December 21, 2021
Peruvian Tax Authority challenges deduction of intercompany charges
The Peruvian Tax Authority is denying deductions for intercompany charges when the Peruvian entity is unable to provide supporting documentation for the costs and expenses incurred by the related party that rendered the services for the Peruvian entity.
In recent tax audits, the Peruvian Tax Authority has challenged the deductibility of intercompany charges.
Legislative Decree 1312, in force since 1 January 2017, amended the Peruvian Income Tax Law by incorporating the following requirements for deducting intercompany charges paid to related parties for corporate income tax purposes:
New audits carried out by the Peruvian Tax Authority
The Peruvian Tax Authority is challenging the deductibility of intercompany charges if the Peruvian taxpayer (user of the service) does not provide supporting documentation for the costs and expenses incurred by the related party that provided the service. In some cases, the Tax Authority denied the deduction when the Peruvian entity was unable to provide the documentation.
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