On 30 December 2018, the Peruvian Minister for Economic Affairs issued Supreme Decree 337-2018-EF and Supreme Decree 339-2018-EF, which contains provisions on the deduction of expenses for intra-group services and the definition of accrual.
According to Peruvian income tax legislation, intragroup services (including both local transactions and cross-border transactions) must be at fair market value under the arm’s-length principle following OECD guidelines. The calculation of the profit margin is governed by special rules particularly in the case of low-value-added services.
In order to deduct the payment for intra-group benefits, the Peruvian company must: (i) satisfy the benefit test (i.e., demonstrate that the intragroup services provided an actual commercial or economic benefit); and (ii) have evidence of the nature of the services and proof that: (a) the services were rendered; (b) there was a real need for the services; and (c) the service provider incurred costs and expenses.
Both Supreme Decrees went into effect on 1 January 2019.
