Peru enacts new rules for tax incentives of expenses related to research and development

On 30 December 2022, Peru enacted Law 31659, increasing the deduction rates for Scientific Research, Technological Development, and Technological Innovation expenses (R&D expenses). The new tax incentives are effective as of 1 January 2023 until 31 December 2025.

Background

Law 30309 introduced a temporary tax incentive allowing taxpayers to deduct R&D expenses, according to the following rules:

• Taxpayers with net income not exceeding 2,300 Tax Units (approx. US$2,996,000) were entitled to deduct: (i) 215%: if the R&D project was carried out directly by the taxpayer or through a Peruvian R&D center; or (ii) 175%: if the R&D project was carried out through non-Peruvian R&D centers.

• Taxpayers with net income exceeding 2,300 Tax Units were entitled to deduct: (i) 175%: if the R&D project was carried out directly by the taxpayer or through Peruvian R&D centers; or (ii) 150%: if the R&D project was carried out through non-Peruvian R&D centers.

The tax incentives expired on 31 December 2022.

Law 31659

Law 31659 increased the deduction rates for R&D expenses and has extended such tax incentives until 31 December 2025, as follows:

• Taxpayers whose net income does not exceed 2,300 Tax Units are entitled to deduct: (i) 240%: if the R&D project is carried out directly by the taxpayer or through a Peruvian R&D center; or (ii) 190%: if the R&D project is carried out through non-Peruvian R&D centers.

• Taxpayers whose net income exceeds 2,300 Tax Units are entitled to deduct: (i) 190%: if the R&D project is executed by the taxpayer itself or by a Peruvian R&D center; or (ii) 160%: if the R&D project is executed by a non-Peruvian R&D center.

Law 31659 is effective as of 1 January 2023 until 31 December 2025.

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

Ernst & Young Asesores Empresariales S.C.R.L, Lima

• Roberto Cores

• Ramón Bueno-Tizón

• Ingrid Zevallos

• Claudia Miranda

• Krizia Hurtado

Ernst & Young LLP (United States), Latin American Business Center, New York

• Lucas Moreno

• Ana Mingramm

• Pablo Wejcman

• Enrique Perez Grovas

Ernst & Young LLP (United Kingdom), Latin American Business Center, London

• Lourdes Libreros

Ernst & Young Tax Co., Latin American Business Center, Japan & Asia Pacific

• Raul Moreno, Tokyo

• Luis Coronado, Singapore

For a full listing of contacts and email addresses, please click on the Tax News Update: Global Edition (GTNU) version of this Alert.