PERU Trends and Developments Contributed by: Alfred Kossuth Wieland and Edgardo Bernal Santos, Thorne, Echeandia & Lema Abogados
exchanges, or bank deposit certificates in domes - tic or foreign currency; • funds allocated to participation agreements or similar arrangements that grant the foreign investor a form of participation in a company’s productive capacity without constituting a capital contribu - tion, corresponding to contractual commercial transactions whereby the investor supplies goods or services in exchange for a share of physical production, total sales or net profits; and • any other form of foreign investment that contrib - Legal Stability Agreements constitute contracts with the force of law and therefore may not be unilaterally amended or terminated by the State. These agree - ments are civil in nature rather than administrative, and may only be amended or terminated by mutual consent of the parties. Certain agreements are intended to ensure the sta - bility of the income tax regime applicable to recipi - ent companies, solely with respect to taxes levied on corporate income, provided those new investments received by the company exceed 50% of its capital and reserves, and are allocated to expanding produc - tive capacity or technological improvement. utes to the country’s development. Binding Legal Stability Agreements Such agreements may also be executed in connection with the transfer of more than 50% of the shares of companies engaged in State-owned business activi - ties. Likewise, they may guarantee the stability of the tax regime applicable to financial leasing contracts, provided that the value of the leased assets is not less than USD2 million or, where lower, not less than USD500,000. Applicable guarantees Legal Stability Agreements may guarantee the follow - ing rights to investors: • stability of the income tax regime; • stability of the free foreign exchange regime and the right to freely remit profits, dividends and royal - ties (applicable to foreign capital); and • stability of the right to non-discriminatory treat - ment.
Similarly, such agreements may guarantee the follow - ing rights to recipient companies: • stability of the income tax regime; • stability of labour hiring regimes; and • stability of export promotion regimes, provided that such regimes are in use at the time of the request. Tax Treatment Under the Peru–United Kingdom Double Taxation Agreement One of the most relevant recent tax developments is the execution of a Double Taxation Agreement (DTA) between Peru and the United Kingdom of Great Brit - ain and Northern Ireland, in the first quarter of 2025, aimed at preventing double taxation and combatting tax evasion. In mid-2025, the DTA was ratified by Peru through Supreme Decree No 051-2025-RE. Unlike other DTAs entered into by Peru, this agree - ment expressly seeks to prevent situations of dou - ble non-taxation or reduced taxation arising from tax avoidance or evasion. To this end, a principal pur - pose test was incorporated, limiting treaty benefits where one of the main purposes of a transaction or arrangement is to obtain such benefits, unless it is demonstrated that the benefit aligns with the object and purpose of the treaty. Business profits are taxable in the state of residence unless the enterprise conducts business through a permanent establishment in the other contracting state, in which case taxation is limited to the portion attributable to such permanent establishment. This rule also applies to technical assistance and digital services. With respect to dividends, taxation is shared, with a reduced withholding tax rate of 10% on the gross amount of dividends in the source state, increasing to 15% where dividends are paid out of income derived from immovable property by certain investment vehi - cles. Interest income is subject to shared taxation, with a maximum withholding tax rate of 10%, while royalties are subject to a maximum rate of 15% on the gross amount.
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