Peru is in for a year of changes as practitioners expect that the new government's pro-business approach will affect both companies and individuals. During new president Pedro Pablo Kuczynski's five-year term in power, Peru is hoping to lower the poverty rate and also boost business and attract investors into the country.
In 2015, a major tax reform passed in December the previous year was the hottest topic among practitioners. The thought behind the reform was to bolster economic growth. Among other changes, it decreases the corporate income tax rate and withholding tax on bearer securities payments, and increases withholding tax rates on dividends.
The corporate income tax rate will decrease regularly over a period of four years, starting at 30% and decreasing to 26% in 2019, while the law will increase the dividend/profit distributions withholding tax rate from 4.1% to 9.3% over the same period.
"It's an important mechanism," said Cristina Chang, partner at Osterling Abogados. "At least the message is very clear. They [the government] want the companies to invest money. If they do that, they will pay less income tax. And I think it's a very useful tool in order to call investors from abroad, considering that the reduction of the corporate income tax rate makes Peru a more competitive country in the region."
However, not everyone agrees that the reform was a beneficial move for taxpayers. Luis Valle, principal associate at Garrigues, said that it was not a real reduction of taxes because the corporate income tax rate and the withholding tax on dividends come to 33% anyway.
"It's an illusion of a reduction, but in the end you are paying the same," said Valle. "The only way to not pay the same is if the profits are not distributed as a dividend. This way, the government is trying to maintain the revenues inside the company. But we believe that this way is not the best way to do it."
Valle said that there might be a reform to flatten the tax rate, but that it was uncertain whether such a reform would be passed by Congress should it be proposed. The government and Congress are not in agreement, which makes it hard to pass changes as the majority of Congress is made up of members of the party that lost the election.
The new government has also made efforts to change the perception of Peru's federal tax authority, Superintendencia Nacional de Aduanas y de Administración Tributaria (SUNAT). Dante Sanguinetti, partner at Philippi Prietocarrizosa Ferrero DU & Uría, said that the tax authorities were trying to show a new, friendlier face and make it easier for companies to pay their taxes.
"They are trying to be more helpful and closer to the taxpayers, and they have people to help taxpayers to file and accomplish all the formalities. They're trying to change the image they had," said Carlos Chirinos, tax manager at Grant Thornton. However, practitioners say that it is well known in the industry that the authorities have an incentive for collecting taxes, and that the inspectors have collecting figures.
President Kuczynski is also hoping to make Peru a member of the OECD and meet the international standards for transparency.
"We [Peru] haven't yet implemented any rules like other countries have been doing," said Gustavo Lazo, head of tax at Estudio Olaechea. "We have been watching the OECD, but the government hasn't yet related any laws regarding that."
A further change is a cut in the tax on transactions carried out in the Peruvian market. In September 2015, the government enacted tax changes that temporarily exempt certain transfers of shares from capital gains tax, EY reports. Until last year these were subject to a 5% tax, however now it is possible to sell shares without paying taxes.
Ernst & Young Asesores Sociedad Civil de R.L.
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Country Tax Managing Partner
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Business Tax Services
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Global Trade and Indirect Tax
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International Tax Services
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Maria Eugenia Caller
Tel: +51 1 411 4412
|Corporate Income Tax||28%||A B|
|Capital Gains Tax||0%||5%||30%||C|
|Net Operating Losses (years)|
|Royalties from, for example, patents, know-how||30%||F|
|Technical assistance payments and service fees||15%||F|
|Branch Remittance Tax||6.8%||D|
A The corporate income tax is 28% for the 2015 and 2016 fiscal years. For the 2017 and 2018 fiscal years, the rate will be 27%. For the 2019 fiscal year and future years, the rate will be 26%.
B Mining companies are subject to an additional Special Mining Tax or to “voluntary” payments.
C Capital gains derived by non-resident entities are subject to income tax at a rate of 5% if the transfer is made in Peru. Otherwise, the rate is 30%. For the period of January 1 2016 through December 31 2018, capital gains derived from the transfer of shares, or listed securities representing shares, carried out through the Peruvian stock exchange are exempt from tax if certain conditions are met. Capital gains derived by resident entities are subject to income tax at a rate of 28%.
D Branches and permanent establishments of foreign companies are subject to the same corporate income tax rate as domiciled companies.
E The Dividend Tax, which is imposed at a rate of 6.8% and is generally withheld at source, is imposed on profits distributed to non-residents and individuals. The Dividend Tax rate will increase to 8% for the 2017 and 2018 fiscal years and to 9.3% for the 2019 fiscal year and future years.
F This tax applies to payments to non-residents.
G A reduced rate of 4.99% applies to certain interest payments.
Deloitte has one of the largest tax practices in Peru. The services the firm provides include corporate and labour law, foreign trade and customs, litigation and M&A, along with the its other services in international and corporate tax, indirect tax, transfer pricing and consulting.
Many of the firm's clients are in the consumer business, manufacturing, life sciences and health care, technology, media and communications (TMT), financial services, public sector and real estate industries. Gustavo Lopez Ameri, who specialises in tax consulting, including international tax, and transfer pricing, particularly for telecommunications companies, leads the tax team.
The tax team at Estudio Echecopar, a Baker & McKenzie member firm, has two partners and eight other tax professionals. Rolando Ramírez-Gastón leads the practice. Its services include advising on audit procedures, tax planning and structuring, M&A, and tax litigation. Clients are in the construction, fishing, retail, mining, cosmetics, financial services, technology, oil and gas and agrobusiness industries. The firm also advises nongovernmental organisations.
In the past year, the tax team provided tax planning analysis and strategy for the separation of Alstom Peru's transport and renewable energy line of business, which included evaluating the options for transferring assets and liabilities. The scope of the advisory also included finding a tax-efficient strategy for the incorporation of a new corporation for allocating the assets and liabilities resulting from the local corporate reorganisation.
Estudio Olaechea has a full-service tax practice, led by Gustavo Lazo. The firm advises local and international clients on domestic and international tax matters. The tax team has two partners and five other tax professionals who handle non-contentious advisory, disputes, tax structuring, and transfer pricing. Many of the firm's practitioners have served in the tax courts. Some of the firm's prestigious multinational clients include Caterpillar, Dole Foods, Goldman Sachs, American Express, Barclays, General Electric, Michelin, The Clorox Company and Mattel.
The firm is working with another law firm to give advice to a sustainable timberland and natural resource investments company regarding tax exposure. This task involves the design of a viable tax structure.
"They're qualified, professional and service-oriented tax lawyers," said one client. "They have a very robust staff of lawyers with expertise in several, if not all, Peruvian tax matters," said another client.
EY's Peruvian branch has 384 tax professionals. The firm has developed a sub-service line called international tax services, which provides advice to chief financial officers and tax directors of multinational companies operating in challenging environments. Roberto Cores Ferradas leads the international tax practice, which has 11 tax professionals including Ferradas, who works in international tax and is a member of the International Fiscal Association's Peruvian group and the Peruvian Institute of Tax Law.
EY is providing tax advisory to Intercorp, a leading group in the banking/finance market with investments in sectors such as retail and education, among others. The tax advisory provided includes the transfer of shares of an entity of the group, as well as the acquisition of shares of a foreign company.
The firm collaborated with the Peruvian Ministerio de Relaciones Exteriores (Ministry of Foreign Affairs) on the elaboration of the official investment guide of Peru. "My experience with this firm has been very good," said one client. "We still have a close and good relationship."
Luis Valle leads the tax department at Garrigues, which has two tax professionals and is especially competent in the mining, energy, investment banking and financing sectors. The firm focuses on tax planning as well as complex international tax issues such as transfer pricing and double tax treaties. The firm also has broad expertise representing clients in tax audits. Although the firm is part of an international network, it has a boutique-style relationship with its clients.
In 2016, the tax team advised an international infrastructure company on creating a tax-efficient structure that will allow purchasing the shares of an infrastructure concessionaire followed by an equity/debt swap to restructure the company's finances.
"We are very satisfied with their assistance. Valle and Rafael Martinelli gave us prompt and understandable answers to our questions and needs. They remain our tax counsels in Peru. I would recommend them; they are a small but competent team. Surely, they will grow in the near future so they will be able to provide their assistance to many more clients," one client said.
"Garrigues is one of the best law firms in Spain. They are a very new firm in Peru, but they will probably find the results they are looking for with their new hirings," a practitioner from a competing firm said.
Carlos Chirinos oversees the team of 45 tax professionals at Grant Thornton. The firm been in the Peruvian market for four years and is focused on assisting the economic sectors, and is also improving its experience in other sectors such as mining.
"Our experience with them was good. The support covered our corporate expectations," said one client.
In February 2016, the firm assisted a client in a complex analysis of inbound financial structures within an important wood industrial group. In a separate deal for a different client in the same month, the firm also assisted on a tax analysis of the transfer of a mining concession.
Hernández & Cía Abogados offers tax consulting, planning, preventive review, audit guidance, and legal counsel services at the administrative and judicial levels. Partner Luis Hernández is described by his peers as an authority in the field. He specialises in tax, customs, international trade and corporate matters, and has been a professor of tax law since 1974. Another partner is Juan Luis Hernández, who practises in the areas of corporate M&A, banking and finance, capital markets, infrastructure and construction.
KPMG's tax team provides various tax, legal, advisory and audit services to local and international clients. Its tax and legal professionals are specialists in tax advisory, including trade and customs services, tax planning and support. The legal services professionals are experienced in advisory, dispute resolution and due diligence. In terms of tax compliance and assessment, the team handles income tax return reviews, tax diagnosis, review of monthly tax obligations, and support in meetings with tax auditors. Its transfer pricing professionals assist with documentation of transactions with related parties, transaction planning, support in tax assessments and defence. Partners in the firm include Manuel del Rio and Rocío Bances.
Miranda & Amado Abogados, Taxand Peru has a tax practice that performs advisory work, tax planning, transactional work and litigation at all levels of the courts. Its work spans the oil and gas, infrastructure, and telecommunications industries.
Rocío Liu leads the tax and customs practice. She has more than 23 years' experience and focuses on tax matters relating to the banking, telecommunications and energy and natural resources sectors. She specialises in tax litigation, tax planning for M&A, finance and capital markets transactions and complex corporate restructurings.
Fernando Castro leads the tax practice at Muñiz, Ramírez, Pérez – Taiman & Olaya. The practice comprises six partners and nine other professionals. The firm is known for its work in tax planning in connection with M&A and financial transactions, but also has significant experience in litigation and transfer pricing. It has a strong presence in the fishing, agricultural and pharmaceutical industries.
The firm is assisting Pesquera Diamante in challenging a tax assessment made by the tax authorities with respect to its income tax of 2003. The case is under the jurisdiction of the Supreme Court. In a separate deal in June 2015, the firm assisted in the acquisition of a 44% stake in Adexus Chile by Graña y Montero.
Osterling Abogados's tax team is led by Cristina Chang and specialises in the mining sector. The firm advises on all tax issues related particularly to this sector, such as tax litigation connected to holding certificates and rollback clauses, tax issues arising from agreements and negotiations with local communities, M&A and deduction of expenses related to this sector such as amortisation of pre-operatives and development expenses, among others.
During the last year, the firm has been advising in tax litigation with an 89% success rate. It also works on M&A, corporate reorganisations, tax planning, tax audits, day-to-day advisory, insurance and more. The firm can provide clients with frequent tax reports regarding the main Peruvian tax news and jurisprudence.
"Our company engaged Osterling for M&A, tax audits and regular tax advice, and the experience has been fully satisfactory so far," one client said.
The firm is representing Sociedad Francesa de Beneficencia in a tax litigation against SUNAT and the tax court regarding the determination of its VAT liabilities of the years 1998 through 2013.
Iván Chu and Juan Manuel Salazar lead the tax practice group at Payet, Rey, Cauvi, Pérez Abogados. The firm also has six other tax professionals who work with corporate tax, international planning, litigation and finance and banking. Its clients are mainly in the telecommunications, mining, electricity, construction, textile, education and oil and gas industries.
The practice is mainly focused on tax consulting (including tax opinions and tax planning), special tax audit assignments (including tax due diligences, review of tax assessments, estimation of potential tax contingencies, and assistance during tax audits) and litigation (including representation of clients before tax and customs authorities such asthe tax court and the judiciary).
The firm is representing a shareholder in the sale of its shares in Cóndor Travel. The team's participation was important because of tax contingency that was disclosed to the buyer as a result of the due diligence process, which has crucial implications in the tourism sector. The team had to analyse and quantify this tax contingency and work on how to structure the share purchase agreement.
"My experience with the tax area has always been amazing, they have always provided the best tax legal advice, very accurate and straight forward," said one client.
Estudio Ferrero Abogados and Delmar Ugarte joined forces with Philippi, Prietocarrizosa, & Uria from January 1 2016. The firm is now known as Philippi, Prietocarrizosa, Ferrero DU & Uria. The firm's tax practice is divided into three sub-areas: international taxation and tax planning, tax litigation and tax advisory and consulting.
The tax practice advises on various customs issues such as general counsel related to temporary import, admission and export, and preparation and monitoring of administrative customs proceedings. In terms of consultancy, the team provides tax advice for clients in various industries. The firm has a lot of experience in the mining industry. It also offers contingency evaluation, planning and tax procedure services, supporting clients in audits and before Peru's different tax authorities and courts. Walker Villanueva leads the tax team of three.
In the past year, the tax team provided tax advice to Inversiones Centenario on the sale of its entire stake in Peruvian cash management company Hermes Transportes Blindados to the Carlyle Group. The work included a deep analysis of the transaction and its consequences.
Led by Orlando Marchesi, the tax and legal services department of PwC performs a range of tax functions. Its consulting arm handles permanent tax consulting, tax planning, due diligence, international taxation and advice on customs issues and trade. The tax audit section offers technical assistance, diagnoses of tax situations, reviews of the proper fulfilment of tax obligations, evaluations of controls and procedures, outsourcing of tax advice, reviews of affidavits, and support and defence during tax audits.
In transfer pricing, the firm's professionals prepare studies and supporting documentation, information affidavits, prospective transfer pricing reports, and corporate restructurings arising from transfer pricing studies.
The litigation team advises on enforcement, claims and appeals procedures, and the process of administrative contentious lawsuits and audit procedures that are already underway. The team also offers legal advice on civil, contractual and corporate matters, M&A, intellectual property and foreign investments.
The practitioners at Rebaza, Alcázar & De Las Casas Abogados are specialists in banking and finance transactions. The firm's tax services professionals are experienced in M&A and corporate finance and can determine the tax implications and risks of financial transactions. The tax practice is led by Camilo Maruy. He specialises in investments tax matters, tax planning for banks, M&A and project finance.
Alex Córdova leads the tax practice at Rodrigo, Elías & Medrano Abogados, which has existed for more than 50 years in the Peruvian legal market. The team consists of eight partners and 13 other tax professionals.
The tax practice group regularly provides legal advice on tax compliance, tax planning, private and governmental tax audits, transfer pricing, tax assessments, tax claims and wealth management matters. On the transactional front, the tax practice group regularly participates in M&A, equity and debt financings, restructurings, privatisations, concessions, foreign investments, derivatives and other corporate transactions.
The team's experience covers industries such as mining, oil and gas, electricity, public infrastructure, power, banking and insurance, transport and telecommunications and project finance.
The firm is advising Minmetals Group regarding its acquisition of the copper mine project Las Bambas. Córdova and Gonzalo La Torre are advising on the anticipated VAT recovery and the amendments to the tax stability and legal stability agreements.
Córdova is a former president of IFA – Peruvian Group, and is a regular speaker at national and international tax congresses. Humberto Medrano, co-founder and a recognised senior tax expert, is a permanent counsel in the tax practice.
Law firm Rubio Leguía Normand gives local and international clients general tax advice, tax planning and consulting, customs and international trade tax services, as well as working on cross-border M&A, infrastructure and structuring projects.
The tax practice includes partners such as Marilú Pedraza, who specialises in tax law and has years of experience in tax planning, advising Peruvian and foreign companies on project finance, debt and equity offerings, M&A and general corporate and financial transactions.
Others include founding partner Alfonso Rubio, who advises on tax and corporate matters, and César Luna Victoria, who advises on international tax planning and financial and corporate transactions.
Walther Belaunde leads Santivañez Abogados's tax team, which provides advice on planning, audits, structuring, M&A, cross-border planning for investments and double tax treaty services. The firm has a lot of experience in the energy and mining sectors.
Belaunde is a former director and current member of Peruvian tax law institute, a member of the International Fiscal Association and past president of the tax committee of the American Chamber of Commerce.
Santivañez is advising a holding company of an electricity distribution company on tax matters related to two power generation plant projects, analysing and suggesting more convenient tax schemes for the project.
Zuzunaga Assereto & Zegarra Abogados provides tax services to local and international companies in various sectors of the economy. Its expertise includes corporate planning, international taxation, tax advocacy, consulting, foreign trade planning and customs. Its partners include Juan José Assereto and Fernando Zuzunaga, specialists in tax, foreign trade and customs, and Juan Carlos Zegarra, a tax specialist with deep knowledge of the natural resources sector.
|Tier 1 - Peru|
|Rodrigo, Elías & Medrano Abogados|
|Tier 2 - Peru|
|Hernández & Cía Abogados|
|Philippi, Prietocarrizosa, Ferrero DU & Uría|
|Rubio Leguía Normand|
|Zuzunaga Assereto & Zegarra Abogados|
|Tier 3 - Peru|
|Miranda & Amado Abogados, Taxand Peru|
|Muñiz, Ramírez, Pérez-Taiman & Olaya Abogados|
|Payet, Rey, Cauvi, Pérez Abogados|
|Tier 4 - Peru|
|Rebaza, Alcázar & De las Casas Abogados|
|Firm to watch - Peru|