Over the past decade, Peru has ranked among the fastest-growing economies in Latin America, fueled by its flourishing tourism industry, a government that fosters foreign investment, and low inflation rates. Launching a business in Peru might be in your best interest.
Peru also has several free trade agreements including with global superpowers China and the United States of America. Its strong mining industry continues to attract overseas investment.
These positive factors have made launching a business in Peru more appealing to foreign companies.
Before you commit to entering the expanding Peruvian business market it’s important to understand the local regulations required to incorporate a company in Peru and more.
Let’s look at the benefits and challenges involved in launching a business in Peru this year and beyond.
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Is Peru a good place to start a business?
Peru has managed to sustain its economic stability with laws that encourage foreign investment. For example, both foreign and local investors enjoy equal rights over their investments under the principle of “national treatment” as per the country’s legislation.
Most business in Peru does not have any specific restrictions or requirements on foreign investment. This favorable business environment for foreign investors makes Peru a great location for expansion.
Despite some recent political turmoil, the Peruvian government announced 30 new public-private projects worth nearly $9 billion in February, which is encouraging for businesses looking to operate in Peru.
Another benefit of launching a business in Peru is that the government offers foreign tax credits.
A deduction program exists for scientific research, technological development, and innovation projects. Under this program, taxpayers who invest in such initiatives can deduct either 150% or 175% of the expenses they incur, depending on the nature of the project.
In a bid to attract more business in Peru, exclusive economic zones have been established, offering tax incentives and other advantages to enterprises operating within their confines.
Additionally, these zones provide vital infrastructure such as high-speed internet, power, and transportation, streamlining the process of establishing a business in the country.
The Peruvian economy is expected to experience a growth rate of slightly less than 3 percent this year. Although it may seem modest, this figure significantly surpasses Latin America’s average of just over 1 percent for 2023.
Despite the global inflation surge, Peru’s current rate of 8.6 percent as of January 2023 is lower than that of its neighboring countries, such as Chile, Colombia, Uruguay, and the LATAM average of 11.45 percent.
5 key tips for launching a business in Peru
- Research the market
- Understand the culture
- Top 3 industries
- Review local regulations
- Partner with local experts
Here are five essential things to understand when launching a business in Peru.
1 – Research the market
It’s important to do your research on the market before launching a business in Peru. This should involve the following:
- Size of market
- Cost of entry
- Domestic and global competition
- Regulatory, trade, and legal challenges
- How your company helps locals
Expanding into a new market can be a significant expense, particularly if executed poorly. However, with thorough planning, comprehensive research, and a clear go-to-market strategy, you can successfully expand your business in Peru.
2 – Understand the culture
To gain potential business relationships and contracts, it’s crucial to respect and comprehend the local business culture. Clients will appreciate it if you have a Spanish business card and understand some Spanish, as Peruvians tend to communicate indirectly.
During negotiations, it’s important to be tactful and diplomatic and avoid being too assertive. Seeking the assistance of local providers for corporate activities can help bridge cultural and linguistic gaps, resulting in a more seamless integration and appeal to local partners.
3 – Top 3 industries
These three business industries currently dominate the Peruvian market.
Mining – The mining and metals sector is the top industry in Peru. It has approximately 200 operating mines employing over 235,000 workers and several large projects in development. It contributes 8.5% to its GDP. Mineral exports make up the majority of the country’s total exports, amounting to 63.9%.
Agribusiness – Peru’s agriculture and livestock industry had an accumulated growth of 367 percent last year. The agribusiness industry has grown from 582 companies in 2009 to over 945 exporting companies today.
Tourism – Famous for its world heritage site of Machu Picchu, Peru’s tourism industry continues to flourish. It is predicted to grow in revenue in 2023 by 31.8 percent and receive over 2.5 million visitors this year.
4 – Review local regulations
What are the opportunities for launching a business in Peru? Does the government offer benefits to foreign companies? Do you need to set up an entity in the country?
These are some of the questions you need to answer before entering a new market. Every country has different laws and regulations regarding tax, employment, and business registration. To fully understand all these possibilities, we recommend that you seek advice from a local legal expert.
5 – Partner with local experts
When launching a business in Peru, a crucial step is to connect with a local legal representative. With extensive knowledge of the market and commercial law, this expert will assist you throughout the company formation process and ensure ongoing commercial and corporate compliance per Peruvian law.
Biz Latin Hub can help with launching your business in Peru
At Biz Latin Hub, we have a team of specialists who can provide you with customized services to meet your Peru business needs.
Our comprehensive range of legal, accounting, and back-office solutions enable us to serve as your primary contact point, helping simplify and speed up your entry into the Peruvian market.
Talk to our team of local experts today about launching a business in Peru, company formation, and how to find the top talent in the region.
If you found this article about launching your business in Peru interesting, be sure to explore the rest of our region coverage. Additionally, you can learn more about our team and expert authors here.
The information provided here within should not be construed as formal guidance or advice. Please consult a professional for your specific situation. Information provided is for informative purposes only and may not capture all pertinent laws, standards, and best practices. The regulatory landscape is continually evolving; information mentioned may be outdated and/or could undergo changes. The interpretations presented are not official. Some sections are based on the interpretations or views of relevant authorities, but we cannot ensure that these perspectives will be supported in all professional settings.