The Peru–UK income and capital gains tax treaty came into effect on 21 January 2026, marking the first agreement of its kind between the two countries. It aims to prevent double taxation, combat tax evasion, and cap cross-border withholding taxes on dividends, interest, and royalties
The income and capital gains tax treaty between Peru and the UK entered into force on 21 January 2026.
Signed on 20 March 2025, the agreement aims to eliminate double taxation, prevent tax evasion and avoidance, and improve dispute resolution between the two nations.
The treaty is expected to strengthen tax cooperation, while providing clarity and certainty for businesses and investors operating across both jurisdictions.
Taxes covered
- Peru: Income taxes under the Income Tax Act (Ley del Impuesto a la Renta) and the Micro and Small Businesses Income Tax Regime.
- UK: Income tax, corporation tax, and capital gains tax.
The treaty also applies to any identical or substantially similar taxes introduced after its signature, in addition to or replacing existing taxes.
Withholding Tax
The treaty sets maximum withholding tax rates on cross-border income: dividend withholding tax is capped at 10% (15% for dividends linked to immovable property), interest at 10%, and royalties at 15%.
Date of Application
- In Peru: The treaty applies to income and payments credited or accounted as expenses on or after 1 January 2027.
- In the UK:
- Taxes withheld at source: Amounts paid or credited on or after 1 January 2027.
- Income tax and capital gains tax: Any year of assessment beginning on or after 6 April 2027.
- Corporate tax: Any financial year beginning on or after 1 April 2027.
Earlier, the UK issued the Double Taxation Relief and International Tax Enforcement (Peru) Order 2025 on 10 December 2025, confirming the ratification of its income and capital tax treaty with Peru.
