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Transfer pricing in Paraguay: arm's length rule, related parties, methods, commodity exports and the technical study

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Last verified: 2026-10-28 · Status: Stable

Since operations from 1 January 2021, IRE taxpayers must price transactions with related parties abroad, and domestic ones where one side is exempt, at arm's length using six OECD style methods, with the comparable uncontrolled price method first. A technical transfer pricing study must be filed when prior year gross income exceeds PYG 10,000,000,000, and always for dealings with low or no tax jurisdictions, free zone users and maquila companies, which are presumed related. Exports of soy and soy products, corn, rice and wheat must use quoted market prices at shipment date, from 1 July 2021, unless the contract is registered with the DNIT.

USD figures use PYG 5,868.31 per US dollar, the Banco Central del Paraguay reference quotation for 28 October 2026 (planilla de cotizaciones of that day). Conversions are for orientation only.

Key facts

Prior year gross income above which the transfer pricing study must be filed10000000000 PYGLey 6380/2019 art. 39; Decreto 4644/2020 art. 27, as of 2026-10-28 · in force
Capital holding that makes companies related50 %Ley 6380/2019 art. 37, as of 2026-10-28 · in force
Transfer pricing rules apply to operations from2021-01-01 dateDecreto 4644/2020 art. 32, as of 2026-10-28 · in force
Quoted price rule for soy, corn, rice and wheat exports applies from2021-07-01 dateDecreto 4644/2020 art. 32, as of 2026-10-28 · in force

The rule

1. Arm's length principle. IRE taxpayers dealing with related parties resident abroad, or in Paraguay when the transaction is exempt or outside IRE for one side, must determine income and deductions using the prices independent parties would have agreed in comparable transactions; otherwise the administration adjusts them.
Cost to do it: Adjustments are taxed at the 10 percent IRE rate (Decreto 4644 art. 30).
Example: An upward adjustment of PYG 500,000,000 adds PYG 50,000,000 of IRE. / An adjustment of US$85,203 adds US$8,520 of IRE.Ley Nº 6380/2019 De modernización y simplificación del sistema tributario nacional, Art. 35 and 36, 2019-09-25 official text · verified 2026-10-28
2. Related parties. Two or more persons are related when one participates directly or indirectly in the management, control or capital of the other; a holding of more than 50 percent of voting capital counts, as does practical capacity to influence decisions through appointments, contracts, functions or credit. Head offices and other establishments of a branch are related. Transactions with low or no tax jurisdictions, and with free zone users or maquila companies, are presumed related unless proven otherwise. Low or no tax jurisdictions are those meeting two of three criteria set by decree (non cooperative listings, effective tax below the Paraguayan rate, no effective exchange of information); Decreto 7402/2022 later modified that article.
Cost to do it: Presumed relation brings the documentation duty regardless of size.
Example: Sales to an unrelated buyer in a free zone are presumed related and need a transfer pricing study. / A US parent holding 100 percent of a Paraguayan EAS is plainly related.Ley Nº 6380/2019 De modernización y simplificación del sistema tributario nacional; Decreto Nº 4644/2020 que reglamenta el Capítulo III (normas especiales de valoración de operaciones) de la Ley 6380/2019, Ley 6380 art. 37; Decreto 4644 art. 5, 2019-09-25 official text · verified 2026-10-28
3. Methods. Comparable uncontrolled price must be used first; resale price, cost plus, profit split, residual profit split and transactional net margin are available when it is not appropriate. Where two or more comparables exist, a range adjusted by statistical methods applies; if the taxpayer falls outside and the result reduces taxable income, the median is used.
Cost to do it: Benchmarking studies are a professional cost; the law sets no fee.
Example: Range of margins 4 to 8 percent, median 6 percent; a 2 percent margin on sales of PYG 10,000,000,000 is adjusted to 6 percent, adding PYG 400,000,000 of income. / On US$1,704,068 of sales the adjustment is US$68,163, IRE US$6,816.Ley Nº 6380/2019 De modernización y simplificación del sistema tributario nacional, Art. 38, 2019-09-25 official text · verified 2026-10-28
4. Commodity exports. Goods with an international quotation on transparent markets or exchanges must be priced at the quoted price on the shipment completion date (or the previous quoted day), or at the contract date if the contract is registered with the DNIT. The decree lists soy, soy products (oils, meal, pellets, expellers), corn, rice and wheat, effective for exports from 1 July 2021, and creates a contract registry.
Cost to do it: Register forward contracts on time to use the contract date price.
Example: A soybean export sold to a related trader in Uruguay is priced at the quoted price on the shipment date. / An unregistered forward sale is reset to the shipment date quote.Ley Nº 6380/2019 De modernización y simplificación del sistema tributario nacional; Decreto Nº 4644/2020 que reglamenta el Capítulo III (normas especiales de valoración de operaciones) de la Ley 6380/2019, Ley 6380 art. 38 num. 7; Decreto 4644 art. 21, 24 and 32, 2020-12-30 official text · verified 2026-10-28
5. Technical study. Taxpayers with related party transactions must obtain and keep a technical study with the related parties, functions, assets and risks, transaction amounts by type and the method and comparables; it must be filed by those whose gross income in the prior year exceeded PYG 10,000,000,000 and, regardless of size, for transactions with low or no tax jurisdictions, free zone users and maquila companies. The study includes group structure and financial information, and is prepared by professionals in a DNIT registry. Penalties follow Ley 125 Book V. The rules apply to operations from 1 January 2021.
Cost to do it: Study by a DNIT registered professional; fee set by the market.
Example: A company with PYG 12,000,000,000 of prior year gross income must file a study. / The threshold is about US$1,704,068 of prior year gross income.Ley Nº 6380/2019 De modernización y simplificación del sistema tributario nacional; Decreto Nº 4644/2020 que reglamenta el Capítulo III (normas especiales de valoración de operaciones) de la Ley 6380/2019, Ley 6380 art. 39; Decreto 4644 art. 27, 28, 29 and 32, 2020-12-30 official text · verified 2026-10-28
SituationStudy keptStudy filed
Related party transactions, prior year gross income above PYG 10,000,000,000YesYes
Related party transactions, prior year gross income up to PYG 10,000,000,000Not required by art. 39No
Any transaction with low or no tax jurisdictionsYesYes, any size
Any transaction with free zone users or maquila companiesYesYes, any size

Who files a transfer pricing study (Ley 6380 art. 39, Decreto 4644 art. 27)

Worked example

  • A Paraguayan distributor with PYG 15,000,000,000 (US$2,556,102) of revenue buys all stock from its Brazilian parent.
  • It is above the PYG 10,000,000,000 threshold, so it files a technical study prepared by a DNIT registered professional.
  • The study benchmarks a 3 to 6 percent operating margin; the company reports 1 percent, so the DNIT can adjust to the 4.5 percent median, adding PYG 525,000,000 of taxable income and PYG 52,500,000 (US$8,946) of IRE.
  • Separately, interest it pays the parent is limited by the 30 percent cap and the BCP average rate rule.

Step by step

  1. Map all related parties, including presumed ones (low tax jurisdictions, free zones, maquilas).
  2. Check prior year gross income against PYG 10,000,000,000.
  3. Commission the study from a professional in the DNIT registry and apply the comparable uncontrolled price method first.
  4. For commodity exports, register forward contracts with the DNIT on time or price at the shipment date quote.
  5. File the study and any informative returns on the DNIT dates and pay IRE on adjustments annually.

Common traps

  • Dealing with a free zone user or maquila is presumed related even if there is no shareholding (art. 37).
  • If outside the range and the result lowers taxable income, the adjustment is to the median, not the edge of the range (art. 38).
  • Domestic related transactions are in scope when one side is exempt or outside IRE (art. 35).
  • The low tax jurisdiction criteria in Decreto 4644 art. 5 were modified by Decreto 7402/2022; check the current text before classifying a jurisdiction.

Sources

Related pages

Related: Paraguay country profile · live dashboard · central bank and release calendar · our posts on X · where Argentina is involved, see The Argentine Thread guide

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