The first in first out (FIFO), average, specific-identification, retail, and normal or base-stock methods are allowed for inventory valuation. The last in first out (LIFO) method is not permitted.
Capital gains are taxed as ordinary income. However, capital gains derived from the sale of stock issued by a Peruvian company through the Lima Stock Exchange are taxed at a 5% rate, provided that the seller is a non-domiciled party.
An exemption has been granted as of January 2016 until December 2019 for the sale of shares performed through the Peruvian stock market exchange as long as these requirements are met:
- No more than 10% interest is transferred.
- The stock has market presence.
Cash dividends distributed to resident corporations are not subject to any taxes.
The PITL establishes that the WHT rate on interest arising from loans is 4.99%, provided the following requirements are met:
- In case of cash loans, the entrance into Peru of the foreign currency must be duly accredited.
- The credit must not accrue an effective interest that surpasses that of the London Interbank Offered Rate (LIBOR) plus 7 points (for loans proceeding from Europe or the United States).
- The loan must be destined to finance business or taxable activities.
- The parties involved must not qualify as related parties for tax purposes.
If any of the above-mentioned conditions are not met, or to the extent they are not fulfilled, a withholding rate of 30% over the gross interest will be applied. A 30% withholding rate will also apply whenever the debtor and creditor are related parties or when the participation of the creditor only aims to conceal a transaction between related parties.
Royalties paid to non-domiciled parties are subject to a 30% withholding rate, to the extent that the goods or rights generating royalties are economically used in the country or the royalties are paid by a domiciled taxpayer.
A Peruvian corporation is taxed on foreign-source income. Foreign-source income is recognised upon accrual. No tax deferral is allowed on this type of income (see Controlled foreign companies in the Group taxation section). Double taxation may be avoided by means of foreign tax credits.