Group taxation is not permitted in Paraguay.
There are no transfer pricing rules in current Paraguayan legislation requiring compliance with certain conditions or minimum prices for the purpose of fiscal deductions, except for the following regulation applicable to importations and exportations:
“In the case of importers, it will be assumed that, in the absence of proof to the contrary, the cost of goods introduced to the country may not exceed the wholesalers price ruling in their place of origin plus freight and insurance costs and expenses to Paraguayan territory, and therefore, the excess of such value will constitute taxable income for the importers.
In the case of exporters, where a price has been fixed or the price declared is lower than the wholesalers price in Paraguay plus the freight and insurance costs and expenses to point of destination, this latter aggregate value shall be taken as the basis for determining the exporter’s taxable income.
To this effect, the nature of the goods and the transaction mode adopted will be taken into account.” (Section 16 of Law No. 2421/04).
There is a Tax Reform in course promoted by the Treasury Ministry and the local Committee, where the transfer pricing regulations will be included following OECD criteria and methods.
There are no thin capitalisation rules in Paraguay.
Controlled foreign companies (CFCs)
There are no provisions in Paraguay for CFCs.