer prices based on international standards was put into force in 2021, which constitutes an opportunity to motivate compliance of companies that conduct operations with related parties and to avoid double taxation and double non-taxation. Along the same lines, Paraguay has adopted several initiatives based on the recommendations of the BEPS Action plan: 1- tax challenges of the digital economy, 4- treatment of financial components, 5 -harmful tax practices, 6 -abuse of tax treaties and 14-resolution of international tax disputes.

Currently, the country has 5 agreements to avoid double taxation.

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