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Peru currently has 8 Double Taxation Agreements - download the complete guide to see the full listing - that follow the OECD Model (Chile, Canada, Brazil, Mexico, Korea, Switzerland, Portugal and Japan), and since it is part of the Andean Community, Decision 578/2004 is applicable (Colombia, Ecuador, Bolivia and Peru). A detailed list of the agreements can be found in Appendix 5. The Convention on Mutual Administrative Assistance in Tax Matters (approved by the Peruvian Congress on May 17, 2018) is also in force and application. Peru has also signed the Multilateral Instrument or MLI BEPS on June 27, 2018. Prevalence of agreements Peruvian courts have established the prevalence of agreements over domestic law.Resolution of the Tax Court "RTF" issued with mandatory observance No. 03041-A-2004. Tax Court Resolutions (RTF) The Peruvian Tax Court has had the opportunity to rule on certain aspects related to the application of the Double Taxation Agreements, followed by a decision from the Judiciary at the Superior Court level reaffirming the Tax Court's criteria. This specific case evaluates the criteria regarding the "beneficial owner“ within the framework of the Peru-Chile DTA. The reference "RTF No. 03306-9-2020" corresponds to the specific Tax Court Resolution number for this case dated 2020.Regarding the Peru-Canada DTA, the Tax Court has indicated certain criteria concerning the implications of changing residency, treaty abuse, and the application of the rule regarding capital gains (sale of shares of Peruvian companies). The specific Tax Court Resolution related to this matter is "RTF No. 8835-12-2022," dated 2022. Criteria of the Tax Administration (SUNAT) The National Superintendence of Tax Administration - SUNAT has issued an interpretation referred to Decision 578, by which the income tax exemption referred to in article 3 of the Decision would be conditioned to the verification of a double taxation situation. Report No. 098-2023-SUNATIt has also ruled on the non-dis­crim­in­a­tion clause in the case of investment funds located in Colombia within the framework of Decision 578 (Report No. 144-2020-SUNAT) and on the qualification of an investment fund located in Chile in accordance with the Peru-Chile DTA. Report No. 143-2020-SUNAT Judicial Rulings The Judiciary has interpreted that the OECD Model Commentaries qualify as "supplementary means of interpretation" according to Article 32 of the Vienna Convention. Therefore, its text holds high significance in  understanding Double Taxation Agreements entered into by Peru.This interpretation is part of the ruling in the case identified as "Expediente 05666-2020_Sala Superior.
Brazil has a network of 36 Double Taxation Agreements - download the complete guide to see the full listing - listed in Appendix 1. Among the agreements currently in force in Latin America are Argentina, Chile, Ecuador, Mexico, Peru, and Uruguay (incorporated in 2023). Brazil did not accept the Multilateral Instrument of the Organization for Economic Cooperation and Development (MLI) to amend its existing agreements. However, in general, treaties concluded by Brazil follow the structure presented in the OECD Model Con­ven­tion.Moreover, the most recent bilateral conventions reflect the country's tendency to align its agreements with the Base Erosion and Profit Shifting (BEPS) standards, including anti-abuse and anti-treaty shopping clauses.Below, we summarize the most relevant topics related to the DTAs, without prejudice to other provisions that may be important depending on the case. Prevalence of DTAs Brazilian courts have established the prevalence of treaties over domestic law. However, Brazilian tax authorities often interpret agreements in a way that limits benefits internationally accepted by the OECD. General Rules of DTAs Dividends: Dividends distributed to residents or non-residents are not subject to income tax. In any case, the 10% or 15% rate generally applies to countries with which Brazil has signed a DTAs.Interest: The 10% or 15% rate generally applies to loans.Royalties: The rate applicable to royalties derived from the use, or the right to use, cinematographic films, films or tapes for television or radio broadcasts, and any copyright of literary, artistic, or scientific works produced by a resident of a contracting state; or derived from the use, or the right to use, trademarks and patents varies in most cases from 10% to 15%. Other Common Clauses in DTAs Definition of tax residence, permanent establishment rules, taxation of capital gains, income from employment, foreign tax credit or exemption from income tax, information exchange, non-dis­crim­in­a­tion, and amicable dispute resolution procedures. Multilateral Convention on Mutual Administrative Assistance in Tax Matters The Convention, effective in Brazil since 2016, authorizes the exchange of tax-relevant information between Brazilian authorities and authorities of over 90 countries that are signatories to the Convention. This exchange can be made upon the request of the interested country or automatically. Income Tax Incidence on Services Provided by Non-Residents Abroad (DTAs) Most DTAs concluded by Brazil have protocols equating technical services to royalties, so Article 7 of the conventions exempting foreign-earned income from income tax would not apply (except for treaties with Austria, Finland, France, Japan, and Sweden). As there is no legal definition of what constitutes 'technical services,' tax authorities often use an expansive interpretation, classifying a significant part of service provision as royalties for DTAs purposes. The most recent treaties concluded by Brazil include a specific article for the taxation of technical services (such as the Brazil-Uruguay DTA). Social Security Brazil has the following totalization agreements: Ibero-American Multilateral Agreement: Argentina, Brazil, Bolivia, Chile, Ecuador, El Salvador, Spain, Paraguay, and Uruguay; Southern Common Market (Mercosur) Agreement: Argentina, Paraguay, Uruguay, and Brazil; Belgium, Canada, Cape Verde, Chile, France, Germany, Greece, Italy, Japan, Luxembourg, Portugal, South Korea, Spain, Switzerland, Quebec, United States.
Chile is a country highly favorable to foreign investment, and as such, has a wide network of agreements to avoid double taxation. To date, Chile has 37 Double Taxation Agreements in force - download the complete guide to see the full listing -, which are indicated in Appendix 2.  We note that as of January 1, 2024, the DTA with the United States of America is in force, and will begin to affect withholding taxes as of February 1, 2024. Also in force is the Convention to harmonize the tax treatment provided for in treaties between the States Parties to the Pacific Alliance Framework Agreement (Chile, Colombia, Mexico, and Peru), which will be applicable in Chile as of January 1 2024, and the Multilateral Convention to apply measures related to tax treaties to prevent base erosion and profit shifting ("MLI"), which entered into force in Chile on March 1, 2021.In the main, the MLI has affected certain provisions in the DTAs with respect to permanent establishments. Additionally, Chile has a relevant network of International Transportation Agreements, and Information Exchange Agreements in force. Mutual Agreement Procedures Currently, the Chilean tax authority ("Chilean IRS") is encouraging the use of mutual agreement procedures for transfer pricing audits. As of 2022, the Chilean IRS has created a specialized team for the application of these procedures, which is separate from the audit team. In turn, as of 2022, instructions have been issued regarding these agreements, embodied in General Ruling 19 of 2023. Tax Court Jurisprudence  There is ample jurisprudence regarding  the application of DTAs.The Chilean Supreme Court of Justice has established criteria in relation to the obligation of the State of residence in the application of the credit or imputation method for taxes paid abroad. The foregoing in order to avoid the generation of double taxation (Supreme Court ruling in case 40023-2017 of 26/11/2019).In line with the OECD model, Chilean Jurisprudence considers the residence factor as the main element for the purpose of determining the taxation power of a Contracting State (Court of Appeals Judgment of 14/04/2023). Chliean IRS Rulings The Chilean IRS has issued ample jurisprudence regarding the application of DTAs. This affords a high degree of certainty regarding the criteria adopted by the tax au­thor­ity.Con­cepts such as "resident", "beneficial owner", "permanent establishment" are dealt with in different official rulings and general rulings issued by the Chilean IRS from 2009 to date: See Chilean IRS rulings 1058 of 2021, 1746 of 2022, 2875 of 2022, 1383 of 2015, 1278 of 2021, 684 of 2021, 1342 of 2023, 1260 of 2022 and General Rulings 57 of 2009, 59 of 2014, 63 of 2021 and 19 of 2023. Hierarchy of domestic law versus DTAs In Chile, the DTAs have the same hierarchy as domestic law. This has been established in the Chilean Constitution, specifically in Article 5. Chile Clause: Special treatment for the distribution of dividends to countries with a DTA in force Chile has an integrated income tax system. Under this system the corporate tax paid at the level of a Chilean subsidiary grants a credit against withholding taxes when distributing a dividend. In the case of countries with a DTA in force, 100% of the corporate taxes paid may be used as a credit against withholding taxes.Thus, Chile reserves the preferential application of domestic law over the provisions of the DTA in this matter. As a consequence, in all DTAs currently in force, the total effective tax burden on a dividend will be 35%.
Colombia has 13 Double Taxation Agreements - download the complete guide to see the full listing -, which are indicated in Appendix 3, following the OECD Model (Spain, Chile, Switzerland, Canada, Mexico, South Korea, Portugal, India, Czech Republic, United Kingdom, France, Italy and Japan) and (Arab Emirates, which is not yet in force), and since it is part of the Andean Community, Decision 578/2004 is applicable to it.  Colombia signed the MLI (Multilateral Convention to Implement Tax Treaty Related Measure to Prevent BEPS), but to the date the legal procedures required for it to enter into force in Colombia (approval as a law before the Congress, analysis of con­sti­tu­tion­al­ity by the Constitutional Court, ratification, etc.) have not been completed. Prevalence of DTAs In Colombia, it has been established that in case of conflict between an international agreement to avoid double taxation and a domestic tax legislation, the international agreement to avoid double taxation prevails in accordance with the principles of specialty and pacta sunt servanda. Tax Ruling No. 100202208-96 – Of the Colombian Tax Authority (“DIAN” per its acronym in Spanish) Ruling C-460 of 2010 – Council of State Constitutional Court The Colombian Constitutional Court has recognized that although the OECD comments are not binding, they are an important interpretative tool in such a complex and changing subject as the international agreements to avoid double taxation. Tax Ruling C-460 of 2010- Constitutional CourtThe Colombian Constitutional Court has recognized that income tax and sim­il­ar/ana­log­ous taxes are autonomous taxes under the Colombian tax regime, but for the purposes of the international double taxation agree­ments, they are assimilable. Tax Ruling C-00049 of 2015, Tax Ruling C-00289 of 2014, Concept 0023323 of 2015, Concept 067157 of 2014 and Concept 073092 of 2013 Colombian Tax Authority (DIAN) Ruling Opinions Among others:The Colombian Tax Authority (“DIAN” per its acronym in Spanish) has issued an interpretation regarding the exempted income referred to in CAN Decision 578, which must be recorded as exempt income, while the non-taxable income provided for in the international agreements to avoid double taxation are INCRGO (income not constituting income or profit). Concept 34760 of 2015- DIANIt has also ruled on the constitutional principle of Pacta Sunt Servanda, which establishes that the international agreements to avoid double taxation are a special law of preferential application, and it is not possible to modify international agreements by Decree- Office 96 of 2021- DIAN. Interpretation of the Most Favored Nation clause (MFN) (Concept 20003283 of 2020) Regarding to the Colombia-Spain DTA, with the entry into force of the Colombia-United Kingdom DTA, the treatment provided for in Section 12 of the Colombia-Spain agreement on royalties is not altered or mod­i­fied. Re­gard­ing to the Colombia-Mexico DTA, the concepts of technical services and technical assistance will no longer be treated as royalties. The consideration for consulting services is not covered by the most favored nation clause, and therefore, it will continue to be treated as a royalty under this agree­ment. Re­gard­ing to the Colombia-Chile DTA, the exclusion of the concepts of technical service, technical assistance and consultancy from the definition of Section 12 of the Colombia-United Kingdom DTA does not constitute an exemption or a stipulation of a lower rate in the terms of this treaty. Thus, the Colombian Tax Authority (“DIAN” per its acronym in Spanish) concluded that the MFN clause of the Colombia-Chile DTA. Regarding to the Colombia-Czech Republic DTA, the concepts of technical services, technical assistance and consultancy will no longer be treated as roy­al­ties.Re­gard­ing to the Colom­bia-Por­tugal DTA  with the treatment in force of the Colombia-United Kingdom DTA, under the mentioned international agreement to avoid double taxation it is indicated that the concepts of technical services, technical assistance and consultancy will no longer be treated as roy­al­ties. Re­gard­ing to the Colom­bia-Switzer­land DTA, the agreement foreseen in Section 12 of the Colom­bia-Switzer­land DTA does not generate any type of alteration or modi­fic­a­tion. Re­gard­ing to the Colombia-Canada DTA, the MFN clause is only applicable for royalties and not for interests. In this case, it is limited only to events in which more favorable conditions are agreed with a third country regarding technical services, technical assistance and consulting.In relation to South Korea, India, France, Italy and Japan, no most favored nation clause was not agreed with respect to this issue.
To this date, Mexico has signed more than 60 International Double Taxation Agreements - download the complete guide to see the full listing -, which are listed in Appendix 4. In addition, on July 1st, 2023, the Multilateral Convention on the Implementation of Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI) entered into force in Mexico. Prevalence of DTAs The Supreme Court of Justice of the Nation (SCJN) has ruled that international agreements containing human rights have the same hierarchy as the Federal Constitution, unless the Constitution provide an express limitation, in which case the provisions of the Constitution shall apply.All other international agreements are ranked below the Constitution but take precedence over domestic law.Plenary of the SCJN; SCJN; 10a. Period; Judicial Weekly of the Federation Gazette; P./J.20/2014 (10a); J; Publishing: Friday, 25 April 2014 9:32 h; Digital record: 2006224. SCJN Rulings The application of a DTA, in connection to the Income Tax Law (LISR) must be subject to the following rules: (i) the benefit of the DTA applies to those persons that prove to be residents of one of the contracting States; (ii) once the taxable event has been defined in domestic law, it is considered in order to classify it in one of the DTA´s items of income; (iii) having established the above, the tax rate applicable in accordance with domestic law must be compared with the maximum tax rate provided for in the DTA; and, (iv) if the DTA provides for a withholding tax rate lower than the one established in the domestic law, it is the treaty tax rate that will be directly applied by the withholding taxpayer (as long as domestic requirements are met).SCJN;10a. Época; ; Judicial Weekly of the Federation Gazette;1a. CCXXXVI/2016 (10a.) ;TA; Publishing: Friday, September 30, 2016, 10:39 h; Digital record: 2012667 MLI On June 7, 2017, Mexico signed the MLI.On October 12, 2022, the MLI was ratified by the Mexican Senate.On November 22, 2022, the “Decree approving the Status of the List of Reservations and Notifications upon Depositing the Instrument of Ratification of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting” was published in the Federal Official Gazette.On March 15, 2023, Mexico deposited the instrument before the Organization for Economic Cooperation and Development (OECD).On June 19, 2023, the Decree Promulgating the MLI was published in the DOF.On July 1, 2023, the MLI became effective in Mexico.With respect to other required taxes other than withholding taxes, it is be applicable as of January 1st, 2024. Federal Court of Administrative Justice (TFJA) Rulings To determine the business profits concept for the application of the DTA, the definition provided in the domestic legislation should be considered (which is mainly focused on commercial activ­it­ies). E.g., jurisprudence IX-J-SS-70[1] of June 2023 issued by the TFJA, ruled that technical assistance payments, for purposes of the Mex­ico-Neth­er­lands DTA, are not deemed as business benefits. Consequently, domestic legislation should be applied, which provides for a withholding tax rate of 25% on technical assistance pay­ments.R.T.F.J.A. Novena Época. Año II. No. 18. Junio 2023. p. 64 IX-J-SS-70
Convenios para Evitar la Doble Tributación en América Latina
We are pleased to share a guide prepared by the Latin American tax law expert team on Double Taxation Avoidance Agreements.These treaties play a crucial role in the legal certainty of foreign investments and in reducing the impact of double taxation, fostering a conducive environment for trade exchange.In this guide, we:Explore, in a concise and practical manner, the tax treatment of non-residents in Brazil, Chile, Colombia, Mexico, and Peru.Provide key references on legislation, judicial criteria, and essential aspects of the Double Taxation Avoidance Agreements in force in each jur­is­dic­tion.In­clude the list of current agreements in each country.
Quick Guide: Renewable Energy and Green Hydrogen Regulation in Peru: Regulatory...
At present, the regulatory framework for renewable energies is being strengthene. From Law 28832 - Law to Ensure Efficient Electric Generation Development, a set of regulations has been developed to...
Global Life Sciences & Healthcare Forum 2023 – recordings & presentations
We were delighted to bring you this year’s Forum, “Blurring Boundaries - Exploring the convergence of life sciences and law”, from Amsterdam.The theme “Blurring Boundaries - Exploring the convergence of life sciences and law” aimed to:Uncover the latest breakthroughs: Dive into the forefront of life sciences advances, including biotechnology, genetics, pharmaceuticals, and medical devicesAddress the regulatory gap: Engage in interactive workshops to bridge the divide between rapid innovation and the development of legal frame­work­sNav­ig­ate global challenges: Explore the impact of globalisation, ethical considerations, privacy concerns, and societal implications on the life sciences sectorFoster collaboration: Connect with legal and scientific minds, exchange ideas, and build valuable re­la­tion­shipsP­resent­a­tions were delivered by fantastic industry speakers, including Annemiek Verkamman (Managing Director, Hollandbio), Charida Dorder (Member of the Dutch AI Coalition), Wouter Boon (Associate Professor, Utrecht University) and Marc Kaptein (Medical Director, Pfizer), as they shared their expertise, thoughts and insights on how the sector is “Blurring Boundaries”. We were also joined by Simon Neill (Senior Legal Director) at Johnson & John­son and Joep Rijnierse (Senior Medical Director) at Amgen in our workshops.This webpage has been designed to keep you updated on the Forum, our speakers, as well as provide you with the useful resources complementing the theme “Blurring Boundaries - Exploring the convergence of life sciences and law”.You will also find on this page details on how to stay connected with CMS through our upcoming webinar series, On the Pulse Webinar Series 2023 - Autumn (cms.law); free eAlert service, Law-Now; and social media channels.
Energy Transition 2023
As the world seeks to balance energy security and affordability with the broadly agreed imperative to address carbon emissions, this report seeks to provide a timely update on how major oil and gas companies are navigating the energy transition based on an analysis of their published data.
Turning the Corner? CMS European M&A Outlook 2024
We are pleased to share with you the 2024 edition of the European M&A Outlook, published by CMS in association with Mergermarket.
Perupetro announces bidding process for Blocks V and VII
On 18 May 2023, Perupetro S.A. ("Perupetro") announced the selection process by "Call No. PERU­PETRO-001-2023" to award the License Agreements for the Exploitation of Hydrocarbons in Blocks V and VII...