By Daniela Comitre, Lead Partner at PwC Peru
Peru continues to stand out as a beacon of opportunity in Latin America, offering significant potential in high-impact sectors such as infrastructure, energy, mining, and specialized services. With a foundation built on long-term macroeconomic stability, an abundance of critical natural resources, and an urgent need to develop new productive capacities, the country remains a compelling destination for global capital.
However, the modern investment landscape demands more than just identifying market potential. For an investment to be truly sustainable and resilient, the fiscal dimension must be woven into the very fabric of business decision-making from inception—not merely treated as an afterthought during profit distribution or divestment. A holistic approach that considers the entire lifecycle of an investment—entry, financing, operation, reinvestment, reorganization, and eventual exit—is essential.
Main Facts: The Intersection of Strategy and Taxation
Investing in Peru requires an understanding that tax planning is not synonymous with tax evasion; it is about risk mitigation and efficiency. The "tax-first" mindset ensures that investors do not encounter regulatory friction when the time comes to pivot, expand, or exit.
The current landscape is defined by a 29.5% corporate income tax rate and a 5% withholding tax on dividends for non-domiciled shareholders. While these figures are straightforward, the complexity arises in how international structures interact with local legislation. Investors must account for the reality that the "substance over form" principle is increasingly the lens through which the Peruvian tax authority, SUNAT, views cross-border transactions.
Chronology: A Shifting Regulatory Environment
- January 2026: The Convention to Avoid Double Taxation (CDI) between Peru and the United Kingdom officially entered into force, marking a milestone in Peru’s expanding treaty network.
- January 2027: The key fiscal provisions of the UK-Peru CDI become fully applicable in Peru, representing a significant shift for British capital entering the market.
- 2024 (RTF N.º 07909-1-2024): The Tax Tribunal (Tribunal Fiscal) issued a landmark ruling allowing the deduction of interest in a leveraged acquisition followed by a reverse merger, provided that the nexus between the debt and taxable income was clearly proven.
- 2026 (RTF N.º 08270-13-2026): In a contrasting decision, the Tax Tribunal denied the deduction of interest in a debt push down scenario, ruling that the debtor company was created solely as a temporary vehicle without sufficient underlying economic substance.
Supporting Data and Technical Nuances
The Reality of CDIs: Beyond the Certificate of Residency
While Double Taxation Agreements (CDIs) are vital for distributing tax powers and mitigating disputes, they are not a "get-out-of-tax-free" card. Many investors mistakenly believe that a certificate of residency is sufficient to trigger treaty benefits. In practice, authorities require evidence of real business functions, decision-making autonomy, and the effective disposal of income. An entity lacking economic substance will rarely find shelter under a CDI.
Financing: The Triple Constraint
Financing strategies are frequently misunderstood. While interest payments to non-domiciled related parties face a 30% withholding tax (which may be reduced by CDIs to 10% or 15%), the deductibility of that interest is a separate battle. It requires adherence to:
- Full Competition (Arm’s Length) Principles: Ensuring interest rates reflect market conditions.
- Tractability: Proving the funds were utilized to generate taxable income in Peru.
- The 30% EBITDA Rule: Peruvian legislation limits the deduction of net financial expenses to 30% of the tax EBITDA, a hard cap that requires precise financial modeling.
The Debt Push Down Debate
The discrepancy between the 2024 and 2026 Tax Tribunal rulings underscores the necessity of "causality." A debt push down—where debt is transferred to an operating company—is not illegal. However, it must be supported by a legitimate business purpose: control, synergies, and operational logic. If the vehicle is perceived as a "shell" created only for tax optimization, the tax authority will likely challenge the interest deductions.
Implications for Investors and Future Outlook
The Exit Strategy: A Core Component of Design
A common error is failing to plan for the "exit" before the "entry." When selling shares in a Peruvian entity, the seller must obtain a certificate of recovery of invested capital from SUNAT. Without this, the tax withholding is calculated on the gross amount, which can be disastrous for liquidity. Furthermore, indirect sales—where a transaction occurs abroad but the value is derived from Peruvian assets—are subject to strict scrutiny.
Reorganizations: The Urgent Need for Reform
Peru’s current framework for international reorganizations is a competitive bottleneck. While the country allows for neutral tax treatment in domestic reorganizations, it largely ignores the necessity of neutral treatment for cross-border mergers, spin-offs, and share exchanges within the same corporate group.
In neighboring jurisdictions, these movements are often tax-neutral provided they maintain economic continuity and do not involve the revaluation of assets. Peru’s failure to adopt similar standards places it at a disadvantage. There is a pressing need for a legislative update that recognizes the legitimacy of international intragroup reorganizations. Such a change would not only foster investment but also provide a clearer framework for the tax authority to prevent abuse while allowing legitimate corporate restructuring.
Conclusion: Investing with an Integrated Vision
To thrive in the Peruvian market, the tax function must evolve from a compliance-focused department into a strategic partner. A well-structured investment in Peru is one that:
- Integrates tax planning with commercial strategy, financing, and corporate governance from the onset.
- Documents substance, business purpose, and economic synergy to withstand the scrutiny of the tax authorities.
- Maintains flexibility to allow for future reorganizations or exits without triggering unnecessary tax penalties.
As Peru continues to refine its tax environment, investors must look beyond the immediate tax rate and view the fiscal framework as a component of the long-term value chain. By embracing transparency and professional structure, companies can ensure that their presence in Peru is not only profitable but also sustainable and prepared for the challenges of a globalized economy.
The path forward for Peru involves not just attracting capital, but retaining it through competitive, predictable, and fair tax policies that acknowledge the modern realities of international business. Investors who align their strategies with these principles will find that Peru remains one of the most promising jurisdictions in the region, ready to support long-term growth and operational excellence.
