PERU Law and Practice Contributed by: Alfred Kossuth Wieland and Edgardo Bernal Santos, Thorne, Echeandia & Lema Abogados
generally subject to gross basis withholding on Peru - vian source income. Additional business taxes include: • the Financial Transaction Tax (ITF) at 0.005% on transactions through Peruvian regulated financial institutions; • the Temporary Net Assets Tax (ITAN) at 0.4% on net assets exceeding PEN1 million for companies under the general or MYPE income tax regimes; and • excise taxes on specific goods (alcohol, sugary drinks, fuel, cigarettes, etc). Small and medium-sized businesses and certain industries (agriculture, Amazonian region, aquacul - ture, forestry, Special Economic Zones) benefit from reduced CIT rates or exemptions, but the general framework (CIT + VAT + transaction taxes) applies broadly to companies doing business in Peru. 9.2 Withholding Taxes on Dividends, Interest, Etc Peru applies source-based withholding on payments to non-residents, with rates depending on the nature of the income and, in some cases, on meeting specific conditions. • Dividends and profit distributions: (a) dividends and other profit distributions by Peruvian companies to non-resident sharehold - ers are subject to 5% withholding income tax; (b) distributions to another Peruvian resident com - pany are not subject to tax. • Interest on qualifying foreign credits can benefit from a reduced 4.99% withholding if statutory con - ditions are met (ie, registration, term, arm’s length terms). Otherwise, interest paid to the foreign creditor will be subject to a 30% withholding. • Royalties, digital and technical services: (a) royalties paid to non-residents are subject to 30% withholding; (b) technical assistance services are generally subject to a 15% withholding if the service qualifies as “technical assistance” (specialised know-how, listed categories such as engineer - ing, etc); and
(c) digital services provided by non-residents from abroad are subject to a 30% withholding. • Consulting or professional services: (a) consulting services (professional services beyond the scope of the technical or digital services definitions) provided by non-residents from abroad are not subject to tax; and (b) professional services provided by a non- resident individual within Peru are subject to a 24% income tax if the person is an independ - ent contractor – the income tax rate is 30% in case of non-resident employees of Peruvian resident entities. Likewise, a 30% income tax applies if the services are carried out within the country by a foreign company. • Capital gains – in general, Peruvian source capital gains of non-residents on non-listed shares are subject to 30% tax. Gains realised on listed shares traded on the local stock exchange are generally taxed at 5%. 9.3 Tax Mitigation Strategies Peruvian law does not forbid tax planning but limits it through general and specific anti-avoidance rules: planning must be based on valid economic, financial or business reasons and not only on obtaining tax savings. The key issues to be considered include the following. • Financing structure and earnings stripping: (a) interest expenses deductions are subject to a 30% tax EBITDA limit, with excess interest carry forward for four years (this cap does not apply in certain circumstances, such as finan - cial and insurance entities, low-income taxpay - ers and specific public procurement loans); and (b) intercompany debt must comply with transfer pricing and thin capitalisation rules – interest on related party loans that do not meet foreign credit conditions is subject to 30% withholding. • Use of tax incentives and reduced rate regimes: (a) sectoral regimes (agriculture, Amazon, min - ing, aquaculture, forestry) offer reduced CIT rates, accelerated depreciation and VAT/excise exemptions, so locating operations or specific asset-intensive activities in eligible regions can lower the effective tax rate; and (b) Special Economic Zones (Tacna, Ilo, Paita and
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