Paraguay Tax Agency Releases Binding Consultation Clarifying VAT Withholding Obligations for Nonresident Reinsurance Services

The Paraguayan Undersecretariat of Taxation Aug. 21 issued Binding Consultation No. 408, clarifying VAT withholding obligations for reinsurance services provided by nonresidents. The taxpayer, a resident insurance company, contracted for reinsurance with a nonresident entity. The taxpayer requested a resolution for the purpose of suspending VAT withholding obligations. The tax agency clarified that: 1) the provision of insurance and reinsurance services is subject to VAT; 2) reinsurance services provided by a nonresident company are subject to VAT withholding at a rate of 10 percent of the tax base, which is considered as 10 percent of the price of the reinsurance ...