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May 14, 2020
2020-5726

Peru enacts special depreciation rules due to COVID-19

On 10 May 2020, Peru’s Executive Power enacted Legislative Decree 1488, establishing special depreciation rules. This measure responds to the COVID-19 crisis. Legislative Decree 1488 is effective 1 January 2021.

Background

Currently, maximum annual depreciation percentages are as follows:

  • Buildings and construction: 5%
  • Vehicles for ground transportation (except railways) and ovens in general: 20%
  • Machinery and equipment used for mining, oil and construction activities; except office furniture and equipment: 20%
  • Data processing equipment: 25%
  • Machinery and equipment acquired as from 1 January 1991: 10%
  • Other fixed assets: 10%

Legislative Decree 1488

Special depreciation regime

The decree establishes a special depreciation regime under which taxpayers may claim 20% depreciation for buildings and construction if: (1) construction started on or after 1 January 2020; and (2) at least 80% of the construction is completed as of 31 December 2022. The 20% depreciation also may apply to assets acquired by taxpayers in tax years 2020, 2021 and 2022, provided the assets meet the requirements for the 20% depreciation. The 20% depreciation, however, will not apply if the assets have been totally or partially built before 1 January 2020.

As part of the special depreciation regime, the legislative decree establishes the following annual depreciation percentages for assets acquired in tax years 2020 and 2021:

  • Data processing equipment: 50%
  • Machinery and equipment: 20%
  • Ground transportation vehicles (except railways) used by authorized companies that provide transportation service to people and/or goods at the provincial, regional and national level: 33.3%
  • Hybrid or electric ground transportation vehicles (except railways): 50%

Depreciation provisions for hotels, travel and tourism agencies, restaurants and related services

The legislative decree establishes a depreciation regime for hotels, travel and tourism agencies, restaurants, and related services. Under the regime, taxpayers may claim 20% depreciation for tax years 2021 and 2022 for buildings and construction that, as of 31 December 2020, had not been depreciated at all. Taxpayers may depreciate, at a 33.3% rate, ground transportation vehicles (except railways) that, as of 31 December 2020, had not been depreciated at all for tax years 2021 and 2022.

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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 (United States), Latin American Business Center, New York
Ernst & Young Abogados, Latin America Business Center, Madrid
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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