Global Tax Alert (News from Americas Tax Center) | 5 January 2017

Peru enacts tax reform

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On 8 and 10 December 2016, Peru enacted tax reform that is effective 1 January 2017.

The tax reform increases the corporate income tax rate from 28% to 29.5%. The new rate will apply to tax year 2017 and thereafter.

The tax reform also reduces the dividends withholding tax rate from 6.8% to 5%. The tax reform repealed the progressive increase in the withholding tax rate for 2017, 2018 and 2019. The new 5% withholding tax rate will apply beginning 1 January 2017 and onwards. For profits earned from 1 January 2015 to 31 December 2016, the former 6.8% withholding rate applies, even if the profits are distributed in 2017. For these purposes, the first-in, first-out rules will come into play.

Additionally, the tax reform extends from 31 December 2018 to 31 December 2019 the temporary exemption from the capital gains tax for capital gains derived from the sale of shares listed and traded in the Lima Stock Exchange. The tax reform extends the scope of the exemption to debt instruments (bonds), REIT certificates, American Depositary Receipts, Exchange Trade of Funds and negotiable invoices (a new investment instrument recently created in Peru), provided said securities are listed and traded in the Lima Stock Exchange.

The tax reform also:

  • Creates an amnesty program only for Peruvian residents for the voluntary disclosure/repatriation of undeclared income held abroad
  • Modifies the regulations related to the special Value Added Tax refund regimes, which are intended to promote and facilitate investments in Peru
  • Reduces the capital gains tax from 30% to 5% for nonresident individuals who dispose of real estate/immovable property located in Peru; the reduction does not apply to nonresident entities
  • Adds a deduction for health and housing expenses of Peruvian individuals

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

Ernst & Young Asesores S.C.R.L, Lima
  • Roberto Cores
    +51 1 411 4448
    roberto.cores@pe.ey.com
  • Ramón Bueno-Tizón
    +51 1 411 7233
    ramon.bueno-tizon@pe.ey.com
  • Nora Orihuela
    +51 1 411 4444
    nora.orihuela@pe.ey.com
Ernst & Young LLP, Latin American Business Center, New York
  • Ana Mingramm
    +1 212 773 9190
    ana.mingramm@ey.com
  • Enrique Perez Grovas
    +1 212 773 1594
    enrique.perezgrovas@ey.com
  • Pablo Wejcman
    +1 212 773 5129
    pablo.wejcman@ey.com
  • Gustavo Cortes
    +1 212 773 6020
    gustavo.cortesgarcia@ey.com
Ernst & Young LLP, Latin American Business Center, London
  • Jose Padilla
    +44 20 7760 9253
    jpadilla@uk.ey.com

EYG no. 00056-171Gbl