The agreement curbs base erosion and profit shifting by reducing withholding taxes on cross-border income, capping dividends at 10% (15% for immovable-property-linked dividends), interest at 10%, and royalties at 15%.
Peru’s Congress approved the tax treaty with the UK on 6 November 2025.
The agreement aims to mitigate tax base erosion and profit shifting by reducing withholding tax rates on cross-border income. It caps dividend withholding tax at 10%, with a 15% rate for dividends linked to immovable property. Interest is capped at 10%, and royalties at 15%.
The treaty also includes safeguards against tax evasion, avoidance, and treaty shopping, along with provisions to address treaty abuse, prevent artificial avoidance of permanent establishment status, and improve dispute resolution.
Earlier, Peru and the UK signed an income and capital gains tax treaty on 20 March 2025.
