Corporate - Group taxation

Last reviewed - 26 January 2021

Group taxation is prohibited in Peru.

Transfer pricing

Transactions between related parties and those entered into with parties domiciled in tax havens are subject to transfer pricing rules.

The existence of the transactions between related parties determine the application of specific valuation methods, which are established in the Income Tax law.

The rules related to market value and transfer pricing establish that, in any kind of transaction, the value assigned to the goods and services must be the market value for tax purposes. If such value differs from the market value, either by overvaluation or sub-valuation, the tax administration will proceed to adjust it for both the purchaser and the seller, even when one of them is a non-domiciled entity, provided that the value agreed to results in a lower tax than the one that would have applied if transfer pricing rules had been applied. The adjustment will be imputed in the taxable period in which the operations with related parties were performed.

In case of transactions between related parties or those entered with tax havens, the market value will be equivalent to the value agreed with independent parties in similar transactions, being mandatory to support such value with a transfer pricing study.

The law states that transfer pricing rules will not apply for VAT purposes.

Benefit test requirement

The benefit test must be accomplished when a domiciled entity receives a service rendered by any of its related parties. Such test is considered complied with when the rendered service provides economic or commercial value to the recipient of the service, improving or maintaining its commercial position, which occurs if independent parties have satisfied the need for the service. The providers’ cost structure must be proved.

If the domiciled entity complies successfully with the benefit requirement test, then the deduction of the cost or expense incurred for the services rendered would be accepted. Low value services must not exceed the margin of 5%.

Formal obligations

New formal obligations have been approved. Such obligations are the following informative tax returns:

  • Local report: Mandatory for taxpayers whose accrued income in the taxable year exceeded 2,300 tax units. They must provide information of transactions that generate taxable income and deductible costs/expenses.
  • Master report: Mandatory for companies that are part of a group with profits higher than 20,000 tax units, and companies that would have performed transactions within the scope of transfer pricing rules, whose amount of operations is equal to or higher than 400 tax units. They must give information regarding the organisational structure of the group, description of their business, their transfer pricing policies for intangibles and financing, and their financial and tax status.
  • Country-by-country (CbC) report: Mandatory for domiciled companies within a multinational group. They must provide information of the global distribution of profits, taxes paid, and business activities performed by each entity of the group in any country.

Tax price adjustments

Adjustments to prices are only required whenever the price paid generates a higher tax deduction or a lower income tax in Peru; consequently, the existence of a tax prejudice will be required for an adjustment to be requested.

Adjustments are performed individually (on each operation) and not in an overall or global manner.

The adjustment of the value assigned by the tax administration or the taxpayer will be effective for both the transferor and the purchaser or transferee, without any constraints. In the case of non-domiciled parties, the bilateral adjustment will only proceed on transactions that could trigger taxable income in Peru and/or deductions for determining the income tax in Peru.

The adjustments are attributed to the corresponding tax period, according to the attribution rules depicted in the PITL (accrual regime for corporate taxpayers). However, when, under such rules, the adjustment cannot be attributed to a particular period, the adjustment will be allocated among all tax periods where income or expense has been allocated, in proportion.

Operations where no consideration has been paid are subject to transfer pricing rules. In this kind of transaction, the adjustment shall be allocated to the period or periods in which revenue would have accrued if consideration had been paid and the income was to be acknowledged by a domiciled taxpayer. On the other hand, if the income were to be recognised by a non-domiciled taxpayer, it would be attributed to the period or periods where the expenses accrued, even if it was a non-deductible expense, and the domiciled taxpayer would be responsible for payment.


There is a specific methodology for determining prices in the sales of internationally traded commodities to tax havens or intermediaries.

In this methodology, it is required to determine the price of the specified operation based on the international price without taking into account the particularities of each case.

Thin capitalisation

According to the PITL, interest deductibility is subject to certain limits for loans between related parties (thin capitalisation rule). According to such rule, in the case of loans between related parties, the amount of interest to be deducted is limited to interest from indebtedness not exceeding three times the debtor’s net equity as of the end of the previous fiscal year.

Only the amount of interest that proportionally corresponds to the maximum amount of debt permitted after applying such coefficient is deductible.

Pursuant to the recent changes to the PITL, the thin capitalisation rule will be applicable to all loans (related or unrelated debt). The new thin capitalisation rule will apply for loans entered or renewed as of 13 September 2018 until 31 December 2020.

The thin capitalisation rule, will not apply to:

  • Insurance and banking companies.
  • Taxpayers whose net income is equal to or less than 2,500 tax units.
  • Taxpayers who develop public infrastructure projects, public services, services related to public services, applied investigation and/or technological innovation through Public-Private Entrepreneurship Associations.
  • Interest arising from loans required to finance the activities mentioned in the previous point.
  • Indebtedness arising from the issuance of debt securities, subject to certain requirements.

Additionally, a limitation on interest deduction applicable as of 1 January 2021 has been established. Such limit will be 30% of the company's EBITDA for related and unrelated debt. For purposes of this new rule, EBITDA is defined as the net income after setting off net operating losses, plus net interest, depreciation, and amortisation. Non-deductible interest exceeding the aforementioned limit may be carried forward to the following four years.

Controlled foreign companies (CFCs)

CFC rules are in force in order to avoid the deferral of income tax on passive income obtained from CFCs (defined as at least 50% of ownership, voting rights, or gains) by domiciled taxpayers, provided such companies are situated in tax havens or jurisdictions with nil or reduced tax rates.

Taxation of indirect disposal of shares in Peruvian entities

Domiciled taxpayers are levied on their worldwide income, whereas non-domiciled taxpayers are levied only on their Peruvian-source income. Income obtained from the indirect transfer of shares issued by entities incorporated in Peru is deemed Peruvian-sourced. For such purposes, an indirect transfer of shares is deemed to exist when the shares of a non-domiciled entity, which in turn owns (directly or indirectly through other entities) shares issued by a domiciled entity, are transferred, provided the following two conditions are jointly met:

  • During the 12 months prior to transfer, the fair market value (FMV) of the shares of the Peruvian entity owned by the foreign entity equals 50% or more of the FMV of the shares of the foreign entity (the 50% test).
  • During any given 12-month period, shares representing 10% or more of the foreign entity’s share capital are transferred (the minimum rule).

Since 2019, an additional scenario for indirect transfer is included. An indirect transfer is considered when the total value of the shares of the domiciled entity being indirectly transferred is equal to or greater than 40,000 tax units. Such amount will be determined by applying the percentage obtained for the 50% test on the total value agreed for the sale of the shares transferred by the taxpayer and its related parties. 

The Regulations establish the methods by which the FMV of the shares will be calculated for purposes of the 50% test and also for calculating the capital gain. If the shares are listed in the stock exchange market, then the FMV will be highest quotation value. If not listed, the FMV will be determined by the discounted cash flow method; the equity value, in case of companies under control and supervision of the Peruvian Superintendence of Stock Market (SMV); the equity value adjusted by the average active market rate; or the appraisal value. The FMV method applicable will have to be determined on a case-by-case basis.