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May 14, 2020
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.
Currently, maximum annual depreciation percentages are as follows:
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:
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.
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 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