Managing Director Walter Gutsch looks at Peru's capacity to simplify the process for multinational organisations doing business in the country.
When the 2014 TMF Group Global Benchmark Complexity Index was released in January, Peru figured highly at 16th most complex jurisdiction in the world.
And it's true that Latin-American countries are prominent in this kind of ranking, almost inevitably, since most have legal systems and infrastructure levels that are still growing. But improvement is not impossible, considering that Peru was at No 3 last year.
It is relevant to highlight that Peru is developing some projects with the purpose of simplifying its business processes. For example, Peru offers both foreign and national investors legal and tax stability agreements to stimulate private investment. These agreements guarantee that the statutes on income taxes, remittances, export promotion regimes (such as drawbacks, or refunds of duties), administrative procedures, and labour hiring regimes in effect at the time of the investment contract will remain unchanged for that investment for 10 years.
Also, there are other organisms such as the Securities Market Superintendence (SMV), the Peruvian Government entity in charge of regulating the securities and commodities markets. SMV's responsibilities include controlling securities market participants, maintaining a transparent and orderly market, setting accounting standards, and publishing financial information about covered companies.
There is, however, still a lot to do to get Peru's complexity level down to an ideal position. Peru needs to centralise all of the requirements. A project needs to be developed in order to centralise all of the regulatory organisms in one, with an aim to simplify the process the companies go through to be in compliance with all the doing-business requirements.
Speaking to colleagues in our Peru business, there are plenty of ideas on how to get this complexity down.
"It will be helpful to continue providing impetus in reducing the paperwork and steps in the process. Right now there are lots of activities and approvals of different nature that take a lot of time to complete," says Jorge Torres, Project Manager for TMF Group Peru.
Meanwhile, TMF Peru Director Esteban Hilgert suggests that "a good tool to reduce Peru's level of doing-business complexity would be for the companies to be able to complete and process all the documentation online."
He adds: "Peru has benefitted from technology before, even for operational processes. For example, the government developed "Ventanilla Única" (VUCE, by its acronym in Spanish), a tool that allows you to send electronic information to comply with all requirements of foreign trade. A similar tool, the National Customs and Tax Administration (SUNAT, by its acronym in Spanish), has also been really helpful. Virtual processes are of benefit for all the organisms and individuals implicated in the process".
Every company interested in doing business in Peru needs to learn all the relevant information before taking the first step. It is recommended that they collaborate with local companies that can act as consultants on legal and economy topics, regardless of the potential the company may have to do profitable business. These local consultants can help the incoming companies in every step of the process and drive them to successful transitions.
Read more on the complexity index. Its top 20 includes other Latin American countries like: Argentina (1), Brazil (2), Bolivia (3), Mexico (6), Paraguay (8), Nicaragua (17), Venezuela (18), Chile (19), and Ecuador (20).
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