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May 26, 2021

Peruvian Tax Authority establishes guidelines for application of new thin capitalization rules

The new guidelines clarify when the deduction for interest expenses will be limited and how the new thin capitalization rules apply to recently incorporated companies and companies in the preoperative stages.

The Peruvian Tax Authority established guidelines (Ruling 015-2021-SUNAT/7T0000) for the application of the new thin capitalization rules for companies with interest expenses during their preoperative stage or companies that recently incorporated.


The new thin capitalization rules, effective since 1 January 2021, limit the “net interest” deduction for corporate income tax purposes to the extent the “net interest” exceeds 30% of EBITDA (i.e., net income after offsetting losses plus net interest, depreciation and amortization) of the previous year. “Net interest” is the difference between interest expense and interest income in a tax year.

The limitation does not apply to companies with net income equal to or less than 2500 Tax units (approx. US$3 million). Companies incorporated during the same tax year will consider the EBITDA for that year.

Additionally, Peruvian Income Tax Law allows expenses and interest accrued during the preoperative stage to be deducted in the first year of operation or amortized proportionally over a maximum period of 10 years, beginning with the first year of operation.

Peruvian tax authority Ruling 015-2021-SUNAT/7T0000

  • In Ruling 015-2021-SUNAT/7T0000, the Peruvian Tax Authority establishing the following:
  • The 30% EBITDA limitation will not apply in the tax year in which an entity is incorporated or begins operations, if the entity’s net income in that tax year is less than 2500 tax units.
  • For entities in the preoperative stage, the following rules apply:
    • If the entity opted to deduct interest expense in the first year of operations, the 30% EBITDA limitation will not come into play if the net income in that first year equals 2500 tax units or less.
    • If the entity opted to  amortize  the interest expense over 10 years beginning with the first year of operation, the entity will have to determine in each year whether the net income equals 2500 tax units or less for purposes of the 30% EBITDA limitation; if net income equals 2500 tax units or less, the entity may deduct accrued interest without limitation.
  • Entities incorporated in tax year 2021 but starting operations in tax year 2022 will consider the EBITDA of tax year 2022 for thin capitalization purposes.


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


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