July 19, 2018 Peruvian Congress grants President power to legislate in tax matters Taxpayers should continue to monitor the release of any tax guidance in the coming months. On July 19, 2018, Peru's Congress enacted Law 30823, which grants the President power to legislate in tax matters. Under this power, the President has the ability to enact for a short period new tax laws with no involvement of the Congress, but only for specific items. Among other things, the President has 60 calendar days (i.e., up to September 17, 2018), to: 1) Issue regulations on the general anti-avoidance rule, which is currently suspended until the regulations are published 2) Modify the Tax Code in order to expand the cases of joint liability of legal representatives by applying the general anti-avoidance rule 3) Issue specific anti-avoidance rules for transactions between related and unrelated parties 4) Establish a special rate of income tax for dividends from companies with legal stability contracts signed during 2015 or 2016 5) Modify withholding tax rates applicable to capital gains and income from independent personal services 6) the criteria to consider legal entities as domiciled in Peru 7) Modify the income tax rates applicable to income from activities developed partly in Peru and partly abroad 8) Regulate the exchange rate applicable to transactions performed by resident individuals and non-resident persons 9) Improve the tax treatment applicable to capital gains from the indirect sale of shares, as well as the criteria to determine when an entity incorporated abroad will be subject to income tax 10) Establish a definition of accrual recognition for income tax purposes 11) Modify the deduction of business expenses (rules on depreciation and amortization, interest, expenses for the acquisition of vehicles, penalties and indemnities) 12) Amend the value added tax to improve its administration 13) Modify the criminal tax law 14) Adapt national legislation to international standards and recommendations issued by the Organisation for Economic Cooperation and Development (OECD), the Financial Action Task Force and international best practices for the fight against tax avoidance and evasion 15) Implement mechanisms of transparency on ultimate beneficial ownership 16) Implement the OECD's Common Reporting Standard in Peru 17) Incorporate the indirect credit rules and modify the direct credit rules in Peruvian local tax legislation ———————————————
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