Paraguay to withdraw Jan 2022 withholding tax on foreign digital services
Paraguay is to suspend from January 2022 the reach on intermediaries of its Digital Services Tax – withholding tax on non-resident income (INR). The 4.5% INR was introduced at the start of 2021 as income tax – calculated as: 15% withholding x 30% of income = 4.5% tax.
Instead of the intermediaries being responsible, taxpayers will be able to act ad the INR agent.
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The obligations for financial intermediaries had been postponed until 1 January 2022 due to the COVID-19 crisis and to give time to affected banking institutions to adapt their systems. Aside from direct providers of digital services, telecoms companies and marketplaces remain liable from 2021 for the new withholding tax.
INR is levied on digital services provided by non-resident entities at a 4.5% rate. If financial intermediaries are involved in the transaction, this tax will not be applicable until January 2022. Nevertheless, entities engaged in the provision of digital services (e.g. telecom companies, resellers of digital services) are still obliged to withhold INR.
Americas Digital Services Taxes (DST)
| Country | Status | Rate | Annual sales threshold | Scope | |
| In-country income | Global income | ||||
| Argentina | Dec 2020 | 5%, 10%, 15% | Online gambling | ||
| Brazil - 1 | Proposed | 1-5% | BRL 100m | BRL 3bn | Advertising; user data; interfaces; |
| Brazil - 2 | Proposed | 3% on COFINS | BRL 78m | $240m | Advertising; platform services for selling goods and services |
| Brazil - 3 | Proposed | 3% | BRL 4.5bn | Advertising; platform interaction services; data | |
| Brazil - 4 | Proposed | 3% - 10% | BRL 100m | Media; apps; gaming; gambling (10%); software | |
| Brazil - 5 | Proposed | 3% | Advertising; user data; payment platforms; media | ||
| Canada | Jan 2024 | 3% | CAD 20m | €750m | Advertising, online marketplaces, social media and the sale/licensing of user data. |
| Colombia | 2023 | 3% | US$ 264k | - | Advertising; streaming or download media; user data; e-learning - Significant Economic Presence test |
| Costa Rica | Nov 2019 | Tourist accommodation rentals | |||
| Paraguay | Jan 2021 | 4.5% | Non-resident: media; gaming; data processing; advertising; gambling; software | ||
| Uruguay | Jan 2018 | 12% | Digital services Non-residents | ||
