Branches, agencies, and PEs of non-resident companies or entities incorporated in Peru are subject to income tax at a rate of 29.5% on their Peruvian-source income.
For tax purposes, branches or subsidiaries are subject to the same obligations applicable to all companies in Peru, including income tax, VAT, FTT, filing of the corresponding income tax and VAT returns, issuance of invoices, etc.
Nevertheless, the following important differences between subsidiaries and branches resident in Peru must be taken into account:
- Branches are subject to income tax only for their Peruvian-source income, while subsidiaries are subject to income tax on their global-source income (both Peruvian and foreign income).
- For branches, the WHT on profit for distribution is applied on the date the annual income tax return is submitted. Subsidiaries are subject to the WHT on the date in which the corresponding shareholders agreement took place or the date when the beneficiary receives the dividends, whichever occurs first. For non-domiciled shareholders, the withholding will be applied whenever the dividend is actually paid, without taking into account the moment in which the shareholder agreement is executed.
- Branches are not considered as 'residents' of a contracting state in the terms of the DTTs currently in force, as they are only taxed over their Peruvian-source income. Therefore, the dispositions set forth in DTTs are not applicable to them.