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October 31, 2019

Peru amends temporary capital gains tax exemption

On 24 October 2019, Peru issued Urgent Decree 005-2019, amending the temporary exemption from capital gains tax for transfers of securities carried out through the Lima Stock Exchange (LSE) if certain conditions are met.


In 2015, the Peruvian Congress approved Law 30341, which temporarily exempted capital gains derived from the transfers of shares from capital gains tax (CGT) until 31 December 2018. Law 30341 was amended by Legislative Decree 1262, which extended the exemption to 31 December 2019. To claim the CGT exemption, a taxpayer and the shares must meet the following conditions:

i. Shares must be listed and traded on the LSE.

ii. In any given 12-month period, the taxpayer and its related parties must not transfer more than 10% of the shares issued by the company whose shares are sold.

iii. Shares should meet the liquidity threshold set out in Law 30341.

Urgent Decree 005-2019

Urgent Decree 005-2019 extends the CGT exemption from 31 December 2019 to 31 December 2022. The following securities are expressly included within the scope of the CGT exemption, provided those securities are listed and traded on the LSE:

a) American Depositary Receipts and Global Depositary Receipts

b) Exchange Trade of Funds, provided the underlying assets are shares or debt securities

c) Debt securities (bonds)

d) Participation certificates in mutual investment funds

e) Participation certificates in (i) real estate investment trusts (REITs) and (ii) securitization trusts for the investment of real estate income

f) Negotiable invoices

To claim the exemption, the securities must be listed and traded on the LSE. Depending on the type of securities, taxpayers might have to meet additional requirements, such as the liquidity threshold, which has been modified as follows:

i. Taxpayers must determine the number of days in which the daily negotiated amount of securities exceeded the limit of 6 Tax Units – approximately US$7,636 (previously 4 Tax Units – approximately US$5,090), within 180 business days before the security sale.

ii. The number of days determined in (i) should be divided by 180 and multiplied by 100.

iii. The result should not exceed 45% (previously 35%).

The CGT exemption will no longer apply if, after the application of the exemption, the issuer of the shares unlists them from the LSE within 12 months of the sale.

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

Ernst & Young Asesores S.C.R.L, Lima
Ernst & Young LLP (United States), Latin American Business Center, New York
Ernst & Young LLP (United Kingdom), Latin American Business Center, London
Ernst & Young Tax Co., Latin American Business Center, Japan & Asia Pacific



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