On 18 March 2021, the Peruvian tax authorities (SUNAT) has issued Report No. 135-2020-SUNAT/7T0000, through which SUNAT announced the use of the most appropriate method to determine the market value of services other than those classified as low value-adding in the case of intra-group services provided before 2019.

Until before the repeal established by Legislative Decree No. 1369, effective as of 1 January 2019, the fourth paragraph of subsection i) of Article 32-A of the Income Tax Law (LIR) stated that in the case of services rendered to the taxpayer by its related parties, the deduction of the cost or expense for the service received should be determined on the basis of the sum of the costs and expenses incurred by the service provider, as well as its profit margin. Regarding low value-adding services, the fifth paragraph of the aforementioned subsection established that the profit margin could not exceed 5% of the costs and expenses incurred by the service provider.

SUNAT clarifies in the Article 32-A of the LIR only established an additional regulation for the purposes of the deduction as cost or expense of the amounts for the services provided to the taxpayer by its related parties, so that, in addition to determining the market value of the transactions according to any of the internationally accepted methods, in the case of services other than those considered of low value-adding services, the deduction it had to be done on the basis of the sum of the costs and expenses incurred by the service provider as well as their profit margin.

In view of the criteria set forth, SUNAT concludes that the fourth paragraph of literal i) of Article 32-A of the LIR, before its repeal by Legislative Decree No. 1369, did not proscribe the use of the most appropriate method to determine the market value of services other than those considered low value-adding services. On the contrary, said device only contemplated additional requirements so that the user of the service could deduct as a cost or expense the amounts for the services provided, that is, that the deduction should be made on the basis of adding the costs and expenses incurred by the provider, plus the corresponding profit margin.