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January 31, 2023

Peru extends tax incentives applicable for Real Estate Investment Funds

  • On 29 December 2022, the Peruvian Government published Law 31650 extending the tax benefits for Real Estate Investment Funds.

  • The extension is valid from 1 January 2023 until 31 December 2026.

On 29 December 2022, the Peruvian Government enacted Law 31650, extending the tax incentives for Real Estate Investment Funds, introduced trough Legislative Decree 1188. These tax benefits will be valid until 31 December 2026. These tax benefits were intended to be in force through 31 December 2022.

Real Estate Investment Funds have the same tax benefits as Real Estate Investment Trusts (REITs), which are also valid until 31 December 2026.

The extended tax benefits applicable for REITs and Real Estate Investment Funds are:

  • Deferral of tax: Taxpayers transferring real estate property to REITs and Real Estate Investment Funds will be liable for capital gain tax and real estate transfer tax once the REIT or Real Estate Investment Fund property is transferred to a third party or when the certificates of participation are transferred.

  • Reduced withholding: Income from a property lease is levied with: (i) a 5% withholding tax in the case of nonresident individuals; and (ii) a 24% withholding tax in the case of nonresident entities.

With this extension, both REITs and Real Estate Investment Funds will have the same tax benefits valid through 31 December 2026.

Law 31650 is effective as of 1 January 2023 until 31 December 2026.


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

Ernst & Young Asesores Empresariales 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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