On 30 December 2021, the Peruvian Tax Administration (SUNAT) has issued Supreme Decree 402-2021-EF in the Official Gazette clarifying the regulations for interest deduction limitation rules.
From 1 January 2021, interest exceeding 30% of EBITDA in the previous year will not be deductible. If interest is not deductible it will be possible to carry it forward for four years, still subject to the limitation of 30% of EBITDA. The new Decree clarifies the following measures:
- When the taxpayer does not obtain net income in a given year (or when the amount of their losses equals or exceeds the net income that they would have obtained), the EBITDA will be equal to the sum of the net interest, depreciation, and amortization deducted in said year;
- Interest expenses that cannot be deducted due to exceeding the indicated limit may be deducted in the 4 immediately following years, but always subject to the limitation of said years. For such purposes, the net interest corresponding to the oldest fiscal year will be considered first;
- In the case of a business reorganization, taxpayers who have just been incorporated or started activities in the course of a given year will calculate the limit for the deduction of interest-based on the EBITDA of that year; and
- The EBITDA for the 2020 financial year, based on which the limit applicable to the 2021 financial year is calculated, will be determined as follows: to the net income after the loss compensation has been made, one must (i) add, in addition from the amount of the respective depreciation and amortization, the amount of interest deducted to establish said net income; and (ii) deduct taxable interest income for that year.
