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20 July 2018

Peruvian Congress grants President power to legislate in tax matters

On 19 July 2018, Peru's Congress enacted Law 30823, which grants the President power to legislate in tax matters. Under this power, the President has the ability to enact for a short period new tax laws with no involvement of the Congress, but only for specific items.

Among other things, the President has 60 calendar days (i.e., up to 17 September 2018) to:

  • Issue regulations on the general anti-avoidance rule (GAAR), which is currently suspended until the regulations are published
  • Modify the Tax Code in order to expand the cases of joint liability of legal representatives by applying the GAAR
  • Issue specific anti-avoidance rules for transactions between related and unrelated parties
  • Establish a special rate of income tax for dividends from companies with legal stability contracts signed during 2015 or 2016
  • Modify withholding tax rates applicable to capital gains and income from independent personal services
  • Modify the criteria to consider legal entities as domiciled in Peru
  • Modify the income tax rates applicable to income from activities developed partly in Peru and partly abroad
  • Regulate the exchange rate applicable to transactions performed by resident individuals and nonresident persons
  • Improve the tax treatment applicable to capital gains from the indirect sale of shares, as well as the criteria to determine when an entity incorporated abroad will be subject to income tax
  • Establish a definition of accrual recognition for income tax purposes
  • Modify the deduction of business expenses (rules on depreciation and amortization, interest, expenses for the acquisition of vehicles, penalties and indemnities)
  • Amend the value added tax to improve its administration
  • Modify the criminal tax law
  • Adapt national legislation to international standards and recommendations issued by the Organisation for Economic Co-operation and Development (OECD), the Financial Action Task Force and international best practices for the fight against tax avoidance and evasion
  • Implement mechanisms of transparency on ultimate beneficial ownership
  • Implement the OECD's Common Reporting Standard in Peru
  • Incorporate the indirect credit rules and modify the direct credit rules in Peruvian local tax legislation

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CONTACTS

For additional information with respect to this Alert, please contact the following:

Ernst & Young Asesores S.C.R.L, Lima

  • Roberto Cores
    roberto.cores@pe.ey.com
  • Ramón Bueno-Tizón
    ramon.bueno-tizon@pe.ey.com

Ernst & Young, LLP, Latin American Business Center, New York

  • Ana Mingramm
    ana.mingramm@ey.com
  • Enrique Perez Grovas
    enrique.perezgrovas@ey.com
  • Pablo Wejcman
    pablo.wejcman@ey.com

Ernst & Young LLP (United Kingdom), Latin American Business Center, London

  • Jose Padilla
    jpadilla@uk.ey.com

Ernst & Young Tax Co., Latin America Tax Desk, Japan & Asia Pacific

  • Raul Moreno, Tokyo
    raul.moreno@jp.ey.com
  • Luis Coronado, Singapore
    luis.coronado@sg.ey.com

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ATTACHMENT

PDF version of this Tax Alert

 

Document ID: 2018-5884

 
 

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