Transfer Pricing obligations in Peru are now being regulated in more detail than ever before. This could mean that intra-group operations will be subjected to greater scrutiny by the Peruvian tax authorities.
The changes cover the filing of the Local Report, the Master Report, and the Country-by-Country Report, with effect from 2016, and include dates by when the amendments must be applied.
For the Local File, the amendments are applicable from the year 2017 (corresponding to 2016 operations); for the Master File and Country-by-Country File, the amendments are applicable from 2018, corresponding to 2017 operations.
The changes include more detail required for all files, including the minimum information required. For the Local File, this information includes identifying the personnel on whom the company's management and administration depend, plus information about intra-group services (benefit test and low value-added activities), and work papers that enable the company's financial information to be linked with its Transfer Pricing analysis. For the Country-by-Country file, the regulations now define the entities or persons required to file the Country-by-Country Report.
The amendments to the Regulations of the Income Tax Law in relation to the Formal Obligations of Transfer Pricing have been made following recommendations by the OECD (Organisation for Economic Cooperation and Development), which Peru hopes to join.
With the amendments applied, the Peruvian tax authority (SUNAT) will be closely monitoring adherence. At TMF Peru, we can help clients prepare the relevant documentation for filing, and subsequently support clients through any inspection process. In addition, by co-ordinating with our Transfer Pricing Partners, we can provide valuable insight into the necessary compliance procedures.
Peru remains one of the most complex countries in which to do business, but we can provide experienced and reputable support for companies wishing to start operations in the country. From company formation to the legal, taxations, administrative, HR and payroll support required, we are a dedicated and pro-active business partner, ensuring compliance is maintained.
One of the Peruvian Government's drives is to digitalise all tax returns, including an obligation to keep electronic accounting books, plus a move to ensure all companies issue invoices electronically. The tax administration, SUNAT, also has, among its current projects, an objective to carry out electronic compliance audits, so establishing a solid reputation for good business practices is essential. We can organise a seamless transition to the new digital taxation environment, with expert advice on maximising the potential of analysing data to enable informed decision-making.
Transparent business practice
Maintaining open and honest business practices, always compliant, is essential in a country where corruption is still a big issue. There was an infamous case last year, involving a large Brazilian construction company, Odebrecht, which admitted paying bribes in more than half the countries in Latin America, including Peru. This not only prompted a change in legislation, but also had a major impact on the local economy.
Given that construction is such a large economic driver in the country, the construction industry itself was hit by Odebrecht subcontracted work to other companies, which then found their incomes suffering after the case was made public. But although anticipated economic growth last year fell short of expectations, this year is poised for recovery, and business should be better able to thrive. The Peruvian economy closed in 2017 with an economic growth of 2.5%, below the growth reached in 2016 (3.9%) and 2015 (3.26%) and below the official estimated given by the Ministry of Economy and Finance (which was 2.8%, according to the last Multi-Annual Macroeconomic Framework). However, for 2018, according to IMF projections, the growth should be 3.8%.
Peruvian legislation now recognises the corporate criminal liability applicable to bribes, so companies need to maintain legal, transparent business practices which are fully compliant with the law.
TMF Peru has the local knowledge, expertise and experience necessary to keep companies fully compliant in today's increasingly regulated environment. For both new and existing companies, we can take care of recurring compliance filings, manage routine corporate changes, and retrieve any official corporate documents from official registries (such as certificates of good standing) that business may require.
Our local team offers experienced company secretaries, lawyers, and paralegals, with a detailed knowledge of the jurisdiction. For multi-national companies with a base in Peru, we work closely with colleagues in other countries to ensure knowledge-sharing and global efficiencies. With over 7,000 experts in over 80 jurisdictions, we are a trusted partner in maintaining compliance for companies of all sizes.
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