Peru Info
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 Posted: Thu Nov 30, 2006 6:16 am Post subject: DOING BUSINESS IN PERU / PERU BUSINESS GUIDE |
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DOING BUSINESS IN PERU
STARTING A BUSINESS
STANDARDIZED COMPANY
Legal Form: Limited Liability Company (Sp Z o.o)
Minimum Capital Requirement: 0
City: Lima
Registration Requirements:
Procedure 1. Check the uniqueness of the proposed company name
Time to complete: 1 day
Cost to complete: USD 2-6, USD 1.22 per name
Comment: Before electing the company name, a search must be conducted in the Public Registry to verify that no other company has the same name. This search takes no more than 1 day. Moreover, the proposed name may be reserved or blocked for 30 days in the Public Registry, so that no other company can register the same name during that time frame.
Procedure 2. An attorney draws up and signs the incorporation papers; have the documents notarized by a notary
Time to complete: 30 days
Cost to complete: USD 200 (attorney fee) + USD200 (notary fee), both fees depend on market conditions
Comment: The Incorporation Documents dully authorized by an attorney and signed by the company's shareholders must be presented to the Notary Public who drafts a Public Deed. The Public Deed needs to be filed before the Mercantile Registry within 30 days thereof. Notary fees up to 1% of capital, depending on the size of the company, the length of the public deed and the initial capital contribution.
The Incorporation Documents must include at least: the company‘s name; its specific purpose and duration; the company's domicile; the initial capital contribution, the shares nominal value and the total number of shares; the classes of shares, if needed; the name, nationality, marital status, occupation and residence of any individual shareholder; the names of the first directors, managers and agents; start-up date of operations.
Procedure 3. Deposit at least 25% of capital in a bank and obtain proof thereof
Time to complete: 1 day
Cost to complete: 0.08% of transaction value
Comment: Each share must be fully subscribed and paid in at least 25%. Payment may be made with cash, goods and real estate. It is recommended that the initial contribution be made in cash by depositing the funds in a bank account and obtaining proof thereof (most banks require a marginal deposit to open an account; for e.g. $400). Initial contributions in goods and real estates need to be appraised and such appraisal be approved by the Board before the shares can be issued.
A tax on financial transactions (ITF) was introduced, whereby any debit and credit on a bank account is taxed. The ITF rate during 2004 was 0.10%, and has been reduced for 2005 to 0.08%.
Procedure 4*. The attorney registers the incorporation Documents with the local Legal Entities Public Registry
Time to complete: included in procedure 2
Cost to complete: 0.3% of capital + USD 10 for performing the registration + USD 9 per appointment of each director, manager or other representative, up to the limit of PEN 3,400 or (equivalent to 1 UIT - Peruvian Tax Unit).
Comment: The notary submits the notarized agreement, including the company‘s name, capital stock and purpose, the address of its head office and branches, the name, nationality, marital status, occupation and residence of any individual shareholder, names of directors, capital structure and contributions, proposed bylaws, date of start-up of the company, proof of capital deposition in a bank.
By law every corporation (sociedad anónima) shall have at least three directors and one manager, except for the sociedad anónima cerrada that may choose not to have a board of directors.
Procedure 5*. The notary stamps the accounting book and the minute book
Time to complete: included in procedure 2
Cost to complete: USD 7 per book of no more than 100 pages. Most companies have between 5 and 9 of these books. Thus, the cost will range between USD 35 and USD 72.
Procedure 6. Stamp the payroll books at the Ministry of Labor and Social Promotion
Time to complete: 5 days
Cost to complete: USD 10 per each 100 pages.
Comment: A copy of the Tax Card shall be attached to the application to stamp the payroll books.
Procedure 7. Obtain Tax Card or Registro Unico del Contribuyente (Taxpayer Identification number, RUC) at the National Superintendency of Tax Administration (Superintendencia Nacional de Administracion Tributaria, SUNAT)
Time to complete: 1 day
Cost to complete: no charge
Comment: Registration with the Peruvian Institute of Social Security (this entity has been substituted by ESSALUD) is no longer required. ESSALUD and the Oficina de Normalizacion Previsional (ONP) are the State entities providing health and pension coverage, respectively. However, workers may elect to get said coverage's from private companies. Contributions to the State social security system (ESalud and ONP) are collected by SUNAT. No further action regarding this matter is required
This card is used to identify companies for tax purposes, including income tax, value added tax, and municipal tax returns and procedures, and any other matters with the Peruvian fiscal administration. Only the Form of the Unified Taxpayer Registry duly filled out shall be submitted for registration. The following papers must be shown at the time of filing: Incorporation documents of the company, original identification card of legal representative, original voucher of water or electric services of the registered office, corresponding to one of the last two months. The company shall indicate in the form what taxes will apply to its activities.
Procedure 8. Obtain a Certificate of Compatibility from the City Council
Time to complete: 6 days
Cost to complete: USD 40 (depends on the City Council, some of them don't charge for the certificate)
Comment: The procedure must be done before Procedure 10. A certificate of compatibility shall indicate that the business the company wants to develop is compatible with the area where its offices will be located and that said offices meet certain requisites, such as parking lots.
Procedure 9. Obtain Technical Report of Approval given by the National Institute of Civil Defense (INDECI-Instituto Nacional de Defensa Civil)
Time to complete: 5-15 days
Cost to complete: USD 2 per square meter (with a maximum of USD 1,000)
Comment: According to the law, all companies that are planning to operate a facility that will be open to the public need to obtain such a Technical Report. The certificate is given by INDECI (National Institute of Civil Defense) and is valid for 1 year. The technical inspection process consists of complying with the minimum security conditions and identifying the risks offered by the facility or construction, to determine the basic equipment necessary to adequately react in case of emergency.
Most district city halls request companies to obtain the report from the National Institute of Civil Defense as a requisite to grant the municipal license to operate. As a result of some accidents during 2003, the reports are more difficult to obtain, now adding more time to companies which activities will concentrate people in their facilities.
Procedure 10. Obtain Municipal License from the City Council
Time to complete: 7-30 days (depending on the municipality)
Cost to complete: USD 90 (varies depending on the City Council where the company's office is located.
Comment: The procedure must be done after Procedures 6, 7, 8 and 9 are completed. A municipal license is required to operate commercially, and it obtained from the Municipality of the jurisdiction where the company is located. Some City Councils require a provisional license while the permanent license is being processed. In most cases the City Council will require a copy of the Incorporation Documents Public Deed, the Distribution Plan, documents supporting title on the property and the Certificate of Compatibility approved by the City Council. Ordinance N°857 simplified the process to obtain a municipal license in the metropolitan municipality of Lima (Municipalidad Metropolitana de Lima) significantly. The certificate of compatibility, the technical approval and the definite business license can be obtained in one step at the municipality within 7 days. In that municipality, the cost was also reduced and ranges from US$30 to US$ 150 depending on the company's activities. Lima has 49 municipalities and the new system is currently still only operational in one.
Note: Procedures sometimes take place simultaneously. Instances of this are marked with an asterisk (*).
TAXATION
Corporate tax
Main rate: 30%
Resident companies are taxed on their worldwide income, with a credit for foreign tax paid; non-resident companies are taxed on Peruvian-source income only. The place of incorporation determines the place of residence of a legal entity for Peruvian tax purposes. Tax is charged at 30% on total income. Dividends paid between resident companies are not subject to withholding tax, but foreign dividends are included in taxable income.
The temporary net asset tax is in force for fiscal years 2005 and 2006, applied on net assets as of December 31st of the previous year for resident companies. The tax is determined by applying a cumulative progressive scale from 0% (up to approximately US$1.48m) to 0.6% (for the excess over US$1.48m), and it is payable during the first 12 working days in April or in nine instalments (from April to December). It may be credited against the payments on account of income tax or against the final payment of income tax.
Individual tax
Progressive rates to 30%
Resident individuals are taxed on their worldwide income; non-residents are taxed on Peruvian-source income only. An individual is resident if domiciled in Peru (domicile being the place of habitual abode). A foreigner is resident if staying in Peru for two years (disregarding absences of less than 90 days). Income tax is charged at progressive rates of 15%, 21% and 30%; non-domiciled individuals pay tax at a flat rate of 30%. Dividends received from resident companies are subject to a final withholding tax of 4.1%.
Capital gains
Gains are taxed as income
Capital gains are generally taxed as income. Capital gains of individuals from the disposal of property are only taxable if they result from habitual transactions, or if they are disposals of certain business property, depreciable personal property, or immovable property constructed with the intention of resale or sold within a development scheme.
Indirect tax
VAT standard rate: 17% Municipal sales tax: 2%
Value-added tax (including Municipal Sales Tax) applies at 19% to most transactions, and exports are zero-rated. Registration is compulsory for businesses. Exemptions include some basic foodstuffs, urban passenger transport, the international transport of cargo, life assurance policies, some financial products, books, and the construction and maintenance of ships.
Tax administration and compliance
Tax year: Corporations: calendar year; Individuals: calendar year
Companies make nine monthly advance income-tax payments based on a percentage of net assets and 12 payments on account based on monthly taxable income. An annual self-assessment tax return must be filed, and final tax paid by the first week in April following the end of the tax year. Tax is deducted at source from wages and salaries. Individuals earning other types of income may be required to make advance payments, depending on the category of income received. Final tax is payable by individuals on submission of an annual self-assessment tax return.
Additional tax information
Withholding taxes: Dividends 4.1%, Interest 4.99% (to non-related parties) or 30% (to related parties), Royalties 30%. Technical assistance services provided by non-domiciled companies 15% (if certain requisites are fulfilled).
Tax treaties: Peru has concluded four tax treaties, with Canada, Chile, Sweden and the Andean Countries (Venezuela, Colombia, Ecuador and Bolivia). A tax treaty with Spain is under negotiation. There is no tax treaty with the US.
Dividends: Dividends received from non-resident companies are taxable.
Revenue protection: There is transfer-pricing and anti-haven (CFC) legislation.
Groups: There are no provisions for group taxation.
Incentives: Hydrocarbons; exports; mining; farming; tourist promotion.
Other taxes: Customs and excise duties, Entertainment tax, Financial transactions tax, Industrial training fund levy, Municipal tax on real property. |
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