The decree sets forth requirements a bill must satisfy if it is proposing new tax exemptions or tax benefits.

On January 22, 2022, Peru's President enacted Legislative Decree 1521, which modifies the Peruvian Tax Code rules for enacting tax exemptions and tax benefits. For information on the approval of the President's request to enact these tax measures, see Tax Alert 2022-0004.

Legislative Decree 1521

Legislative Decree 1521 requires bills modifying tax exemptions and tax benefits to include the purpose and scope of the proposed tax exemption or benefit. The bill also must include an analysis of its effect on current Peruvian tax legislation and a quantitative analysis of the estimated cost of the proposed tax measure. Additionally, the bill must have a supporting analysis on whether (1) the proposed tax measure is efficient compared to other public policies, and (2) the measure will create unfair competition between taxpayers receiving the benefits and those that do not.

In addition, Legislative Decree 1521 requires proposed tax exemptions and tax benefits to align with the Government's tax policies. Tax exemptions or tax benefits must not apply to excise taxes or any goods or services that damage public health or the environment.

Any bill proposing tax exemptions or tax benefits must include the taxpayers that fall within the scope of the benefit, and establish the criteria used to evaluate the impact of the tax benefit and the length of the tax exemption or tax benefit. Tax exemptions or tax benefits may not exceed three years. If the bill does not include a period for the exemption or benefit, the period will be three years.

For Congress to evaluate and approve a bill that would establish new tax exemptions or tax benefits, the bill must have a favorable report from the Ministry of Economics and Finances.

Taxpayers that must issue electronic invoices under Peruvian tax legislation may be eligible for tax exemptions or tax benefits. The Peruvian tax authority must publish annually on its website the taxpayers receiving the tax exemption or tax benefits. The taxpayer information published on the website must include the taxpayer's name, tax ID, economic activity, and amount of the exemption or benefit, among other things.

Legislative Decree 1521 is effective January 23, 2022.

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