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The legislative decree reduces the threshold at which taxpayers must route payments through the Peruvian banking system. It also allows taxpayers to make payments to nonresidents through foreign banking/financial entities for certain transactions.

On March 3, 2022, Peru's President enacted Legislative Decree 1529, amending Law 28194, which regulates the use of the Peruvian banking system for tax purposes.

Background

On October 27, 2021, Peru's President asked Congress for the power to enact tax measures. On December 27, 2021, the Congress approved the President's request to enact different tax measures, including measures to improve the use of the Peruvian banking system for tax purposes. For information on the approval of the President's request to enact certain tax measures, see Tax Alert 2022-0004.

Legislative Decree 1529

According to Law 28194, taxpayers should route any payment over PEN 3,500 or USD 1,000 through the Peruvian banking system. Otherwise, taxpayers will (1) not be able to claim the payment as a deductible expense for corporate income tax purposes, or (2) lose any tax basis (cost basis), depending on the type of payment.

Legislative Decree 1529 reduces the threshold from PEN 3,500 or USD 1,000 to PEN 2,000 or USD 500. Therefore, taxpayers must route any payment over PEN 2,000 or USD 500 through the Peruvian banking system.

For the following transactions, the legislative decree also requires payments equal to or more than 1 Tax Unit (USD 1,222) to be made using the Peruvian banking system:

• Transfers of real estate rights or property
• Transfers of vehicles (ships, aircraft or land vehicles)
• A cash contribution for the incorporation of a company, as well as any capital increase or capital reduction of a company

Additionally, Legislative Decree 1529 allows payments to nonresidents for international trade transactions, the acquisition of real estate, or the acquisition of shares and other securities to be made through foreign banking/financial entities (unless the foreign banking/financial entities are residents of tax havens; in that case, the payment will not be valid for Peruvian tax purposes). Before this amendment, taxpayers had to route payments to nonresidents for the acquisition of real estate, shares and other securities through the Peruvian banking system.

For purposes of Law 28194, Legislative Decree 1529 directs taxpayers to make payments directly to the seller, creditor or service provider. When the payment is made to a third party appointed by the seller, creditor or service provider, however, the taxpayer should communicate the appointment to the Peruvian tax authority before making the payment.

The amendments are effective April 1, 2022, except for the provision on banks and financial institutions that are residents of tax havens, which is effective January 1, 2023.

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