For income tax purposes, the following entities, among others, are considered as resident entities in Peru:
- Corporations duly incorporated in Peru.
- Branches, agencies, and PEs in Peru of non-resident individuals or entities.
- Partnerships and limited liability companies.
Permanent establishment (PE)
According to the PITL, a foreign company is considered to have a PE (i) if it has a fixed place of business through which it carries out business activities in whole or in part; (ii) if an individual has a power of attorney of a foreign entity and uses it on a regular basis to sign agreements on behalf of the foreign entity; and (iii) if the person with powers of attorney of the foreign entity keeps in Peru inventory and/or goods to be negotiated in Peru on behalf of the foreign entity.
As of 1 January 2019, a PE presence will be triggered when (i) a sole proprietorship, partnership, or entity of any nature incorporated abroad carries out its business activities in whole or in part through a fixed place of business in Peru; (ii) a construction, installation, or assembly works or projects, as well as the supervision activities related to them, exceeds 183 calendar days within any period of 12 months, unless a shorter period has been established in a double taxation treaty (DTT); (iii) the provision of services, when performed within the country for the same project, service, or for a related one for a period or periods exceed 183 calendar days within any period of 12 months, unless a shorter period has been established in a DTT; and (iv) a person acts in the country on behalf of a sole proprietorship, entity, or any other foreign entity, and usually concludes contracts or usually performs the main role in the conclusion of contracts routinely held without substantial modification by the sole proprietorship, entity, or any other foreign entity, and such contracts are held on behalf of these, for the transfer of the right to property or the right to use property owned by them or over which they have the right to use, or for the provision of services on their behalf.
The consequence of a PE presence in Peru is that the PE will be required to comply with all the formal and substantial tax obligations of any domiciled taxpayer, meaning that it will have to be registered before the tax administration (get a tax identification [RUC] number), issue/receive invoices, keep full accounting books, file monthly and yearly tax returns, withhold taxes, allocate a reasonable income for its Peruvian source activities, etc. If a PE presence is determined, then the tax contingency will have to be quantified by calculating the taxes, fines, and interest accrued as from the moment in which the PE presence can be deemed, except for the period barred by statute of limitations.