The Peruvian Executive Branch has announced the approval of Legislative Decree No. 1662, dated 24 September 2024, which modifies the Advance Pricing Agreement (APA) provision in the income tax law to permit the retroactive application (roll-back) of APAs in specific circumstances.
Under this new rule, the National Superintendence of Customs and Tax Administration (SUNAT) can enter into agreements with taxpayers and foreign authorities under international treaties designed to prevent double taxation.
The rollback of an Advance Pricing Agreement (APA) is generally permissible when it is confirmed that the facts and circumstances from prior years remain consistent with those of the years covered by the APA, and the tax authority (SUNAT) retains the capacity to determine income tax liability in accordance with transfer pricing regulations, provided that the statute of limitations has not lapsed.
The rollback of an APA is prohibited if SUNAT has already made and communicated a determination regarding the value of the transactions in question as a result of applying the transfer pricing rules.
This modification of the Income Tax Law aims to enhance tax compliance.
