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March 29, 2023
Peruvian Government modifies minimum interest rate allowed for national and foreign currency loans
Peruvian Legislative Decree 1545, published on 15 March 2020, expressly establishes that all loans will accrue a minimum interest rate, even if the parties had agreed to a lower interest rate or had agreed the loan would not accrue any interest.
Formerly, the Peruvian Income Tax Law established that the interest rate on Peruvian currency loans could not be lower than the monthly average active market rate in local currency (TAMN, per Spanish initials), published by the Banking Authority; and, for loans on foreign currency, the interest rate could not be lower than the average six-month rate published by the London Inter-Bank Offered Rate (LIBOR) for the last semester of the previous year.
Taking these restrictions into account and given that the LIBOR will no longer be published, the Executive enacted Legislative Decree 1545.
Legislative Decree 1545
The new Legislative Decree requires the interest rate on loans to meet these requirements:
The Legislative Decree will take effect as of 1 January 2024.
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