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V1385-14 22 May 2014 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · doble imposición internacional

Deduction allowed for Paraguayan tax if similar to Corporate Tax

A company asked whether rent tax paid in Paraguay is comparable to Corporate Tax for deduction purposes. The DGT states that IRACIS is analogous if it taxes foreign income obtained by the entity.

The question raised

Whether the tax paid in Paraguay is assimilable to or equivalent to Corporate Income Tax in Spain, for the purposes of applying the deductions of articles 31 and 32 of the consolidated text of the Corporate Income Tax Law.

The DGT's ruling

To deduct the tax paid abroad, it must be of an identical or analogous nature to Corporate Income Tax, that is, a tax of a direct and personal nature that taxes the income of companies. IRACIS is considered analogous insofar as it is a tax that taxes the income obtained by the entity in Paraguay. Likewise, for the dividend deduction, a holding of at least 5% maintained for one year is required.

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