Cross‑Border Tax Forecast 2026 in Peru

The Republic of Peru and the UK have entered into a double taxation convention (DTC) which shall take effect with respect to corporate income tax as of 1 January 2027.

The DTC addresses income from immovable property, business profits and international transportation. Maximum withholding tax rates at the source state are established for dividends (10% or 15%), interest (10%) and royalties (15%), and criteria are set for the taxation of:

• capital gains
• independent personal services
• income from dependent employment
• directors’ fees
• artistes and sportspersons
• pensions
• government service
• students
• other income not expressly mentioned.

The DTC will prevent scenarios in which the same income is subject to taxation in both Peru and the UK.

In this regard, it opens the door to more tax-efficient structures involving said country.

Review the structure of commercial transactions involving operations linked to the UK in order to identify potential tax saving opportunities.

This treaty, developed by the OECD as part of the Base Erosion and Profit Shifting (BEPS) Action Plan, aims to strengthen DTCs and prevent tax avoidance.

This multilateral instrument (MLI) will automatically modify the DTCs entered into by Peru with Canada, Chile, Korea, Portugal and Mexico.

In particular (among other matters):

• anti-abuse rules are introduced (Principal Purpose Test or PPT)
• a new definition of permanent establishment is set forth
• a new treatment of certain capital gains is introduced.

The convention modifies the international taxation rules upon which commercial arrangements involving Peru had been designed in conjunction with Canada, Chile, Korea, Portugal and Mexico.

In particular, the newly incorporated rules may give rise to risks in tax planning arrangements that, at the time they were conceived, were not in place.

Undertake a reassessment of tax planning arrangements that may have been designed prior to the entry into force of the convention, in order to assess whether new contingencies may arise as a result thereof.

Resulting in Constitutional Court Ruling – Case No. 04068-2023-PA/TC, the Constitutional Court undertook a constitutional reassessment of how the tolling of the statute of limitations, provided for under Article 46 of the Tax Code, should be construed, with direct implications for tax litigation and legal certainty.

The Court ruled that where, in administrative litigation, the assessments (Assessment Resolutions, Penalty Resolutions, Payment Orders etc.) are declared null and void, the time elapsed during the administrative contentious proceedings shall be computed toward the statute of limitations period. 

This criterion allows for the invocation, upon a declaration of nullity, of the statute of limitations for the tax assessment action with respect to those taxes and periods that remained in excess of the statutory 4-year deadline for resolving administrative appeals, up to the aforementioned declaration of nullity.

This would enable the argument that the tax authority no longer has the power to reassess said debts, thereby precluding any future audit adjustments or assessments for those taxes and periods.

• Identify pending litigation in which the statutory deadline for resolving administrative appeals has exceeded the 4-year statutory period
• Assess potential nullity arguments that may be raised in order to obtain annulment of the assessments