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August 7, 2018
2018-1582

Peru amends income tax law and REIT tax rules and enacts provisions with regard to ultimate beneficial ownership of legal entities

The new decrees establish new rules for royalties and service payments to nonresidents, modify the rules applicable to real estate investment trusts and require entities to report ultimate beneficial owners. Taxpayers should ensure that they are in compliance with the new decrees.

On August 2, 2018, Peru enacted Legislative Decrees 1369, 1371 and 1372, which: (i) amend the rules on the deduction of royalties and services paid to nonresidents under the Peruvian income tax law; (ii) amend the tax rules applicable to real estate investment trusts (REITs); and (iii) establish provisions on the disclosure of the ultimate beneficial ownership of legal entities in Peru.

1. Legislative Decree 1369 — Amendments to Peruvian income tax law with regard to the deduction of royalties and services paid to nonresidents

Legislative Decree 1369 will allow Peruvian corporate taxpayers to deduct royalties and payments for services made to nonresidents in the tax year in which the payment is effectively made to the nonresident, regardless of whether the royalty or the service payment was recognized in a different tax year. Under the previous tax treatment, royalties and service payments were deductible in the tax year in which they were recognized, regardless of whether they were effectively paid. The new treatment is effective January 1, 2019.

2. Legislative Decree 1371 — Amendments to tax rules applicable to REITs in Peru

Legislative Decree 1371 allows REITs and funds investing in real estate (which have the same tax benefits as REITs) to depreciate the real estate transferred to them. This provision is effective January 1, 2019.

3. Legislative Decree 1372 — Provisions on the disclosure of the ultimate beneficial ownership of Peruvian legal entities

For the first time, Peru will require Peruvian legal entities to report and identify to the Peruvian Tax Authority individuals who are their ultimate beneficial owners. This obligation applies to funds, investment funds, trusts, foreign trusts with a Peruvian administrator, joint ventures, etc. Legislative Decree 1372 also will deem an individual as a beneficial owner if he/she holds at minimum 10% of the capital of a Peruvian legal entity.

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Contact Information
For additional information concerning this Alert, please contact:
 
Ernst & Young Asesores S.C.R.L, Lima
• Roberto Cores+51 1 4114448;
• Ramón Bueno-Tizón+51 1 4117233;
Latin American Business Center, New York
• Ana Mingramm(212) 773-9190;
• Enrique Perez Grovas(212) 773-1594;
• Pablo Wejcman(212) 773-5129;
 

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