With the repeal of Law 27360, agribusiness entities will be subject to a higher corporate income tax rate and a lower depreciation rate beginning January 1, 2021.

On December 4, 2020, Peru enacted Law 31087, which repeals the special rules to promote agribusiness (i.e., agrarian regime) established in both Law 27360 and Urgency Decree 043-2019.

Background

In 2000, Peru enacted Law 27360, establishing the agrarian regime, which provided the following benefits to agribusiness entities:

• 15% corporate income tax rate
• 20% depreciation rate for investments in hydraulic infrastructure and irrigation works
• Value-added tax (VAT) recovery during the pre-operational stage for the acquisition of capital goods, inputs, services and construction contracts incurred, provided that the pre-operative stage is less than five years

The regime was extended until December 31, 2031 by Urgency Decree No. 043-2019.

Law 31087

With the repeal of Law 27360 and Urgency Decree 043-2019, agribusiness entities will be subject to the general tax regime beginning January 1, 2021. Under that regime, agribusiness entities will be subject to:

• A 29.5% corporate Income tax rate
• A 10% depreciation rate on investments in hydraulic infrastructure and irrigation works

The agribusiness entities also are subject to the early VAT recovery regime, provided they meet the following requirements:

1. The entities make an investment of at least USD 5 milion in any project.
2. The pre-operative stage of the project (time incurred until the first invoice is issued for the project) is not less than two years.

———————————————