Peru’s Congress enacted Law 30823 on 19 July 2018 granting President Power to enact new tax legislation for a short period on specific issues. The President has 60 calendar days till 17 September 2018 to issue new tax legislation.
The issues are as under:
- Issue regulations on the general anti-avoidance rule (GAAR), which is currently suspended until the regulations are published;
- Modify the Tax Code in order to expand the cases of joint liability of legal representatives by applying the GAAR;
- Issue specific anti-avoidance rules for transactions between related and unrelated parties;
- Establish a special rate of income tax for dividends from companies with legal stability contracts signed during 2015 or 2016;
- Modify withholding tax rates applicable to capital gains and income from independent personal services;
- Modify the criteria to consider legal entities as domiciled in Peru;
- Modify the income tax rates applicable to income from activities developed partly in Peru and partly abroad;
- Regulate the exchange rate applicable to transactions performed by resident individuals and nonresident persons;
- Improve the tax treatment applicable to capital gains from the indirect sale of shares, as well as the criteria to determine when an entity incorporated abroad will be subject to income tax;
- Establish a definition of accrual recognition for income tax purposes;
- Modify the deduction of business expenses (rules on depreciation and amortization, interest, expenses for the acquisition of vehicles, penalties and indemnities);
- Adapt national legislation to international standards and recommendations issued by the Organization for Economic Co-operation and Development (OECD), the Financial Action Task Force and international best practices for the fight against tax avoidance and evasion;
- Implement mechanisms of transparency on ultimate beneficial ownership;
- Implement the OECD’s Common Reporting Standard in Peru;
- Incorporate the indirect credit rules and modify the direct credit rules in Peruvian local tax legislation; and
- Amend the value added tax to improve its administration.
