In the following report, we will give an overview of why there has been a growth in the demand for professional accounting services in Lima, Peru. The overview will briefly summarize the economic outlook and trends in the Andean nation, most notably in the Mergers and Acquisitions(M&A) market, explain the recent changes in taxation laws in Peru and the opportunities and challenges they present as well as let you know what you can expect for the future of the economy.
Outsource Accounting Services – Economic Overview of Peru
According to the Inter-American Development Bank, Peru is one of the most important and fastest growing economies in Latin America. Peru is a key player in the region, flaunting diverse characteristics such as a variety of climates, a large territorial area, significant natural resources and long-lasting macroeconomic and political stability. It shows a remarkable annual growth rate at a low inflation rate of 2.9% and has a growing middle class and dynamic rates of GDP growth. Since 2016, Peru has had an ambitious new president, Pedro Pablo Kuczynski, who has been highly committed to keeping the country open to foreign trade and investment and encouraging economic diversification. Due to an economic basis that facilitates investment and bond issuance, Peru’s GDP is forecasted to grow by 3.7% this year, placing it at the forefront of South America’s economic expansion.
One of the main changes of Peru this year was the introduction of a new immigration law, which came into effect on the 27th of March in 2017. This new legislation involves a number of changes with the key objective of simplifying the immigration law and protecting fundamental rights of foreigners and nationals. Another regulatory change this year is the enactment of the new tax reform, effective since the 1st of January of this year. The main changes to this include the increase of the corporate tax rate from 28% to 29.5% and the reduction of dividends withholding tax rate from 6.8% to 5%.
What are the Opportunities and Challenges for Outsourcing Accounting Services in the Peruvian Market?
As the Peruvian economy and foreign direct investment grow, more opportunities are presented to the accounting sector. Peruvian companies have started to gain interest in professional accounting services, in order to focus on main business activities.
The main challenges of accounting firms in Peru are attracting and developing new business, as it is getting more and more challenging to generate new clients, due to high competition in the market from major international consulting firms. Apart from that, technology keeps accounting firms on its toes as they try to keep up with fast-paced changes in the sector to meet ever-changing customer expectations and demands.
Therefore, marketing for accounting firms is getting more and more important in order to attract clients as well as building a positive customer experience for clients. The demand for consulting services within the country is increasing and at the moment, the most requested consultancy in the country is tax consultancy.
What are the Expectations for the Future of Peru´s Economy?
Peru’s economy will be growing, but it also faces weaknesses because the country is dependent on natural resources and the mining industry. Trade and foreign investment are very important to Peru’s president, therefore, if Peru deepens its structural reforms to improve competitiveness, there is no doubt that the country will continue on its road to success. Regarding professional business services, accountings importance in the public sector grows as public investment increases in Peru. As for the private sector, consulting on taxes will continue gaining traction, since income tax has now become the main tax of the Peruvian government.
If you are interested in investing or incorporating a company in Peru and have more questions about how valuable an accounting service can be for your business, please feel free to contact us. Our team of local and foreign experts at Biz Latin Hub offers a wide range of professional multilingual market entry and back-office services that can help you start your company in Latin America.
If you want to know more about our accounting services and how we can help you do business in Lima, Peru, watch this video: