Peru enacts regulations for 18% VAT on use of digital services by individuals

Background

On 4 August 2024, the Executive enacted Legislative Decree 1623, establishing an 18% VAT on individuals' use of digital services via online platforms and importation of intangibles via the internet. Beginning 1 October 2024, nonresident digital service providers and sellers will be obliged to withhold this 18% VAT. (For more information on this issue, see EY Global Tax Alert, Peru enacts rules for levying 18% VAT on use of digital services by individuals, dated 6 August 2024).

Supreme Decree 157-2024-EF

The Supreme Decree provides the first set of Regulations for Legislative Decree 1623, establishing the following:

• If a nonresident fails to register in the VAT Registry or to pay the VAT, the following entities will be responsible for the payment:
  • Peruvian financial entities and electronic money entities regulated by the Peruvian Banking Authority
  • The Peruvian National Bank
• When the individual is the final user of the streaming services and is engaged in business activities, the VAT withheld by the nonresident could be used as input VAT by the individual. The invoice issued by the nonresident must establish the amount of the transaction, as a supporting document of the input VAT for the individual.

• A new procedure provides for the nonresident to set off excess payments against future payments of the VAT and/or request the corresponding refund.

The following topics are yet to be regulated:

• Rules regarding the registration of the nonresident in the VAT Registry

• The option to pay the tax in Peruvian sols or US dollars