Peru is a beacon for economic success in Latin America. The country provides myriad investment opportunities in mining, agriculture, technology and other high-performing sectors.
As investors express increasing interest in the country’s open business environment and advantageous strategic location, we speak with our Peru accounting team to get top tips for foreign investors forming a company in Peru.
1. Company Formation in Peru – Understand the types of legal entities available to you
There are several available legal entities in Peru to choose from to ensure your company has the right business structure:
This business structure is mostly used in smaller business projects whose main sources of income are labor- and capital-invested. An Empresa Unipersonal owner is a natural person in charge of the development of all commercial and financial activity, and is personally responsible for the company’s debts.
Empresa Individual/Responsabilidad Limitada: Individual Limited Liability Company
This type of legal entity is also referred to as an Individual Limited Liability Company. This structure allows a company to initiate activities individually, using a RUC number (Tax Identification Number) and a different patrimony.
In an EIRL, liability is limited to the capital that the owner has incorporated into the company, with the company’s assets being separated from the owner’s assets. After an Individual Limited Liability Company is established, new partners may only be incorporated if the structure changes to a Share Company or a Limited Liability Company.
Sociedad Anonima: Joint Stock Company
A Sociedad Anonima is constituted in a single act by its founding partners. It has limited liability in that partners’ personal assets are protected from any company liability.
Its capital is represented by registered shares, which are constituted by the contribution of the partners, which may be monetary or non-monetary goods.
Sociedad Anónima Abierta: Public Limited Company
As the name implies, the shares of a Sociedad Anonima Abierta remain open and can be acquired by people who consider it relevant to invest and thus become shareholder partners.
A Public Limited Company is open when it has more than 750 shareholders, when more than 35% of its shares belong to 175 members or more, and when all of its voting members decide to take said denomination.
Sociedad Anónima Cerrada: Closed Company
This type of company is defined by the following characteristics:
- the number of shareholders does not exceed 20 people
- its shares are not registered in the Public Registry of the Stock Market
- shares will remain with the partners permanently.
This company must appoint a General Manager, but it’s optional to appoint a Board of Directors.
Sociedad Comercial de Responsabilidad Limitada: Limited Liability Company
In the Limited Liability Company, capital is divided into equal, accumulative and indivisible shares, which cannot be incorporated in the form of securities, or be called “shares”. There mustn’t be more than 20 partners. Like the Sociedad Anonima, partners are not personally liable for possible debts of the company.
2. Doing Business – Get your tax identification with SUNAT
These are several categories under which an individual who owns or is going to start a business must register their activities with SUNAT, Peru’s National Tax Authority.
These tax regimes establish how your taxes are paid and the levels of payments you must make. Electing the right regime mainly depends on the type and size of the business.
New RUS regime
RUS is a tax regime created for small merchants and producers, which allows them to pay a monthly fee based on their purchases and/or income. This is a single payment that replaces the payments of various taxes separately. Under the New RUS, businesses are prohibited from issuing invoices and other vouchers that entitle tax credit.
This regime is applicable to your business if purchases and sales per month do not exceed S./8000 Peruvian soles. The rate per month ranges between S./20-50 Peruvian Soles.
A company will be considered part of this regime when its net sales fall between S./8000-525,000.
The company must then pay 1.5% of monthly income tax and 18% of monthly IGV (value-added tax or VAT). In this regime, the company is not required to file an annual tax return.
Companies come under this regime when their net sales fall between S./525,000-7,140,000. Please note that this amount may vary per year.
Depending on the total annual income of the company, it will have to pay between 10-29.5% of its income in the annual income statement.
The company must also pay 1% of monthly income tax and 18% of monthly IGV under the MYPE regime.
General tax regime
Companies fall under the general tax regime when their net sales are greater than S./ 7,140,000. Please note this amount may vary per year.
The income tax rate under this regime is 29.5% of the annual income statement.
The IGV rate is 18% monthly IGV for general tax companies.
How do I get my tax identification number?
You can obtain your company’s Tax Identification Number (known locally as a RUC) at the SUNAT.
However, before requesting the RUC, the company must be duly registered with the respective local and national governmental authorities. The Superintendencia Nacional de Los Registros Publicos (SUNARP) will oversee this registration process. SUNARP will want information about your shareholders, legal representative, and economic activity as part of this registration process.
Once the RUC is obtained, your company must make monthly VAT/IGV returns starting in the following month.
3. Consider the tax incentives and benefits available to you
We consider the following tax incentives to be the most attractive for business people investing in Peru:
- Law of the Amazon: if your products are produced and sold in the Amazonian zone of Peru, they are exempted from VAT (IGV).
- Law of the Free Zone: if the products are produced and sold in the free zone (borders of Peru), they are exempt from VAT (IGV).
- Exports: All exports of goods and/or services are exempt from VAT (IGV).
Companies whose operations have big impacts on their local environment and communities, such as mining, oil and gas, and major construction projects have the opportunity to engage those communities in a positive way. Part of their taxes are put towards public infrastructure, such as roading, schools and residences
This enables these companies to build a positive connection with those immediately impacted by their operations, and demonstrate how their work contributes to the legacy of the community.
4. Monitor potential reforms and other compliance requirements
There is not yet a significant tax change or reform since the creation of the MYPE tax regime.
The elimination of the New RUS Regime is under consideration, but this is controversial since it affects small merchants and/or entrepreneurs.
In general, the Tax Authorities are seeking ways in which they can formalize tax payments from small and medium-sized enterprises.
For an entrepreneur and/or company to operate in Peru, they’ll need to:
- Have a Peruvian company and/or branch with 2 or more partners
- Have a bank account (in Soles and/or Dollars) in a commercial Peruvian bank
- Have a tax identification number (RUC)
- Submit monthly tax returns regardless of whether operations were carried out during the month
- Pay income tax: normally when businesses start, they pay 10% of their annual income. Then, as their income increases, they move into a different tax regime
- Pay IGV (VAT), which is the difference between debt and tax credit, every month
- Submit the annual tax return.
Crucially, Peruvian-based companies must maintain their compliance with local accounting and tax laws to avoid future audits or penalties before the local tax authority (SUNAT). Fines are often high, avoidable, and could damage the liquidity of the company.
Partner with local tax and accounting experts
Finding a trusted partner who can keep you and your business informed of local tax and accounting requirements, and any changes to them is crucial. Keep your company compliant and in control of its obligations with experts who put your commercial success first.
At Biz Latin Hub, we work in the best interests of your business and ensure you stay compliant every step of the way. Our Peru office will guide you through the company formation process, and can assist you in and ongoing capacity with our suite of market entry and back office services.
Reach out to us today at [email protected] for personalized assistance.
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