Paraguay announced on 22 May 2020 that it will delay the effective date of imposing VAT on digital services by 6 months. VAT on digital services was set to become effective from 1 July 2020. This was adopted in the framework of the September 2019 Tax Reform Law and includes that digital services supplied by digital platforms are subject to VAT at the standard rate of 10%. Where the payment for digital services is made to a non-resident through a financial institution in Paraguay, the financial institution is responsible for withholding and remitting VAT on the payment.
A government decree formally adopting the 6-month deferral is expected to be issued soon.
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