On 24 August 2018, Peru's President enacted Legislative Decree 1381, which amends the definition of tax havens and preferential tax regimes for Peruvian tax purposes and extends application of the transfer pricing rules to transactions entered with entities subject to preferential tax regimes.

Definition of tax haven

Under the amended Peruvian Income Tax Law, a jurisdiction is a tax haven or non-cooperative jurisdiction if at least one of the following requirements is met:

• No transparency at a legal, regulatory or administrative level
• No exchange of information, as well as the existence of legal provisions or administrative practices limiting the exchange of information
• No requirement of a substantive local presence, real activities or economic substance
• Low or no taxation

A jurisdiction is a preferential tax regime if at least one of the following requirements is met:

• No transparency at a legal, regulatory or administrative level
• No exchange of information, as well as the existence of legal provisions or administrative practices limiting the exchange of information
• No requirement of substantive local presence, real activities or economic substance
• Low or no taxation
• Tax benefits available for non-residents, but not residents
• Territorial or domestic taxation on an exclusive basis

Application of transfer pricing rules to transactions entered with entities subject to preferential tax regimes

Legislative Decree 1381 extends the transfer pricing rules to transactions entered with entities subject to preferential tax regimes. Previously, the transfer pricing rules only applied to transactions with related parties or residents of tax havens.

The amendments to the Peruvian income tax law will be effective 1 January 2019.

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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