PWC - Doing Business in Peru 2016

What we do
differently
PwC supports and promotes the growth of the
business sector and the country, offering innovati-
ve solutions and integrated solutions which can
build a positive future in a sustainable way.
2
Doing business and
investing in Peru
Doing business and investing in Peru 2016 3

Esteban Chong
Country Senior Partner
PwC Peru
4
Foreword
Doing business
Business and investing
Investing in
in Peru
Peru 2016
2016 5
Contents
05
Foreword
08
Business
40
Corporate
environment aspects
Country overview 11 Incorporating a legal entity in
Major industries 16 Peru 41
Potential growth areas 23 Corporation - Sociedad
Investment incentives 34 Annima 43
36 Relationships of shareholders,
45
Agreement (TPP) 37 Limited liability company
Trade agreements 38 (S.R.L.) 48
Integrated Latin American 39 Branch of a foreign company 49
Market Participation account
agreement
Consortium or joint venture
agreement 50
73
Financial accounting
77
Business
& reporting associations
51
Labour
60
Tax
legislation aspects
Labour relations 52 Corporate income tax 61
Payroll costs 54 Withholding taxes 62
Indirect sale of shares 63
Market value and transfer pricing rules
Stability agreements 64
Income tax on individuals 65
Controlled foreign corporations (CFC) rules
Tax treaties in force 67
Payroll taxes
Financial transactions tax (FTT)
Temporary net assets tax (TNAT)
Value added tax (VAT) 69
Obligatory Tax Payment System (SPOT)
Early recovery of VAT 70
Recovery of VAT on exploration activities for mining, oil and gas
Exporters positive VAT balance
Excise tax 71
Customs duties
Free Trade Agrements (FTA)
Foreign Account Tax Compliance Act (FATCA) 72
82
Regulatory
88
PwC Peru
bodies professional services
1.
Business
environment
Historically, Perus economy has been underpinned by the production and export of
and favourable external factors, such as the high prices for Perus export commodities,
the past decade: construction grew in line with a real estate boom and the increase in
-
cantly fuelled by increased investment and foreign demand for manufactured goods.
However, in the last three years, the global economic growth has slowed down and the
prices for the commodities that Peru exports, especially metals, have remained low.
-
recent years, in line with the slower growth in main sectors of the Peruvian economy,
evidencing the impact that international commodities prices has on the rate of the
a higher value-added economy.
Peru: private investment US$ Millions
45
39.1 41.8 40.8
40 37.1
35 32.5
30 28.4
25 23.7
21.4
20 17.2
15
10
0
Source: BCR
2007 2008 2009 2010 2011 2012 2013 2014 2015
Source: Apoyo Consultoria

1

Latin Americas GDP (2007-2015) Real evolution (%)
7.0
6.0 5.8
5.1
5.0
4.3 4.3
4.0 3.8
3.6
3.0
2.4
2.1
2.0
1.2
1.0
0.0
Source: BCR, FMI Venezuela Mexico Brazil Chile Ecuador Argentina Colombia Bolivia Peru
Peru: exports prices (2006=100)
180 164 160

151
160
141
140 135
118 120
114
120 103
100
100
80
60
40
20
0
Source: BCR
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
(Average annual variation - %)
Venezuela 41.3
Argentina 14.3
Bolivia 6.3
Brazil 5.9
Ecuador 4.4
Mexico 4.1
Colombia 3.9
Chile 3.7
Peru 3.2
Source: BCR, IMF

0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 45.0
10
1.1. Country overview
Population
Peru has the worlds 42nd largest population, and the fourth largest population in Latin
America, surpassed only by Brazil, Mexico, Colombia and Argentina. As of 30 June 2015,
the countrys population is estimated at 31,151,643 people, with an average annual growth
of 1.10%. Three quarters of the population live in urban areas and one quarter in rural
areas. By 2021, Perus bicentennial year of independence, the population is projected to
exceed 33 million; and by 2050, it is expected to reach 40,111,393 people, according to the
estimates of Instituto Nacional de Estadstica e Informtica (INEI), Perus national statistics
institution.
2015 2021
Age group Men Women Men Women
0-4 1,460,651 1,401,223 1,552,891 1,492,428
5-9 1,489,659 1,433,085 1,583,730 1,526,364

10-14 1,483,135 1,431,027 1,576,794 1,524,172
15-19 1,465,657 1,421,872 1,558,213 1,514,421
20-24 1,432,145 1,396,242 1,522,584 1,487,123
25-29 1,343,154 1,318,192 1,427,974 1,403,993
30 - 34 1,214,095 1,197,686 1,290,765 1,275,643
35 - 39 1,134,864 1,123,508 1,206,530 1,196,637
40 - 44 990,241 987,389 1,052,774 1,051,658
45 - 49 860,135 865,218 914,452 921,535
50 - 54 736,147 750,165 782,634 798,993
55 - 59 590,957 614,146 628,276 654,121
60 - 64 469,267 498,435 498,901 530,878
65 - 69 351,637 384,422 373,843 409,444
70 - 74 254,420 291,239 270,487 310,196
75 - 79 176,971 217,259 188,147 231,400
80+ 152,679 214,721 162,321 228,697
Source: INEI

Economy
Peru has experienced robust economic growth during the past decade, and is currently
the sixth largest economy in South America as measured by Gross Domestic Product
(GDP) based on Purchasing-Power-Parity (PPP), according to the IMF; and, according to
Bloomberg Markets Magazine, it is also in the seventh place of the 20 best countries and
frontier markets to invest in.
This is testimony to its solid macroeconomic performance related to economic policies

adopted since the 1990s. These policies are based on a free market economy, a subsidiary
role of the State, free initiative of private investments, macroeconomic stability, trade
liberalization, promotion of local and foreign investment, encouragement of free
competition, legal stability, and social inclusion. Foreign investment promotion policy is
based on the principle of national treatment.
South America: GDP 2015 based on Purchasing-Power-Parity(PPP)

Current international dollar
Brazil 3,207.86
Argentina 964.28
Colombia 664.98
Venezuela 491.59
Chile 424.30
Peru 385.38
Ecuador 181.81
Uruguay 74.19
Bolivia 73.88
Source: IMF World Economic Outlook Paraguay 60.85
Bloomberg Markets: the top 20 emerging markets, 2015 (score)
69.61 68.44
62.04 59.26 58.97 58.78
57.26 56.30
53.24 52.63
48.93 48.33 46.19 45.78 45.65
45.30 43.75
39.59 38.31 37.89
Malaysia
Brazil
Peru
Poland
Thailand
Phillippines
Chile
Morocco
Czech Republic
Panama
Colombia
South Korea
Mexico
Indonesia
Russia
South Africa
China
Latvia
Turkey
Hungary
12
Bloomberg ranked emerging markets based on the overall investment climate on a projec-
ted risk-adjusted return basis through 2015.
Although Peru has experienced a deceleration in its GDP growth rates in 2014, the trend
is expected to reverse in the next years. The Peruvian Government has adopted several
public investment in infrastructure projects.
Peruvian Real GDP: rates of growth (%)
9.1%
8.5% 8.5%
7.5%
6.3% 6.5%
6.0% 5.8%
5.5% 5.2%
4.3%
4.0%
3.3%
3.26%
2.4%
1.0%
Source: BCRP, IMF (Forecast)

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016(F) 2017(F) 2018(F) 2019(F) 2020(F)
The growth of the Peruvian economy in the last decade has been possible due to the high
the investment in infrastructure improved electrical connectivity and coverage. These large
investments were accompanied by many others in agroindustry, services, etc. Nowadays,
due to the global economic context, many projects are in a stand-by phase.
Latin American countries: investment as a % of GDP
25.4 24.7
24.0
22.3 22.1
20.3
19.4
18.0 17.8 17.4 16.8
Source: IMF
Peru Ecuador Colombia Chile Mexico Bolivia Uruguay Brazil Venezuela Argentina Paraguay

Country risk and investment rate
Perus sound economic policies have been key to obtain an investment grade from the major
affected by the business slowdown in international markets. It has been its worst slowdown
in the last seven years.
Country S&P Moody's Fitch

Argentina B-u Caa1 WD
Bolivia BB Ba3 BB
Brazil BB Ba2 BB+
Chile AA Aa3 AA-
Colombia BBB+ Baa2 BBB+
Ecuador B WR NR
Mexico A A3 A-
Paraguay BB Ba1 BB
Peru A- A3 A-
Venezuela CCC Caa3 CCC
Source: MEF
*Countries appear in alphabetical order
Best countries to do business -Latin America
LAC World SA World

Country Country
Ranking Ranking Ranking Ranking
1 30 Chile 1 30 Chile
2 51 Uruguay 2 51 Uruguay
3 52 Costa Rica 3 55 Peru
4 53 Mexico 4 65 Colombia
5 55 Peru 5 90 Brazil
6 56 Panama 6 100 Argentina
7 59 Jamaica 7 109 Paraguay
8 65 Colombia 8 120 Ecuador
9 86 El Salvador 9 128 Bolivia
10 87 Dominican Republic 10 138 Venezuela
Source: Forbes (Dec, 2015) Source: Forbes (Dec, 2015)
14
World Bank Doing Business Ranking - Regional Doing Business Ranking
Latin America, 2016
Country Rank Place Country

Mexico 38 1 Mexico
Chile 48 2 Chile
Peru 50 3 Peru
Colombia 54 4 Colombia
Uruguay 92 5 Uruguay
Paraguay 100
Source: http://www.doingbusiness.org/rankings
Brazil 116
Ecuador 117
Argentina 121
Guyana 137
Surinam 156
Bolivia 157
Venezuela 186
Countries with the best economic climate - Latin America
Peru 112
Paraguay 112
Bolivia 94
Colombia 92
Uruguay 90
Chile 85
Mexico 83
Argentina 69
Ecuador 57
Brazil 50
Venezuela 20
Source: Getulio Vargas Foundation (Oct, 2015)

1.2. Major industries
Mining
The mining sector has been a key element in the economic growth experienced by Peru in
the past few years. In the last 5 years, on average, mining has accounted for 12% of GDP,
57% of total exports and 13% of tax income (23% of income tax)2.
In 2014, Peru was one of the worlds main mining exporters, as the worlds third largest
silver, copper, zinc and tin producer; the fourth largest lead producer and the sixth largest
gold producer3.
and the legal and bureaucratic burden affecting some investment projects, which have
prompted a revision of the investment plans by the mining companies operating in the
country. Nevertheless, during these years, Peru has seen healthy investment of about US$
prices, such as Toromocho (Chinalco), Las Bambas (MMG), Marcona (Shougang Hierro
Peru) y the expansion of the Cerro Verde mine (Freeport-McMoRan). Thus, in 2016 Perus
mining GDP is expected to increase by 12% compared with 2015. 4
Mining GDP Base Year 2007 PEN Millions
70,000
59,612
60,000 55,035 54,554
50,714 51,043 52,473
49,599 50,076
50,000 45,892
43,236 44,058
39,206
36,993
40,000
30,000
20,000
10,000
Source: BCR
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
2
Source: BCR, INEI, Sunat, Apoyo Consultora.
3
Source: Apoyo Consultora
4
16
Mining investment US$ Millions
12,000
9,934
10,000
8,503 8,883
8,000 7,243 7,150
6,000
4,069
4,000
2,000
Source: Apoyo Consultora 2010 2011 2012 2013 2014 2015
Mining production
8,000
7,000
6,000
5,000
4,000
3,000
Silver (thousands of Kg)
2,000
Iron (thousands of t)
Zinc (thousands of t) 1,000
Copper (thousands of t )
0
Source: Apoyo Consultora 2008 2009 2010 2011 2012 2013 2014 2015
Mining exports US$ Millions
30,000 27,525.7 26,422.8

22,954.8
25,000 21,902.8
19,471.3
20,000 17,919.9
15,000
10,000
5,000
0
2010 2011 2012 2013 2014 2015

Selected mining projects
Phase Project name Company Investment (US$ Millions)

Las Bambas Las Bambas 10,000
Minas Conga Yanacocha 4,800

Expansion Cerro Verde Freeport 4,600
Quellaveco Anglo American 3,300
Haquira Minera Antares 2,800
Galeno Lumina Copper 2,500
Hierro Apurimac Apurimac Ferrum 2,300
Environmental Impact Study
Caariaco Caariaco Copper 1,599
approved
Los Chancas Southern Peru 1,560
Marcona (expansion) Shougang Hierro 1,500
Pampa de Pongo Jinzhao Mining 1,500
Environmental Impact Study
Ta Mara Southern Peru 1,400
presented
Toromocho (expansion) Chinalco 1,350
Toquepala (expansion) Southern Peru 1,200
Bayovar (expansion) Miski Mayo 520

Exploration San Gabriel (Ex Chucapaca) Buenaventura 520
Magistral Milpo 480
Santa Ana Bear Creek Mining 71
Mining investment by type (US$ Millions)

Type 2010 2011 2012 2013 2014 2015 2016 2017 2018
New Projects and expansions 1,540 4,284 4,979 5,483 4,536 3,722 1,452 480 380
Exploration 560 728 1,075 914 568 398 358 360 550
Operation and maintenance 1,313 1,460 1,539 1,603 1,887 2,031 2,735 3,074 3,074
Other 656 771 910 1,935 1,903 1,000 900 900 800
Total 4,069 7,243 8,503 9,934 8,894 7,151 5,444 4,814 4,804
18
Manufacturing
The manufacturing sector is another of Perus economic foundations. In the last 5 years,
manufacturing represented, on average, 15% of GDP, 16% of exports and 18% of tax
agreements, increasing competitiveness and specialization in sectors in which Peru has

a competitive advantage. Also, non-traditional manufactured products represent 24% of
total exports5.
In spite of a deceleration in line with the international economic situation, with a decline
of 3.7% in its manufacturing GDP in 2014, the Peruvian manufacturing sector presents
many opportunities for growth in the coming years. International demand for Peruvian
manufactured goods is expected to rebound led by the United States, increased investment
is expected to follow a public-private concession program, and manufacturing is expected
6
Manufacturing GDP Base Year 2007 PEN Millions
80,000
65,265 68,508
64,330 66,041 64,938
70,000
57,354 59,255
60,000 52,807 53,502
47,766
44,529
50,000 41,778
38,883
40,000
30,000
20,000
10,000
0
Source: BCR
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2014
2005
US$ Millions
1,188
1,052 1,040 1,064
949
Source: Sunat 2011 2012 2013 2014 2015
5
Source: BCR, Sunat, INEI, Apoyo Consultora
6
Source: BCR, Apoyo Consultora.
Doing Business and Investing in Peru 2016 19

Textile exports US$ Millions
2,176
1,989
1,926
1,799
1,323
Source: Sunat
2011 2012 2013 2014 2015
Nometallic minerals exports US$ Millions
722 720 696

663
492
Source: Sunat
2011 2012 2013 2014 2015
Modern retail sales (PEN)
25,000,000
21,451,866 21,768,314
19,723,359
20,000,000
17,877,861
15,712,489
15,000,000
11,939,148
10,309,868
10,000,000 9,293,426
5,000,000
(*) Inluding supermarkets, department and

home improvement stopres, pharmacies
2008 2009 2010 2011 2012 2013 2014 2015
and movie theatres.
Source: SMV, companies, Apoyo Consultora
20
Construction
The construction sector is one of the most important to the Peruvian economy and has been
one of the most dynamic in the past 10 years, with an annual growth rate of 11.3%, well
above the countrys GDP growth, reaching 7% of total GDP and tax income.7
In recent years construction has experienced a slowing growth in line with the current
economic situation. Public and private investment in construction has contracted in recent
years and is estimated to have contracted by around 2.7% in 20158.
sector will improve due to the recovery of the countrys economic activity and increased
public investment by subnational governments. It is projected that in 2016, the construction
sector will grow between 4% and 5%.
Construction GDP Base Year 2007 PEN Millions
35,000 31,353 31,956

30,081
28,779
30,000
24,848
23,993
25,000
20,360
19,061
20,000 16,317
13,994
15,000 11,195 12,168
10,672
10,000
5,000
0
Source: BCR
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Local cement sales Millions of metric tonnes
14,000
11,550
12,000 11,260 11,381
10,119
10,000 8,956
8,441
8,000
6,000
4,000
2,000
Source: INEI 2010 2011 2012 2013 2014 2015
7
Source: BCR, Sunat, INEI, Apoyo Consultora.
8
Source: BCR, Apoyo Consultora.

Investment
Category Project Company Shareholders Location Initiative Type (US$ Status
Millions)
Train Cosapi, Impregilo,
Consorcio Iridium - Grupo
Lima Metro
Nuevo Metro de ACS, Vialia -FCC, Lima Public Co-financed 5,658 Studies
Line 2
Lima Ansaldo Breda y
Ansaldo
Airport Jorge Chvez
Lima Airport Fraport, IFC, AC
Airport Lima Public Self-sustaining 1,200 Studies
Partners Capitales
expansion
Road Javier Prado Graa y
Graa y Montero Lima Private Self-sustaining 900 Studies
Expressway Montero
Road Va Parque
Rmac OAS OAS Lima Private Self-sustaining 750 Construction
Expressway
Road Lima New
Odebrecht Odebrecht Lima Private Self-sustaining 590 Construction
Roads
Road Longitudinal
de la Sierra Consierra Sacyr, Mlaga La Libertad,
Public Co-financed 552 Construction
Highway Tramo II Hermanos Cajamarca
Stretch 2
Airport Chinchero Corporacin
Consorcio
International Amrica, Andino Cusco Public Co-financed 420 Studies
Kuntur Wasi
Airport Investment Holding
Port Callao North
Grupo Moller-
Terminal - APM Terminals Lima Public Self-sustaining 370 Construction
Maersk
Phases 1 & 2
Road Road Network 4
Autopista del Lima, Ancash,
(Northern OHL Concesiones Public Self-sustaining 340 Construction
Norte La Libertad
Highway)
Road La Libertad,
Autopista del Consorcio Vial
Hidalgo e Hidalgo Lambayeque, Public Self-sustaining 300 Construction
Sol Highway del Sol
Piura
Port Minerals
terminal - Tisur Grupo Romero Arequipa Private Self-sustaining 260 Construction
Matarani Port
Road Road Network 6
Coviperu Hidalgo e Hidalgo Lima, Ica Public Self-sustaining 200 Construction
expansion
Road Pavimentos
Colombia,
Southern Consorcio
Sainc, Nexus
Panamerican Concesin Vial South Public Self-sustaining 200 Studies
Infraestructura,
Highway del Sur
Nexus Banca de
Inversin
Road Southern Graa y
Graa y Montero Lima Private Self-sustaining 200 Studies
Expressway Montero
Port General San Consorcio Servinoga, Pattac, Ica Public Self-sustaining 182 Studies
Martn Port Paracas Tucumn, y
Terminal Fortesolo
22
1.3. Potential growth areas
Power
As the main power source, electricity is of vital importance to the development of the
countrys economic activities. In the coming years, demand will follow the dynamism of
Perus economy, and is projected to grow at an average rate of 9.5% (in energy terms)
between 2015-20189. In 2015, annual growth was projected at 5.1%, due to the higher
demand from mining and industrial projects10. In the following years, investment is
expected to fall following completion of large projects, and overcapacity is expected to
place downward pressure on energy prices. Large transmission projects are expected to
studies will cause deferment of construction of new projects11.
Despite ample availability of hydro-resources and natural gas to meet growing demand,
there is still room to explore and develop renewable energy projects, such as solar, wind,
biomass and geothermal, to continue increasing power generation.
Evolution of GDP
8.5
7.6
6.0 6.2
8.1 5.9
4.9
6.5
5.8 5.5
Electricity GDP
2.4 3.3
National GDP
Source: BCR
2010 2011 2012 2013 2014 2015
Maximum demand
67,590 71,711
60,645 64,378
57,006
52,992
MW
Source: Apoyo, COES 2010 2011 2012 2013 2014 2015
9
Source: Maximixe
10
Source: Maximixe
11

Electricity production (GWh)
44,540
41,796
36,669
37,321 2,313
1,132 882
1,511
15,340 17,030 19,910 20,669
Other
Natural gas
Hydraulic
Total
Source: Apoyo, COES 2012 2013 2014 2015
Private investment in electricity US$ Millions
2,589
2,440 2,475
337
421 401
1,749 470
188 244
229
1,370
279
107
Distribution
1,241 1,781 1,830 1,829 1,263
Transmissionn
Generation
Total

*Projections made by Apoyo Consultoria in January 2016. 2011 2012 2013 2014 2015*
No information available about distribution investment
in 2015.
Annual growth of electricity consumption 2004-2014
12%
10.76%
10% 8.79% 8.61%

8.45%
8.33% 10.06%
8% 6.65%
6.30%
5.87% 8.35%
5.56% 5.36%
7.66%
6%
5.94% 5.97%
5.60% 5.88%
2.95% 5.37%
4% 5.01%
2%
2.91%
Energy
Maximum demand
0% 0.84%
Source: COES 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
24
Hydrocarbons
The hydrocarbons sector is essential to Perus development, not least because 64% of the
energy consumed daily comes from fossil sources, but also because in the past 5 years the
sectors contribution to GDP increased by 62%12.
Peru is a net hydrocarbon importer, with a consumption of 150,000 bbl per day, but a
production of less than 70,000 bbl per day. Peru imports mainly from Ecuador and Africa 13.
In recent years, production has decreased, and this tendency is expected to continue due to
gas production has been increasing notably due to investment in infrastructure, new
production from completed projects such as Camisea, and the expansion of existing
projects14 . Peru has great potential in this sector. Today, only one third of all basins has
been explored, with 18 oil basins yet to be explored. It is estimated that exploration in
these basins could potentially double current production, enough to satisfy internal
demand and eventually export.
GDP evolution
28.4%
19.7%
8.5% 6.5% 7.2%

6%
4.0% 3.3%
2.3% 5.9%
2.4%
Hydrocarbons GDP -11.5%

National GDP
Source: BCR, Apoyo Consultora 2010 2011 2012 2013 2014 2015
12
Source: SNMPE, Sociedad Peruana de Hidrocarburos
13
Source: SNMPE
14

Audited oil production
26,531 25,387 23,984 25,296

22,956
21,173
Thousands of barrels
Source: Perupetro 2010 2011 2012 2013 2014 2015*
Audited natural gas production
456,407
430,559 441,244
418,795
401,169
255,609
Millions of cubic feet
Source: Perupetro 2010 2011 2012 2013 2014 2015*
Investment in US$ Millions
1,880
1,444
1,324 1,361
1,190
755
351
120
US$ Millions
Source: Perupetro 2000 2005 2010 2011 2012 2013 2014 2015*
26
Crude oil price evolution WTI (1Line) US$/BL
110 97.9
94.2 93.2
100
90
80
70 59.3 59.8
54.4
60 50.7 47.8 50.9
47.2 45.5 46.3
50 42.8 42.7
37.3
40
30
20
10
0
Source: Perupetro
Jan-15
Feb-15
Mar-15
Apr-15
May-15
Jun-15
Jul-15
Aug-15
Sep-15
Oct-15
Nov-15
Dec-15
2012
2013
2014
Gas price evolution US$/MMBTU
20.00
17.50
15.00
12.50
10.00
7.50
5.00
2.50
0
Source: Perupetro
Jan-15
Feb-15
Mar-15
Apr-15
May-15
Jun-15
Jul-15
Aug-15
Sep-15
Oct-15
Nov-15
Dec-15
2012
2013
2014
Algonquin City Gate 3.98 7.04 8.28 10.10 17.82 7.37 3.25 1.97 1.78 2.17 2.46 2.72 3.79 3.06 2.44
Henry Hub 2.75 3.72 4.37 2.97 2.85 2.80 2.58 2.84 2.77 2.83 2.76 2.65 2.32 2.08 1.92
UK NBP 9.48 10.65 8.23 6.99 7.75 7.07 6.97 6.82 6.75 6.76 6.18 6.29 6.07 5.45 5.15
Belgian Zeesbrugge 9.45 10.56 8.14 6.75 7.49 6.86 6.87 6.71 6.72 6.70 6.28 6.25 5.95 5.35 4.97
Asian JKM 15.12 16.58 13.88 8.81 6.90 7.56 7.08 7.48 7.35 7.76 7.88 7.08 6.82 7.47 7.18

Fishing
of the countrys GDP, it represents 7% of exports15. It is projected that this sector grew 70%
will allow for an increased anchovy capture16. However, as a consequence of the El Nio
phenomenon, anchovy availability was reduced as the quota was the lowest in 10 years.
Nevertheless, it is expected that El Nio will subside from January 2016, and capture will
return to normal levels17.
GDP evolution
52.9%
24.8%
8.5% 15.9%
6.5%
6%
2.4%
5.9% 3.3%
Fishing GDP -19.6%
National GDP -32.2% -27.9%
Source:BCR 2010 2011 2012 2013 2014 2015
6,994,051
4,698,532
3,331,761 3,615,477 3,616,484
2,255,453
Source: Produce 2010 2011 2012 2013 2014 2015
15
16
17
Source: Semana Econmica
28
Fishmeal and oil production (Gross metric tonnes)
1,634,676
1,118,572
846,260 839,703
785,630
524,605
347,558
173,463 201,605 169,733
Fishmeal 96,867 100,438
Source: Produce 2010 2011 2012 2013 2014 2015
Historical anchovy quotas
Peruvian sea - 200 miles
Historic quotas (millions of t)
South-Central Zone
6.2
4.4
3.7
3.5
2.5
0.7 0.7
0.8 0.8
0.9
2011 2012 2013 2014 2015
South Zone
Peruvian sea - 200 miles

Product exports (indirect human consumption) Millions of US$ FOB
274.9 443.1
232
234.7 281.6
196.9
1,612.9 1,766.6 1,751.9 1,355 1,319.6 1,121.1
Fishmeal
Source: Produce 2010 2011 2012 2013 2014 2015
Product exports (direct human consumption) Millions of US$ FOB
71.40
31.00 67.30
38.00
57.98
25.80
982.60
873.80
833.20 832.60 735.87
Cured 540.50
Frozen
Canned
53.30 105.90 94.70 107.10 94.20 95.69
Source: Produce 2010 2011 2012 2013 2014 2015
30
Fishmeal exports by country of destination
4.70%
3.00%
5.80%
7.10%
11.70%
67.70%
China Japan Chile Australia Germany Others

Source: Produce
Fishmeal international price US$/MT
1,711.78 1,921.47
1739.22 1,624.30 1,764.20
1519.25
Source: Indexmundi 2010 2011 2012 2013 2014 2015

Agroindustry
The great variety of products cultivated in Peru has placed the country as one of the worlds
10 largest agricultural producers. Roughly every 5 years, the value of Perus agricultural
exports has doubled, growing at a rate of approximately 17% annually; and it is expected
that, by the end of 2016, it will reach US$ 7 billion as a result of new products and more
irrigated land18. On the other hand, the effects of the El Nio phenomenon are not expected
to affect the sectors growth in 2015, which is expected to exceed 2.5%, mainly due to the
recovery of important crops such as coffee and the growth of the livestock subsector19.
GDP evolution
8.5%
6.5%
6.0% 5.8%
4.3% 4.1% 5.9%
2.4% 3.3%
1.5%
2.8%
Agroindustrial GDP
1.9%
National GDP
2010 2011 2012 2013 2014 2015
Source:BCR
Exports evolution US$ Millions
5,015
4,505
4,098 4,142
2,043
4,172
3,361 3,308
3,023
3,164.6 2,832
2,190
1,673
975 1,075 843
781
515
*Until October, 2015 2010 2011 2012 2013 2014 2015

Source:Siicex
Traditional exports Non-traditional exports Total
Source: Andina news agency: Juan Manuel Benites, minister of Agriculture

18
Source: Semana Econmica

19
32
Production of main agricultural products (thousands of tonnes)
Product 2014 2015* Zones with higher production (2015)

Potatoes 4,704 3,797 Puno(18%), Junn (11%), Cusco (10%)
Grapes 507 270 Ica (44%), Lima (28%), La Libertad (11%)
Sugar canes 11,390 6,311 La Libertad (55%), Lambayeque (17%), Lima (17%)
Yuca (Cassava) 1,196 800 Loreto (28%), Amazonas (14%), Ucayali (13%)
Cacao 81 62 San Martn (37%), Junn (22%), Cusco (12%)
Limes 264 192 Piura (56%), Lambayeque (19%), Tumbes (8%)
Quinoa 115 94 Puno (41%), Arequipa (15%), Ayacucho (15%)
Mangoes 376 195 Piura (61%), Lambayeque (16%), Cajamarca (5%)
Asparagus 378 221 La Libertad (51%), Ica (37%), Lima (6%)
Yellow corn 1,227 927 Lima (21%), La Libertad(14%), Ica (13%)
Garlic 82 29 Arequipa (53%), Cajamarca (11%), Junn (11%)
Paddy 2,896 2,473 Piura (18%), Lambayeque (17%), San Martn (17%)
Avocados 336 315 La Libertad (31%), Lima (21%), Ica (17%)
Coffee 209 217 San Martn (26%), Junn (18%), Cajamarca (18%)
Product 2014 2015* Zones with higher production (2015)

Cattle 385 259 Cajamarca (15%), Puno (12%), Hunuco (10%)
Eggs 359 254 Ica (31%), Lima (18%), La Libertad (14%)
Milk 1,840 1,308 Arequipa (17%), Cajamarca (17%), Lima (14%)
Birds 1,607 1,140 Lima (46%), La Libertad (18%), Arequipa (9%)
Goats 15 10 Piura (32%), Lima (12%), La Libertad (9%)
Sheep 86 61 Puno (31%), Junn (8%), La Libertad (6%)
Until August, 2015.

Source: Sistema Integrado de Estadstica Agraria
Main destinations of traditional products Main destintations of non-traditional products
25%
31%
36%
44%
21%
16%
5%
6%
10% 6%
Germany US Belgium Others US Netherlands Spain UK Ecuador Others

Source: Siicax

1.4 . Investment incentives
Peru offers an attractive business environment for both national and foreign investment.
It has an auspicious legal framework for investments, like a non-discriminatory
treatment of the foreign investor, unrestricted access to most economic sectors and free
transfer of capital. In consequence, Peru is ranked 2nd among South American countries
in the Ease of Doing Business Ranking.
Investors in Peru have the same rights over their investments as local investors, based on
the principle of national treatment. No authority has the power to apply differentiated
treatment concerning prices, exchange aspects, tariffs, non-custom duties, business
information or any other feature with equivalent effects, based on nationality, types of
economic activity or geographic location in the country.
No specific restrictions or requirements apply to foreign investment in the vast majority

of economic activities according to Perus legal framework. Furthermore, they do not
need prior authorization from the government. Investments that require approval
are those involving weapons and/or explosives, private security and surveillance,
investments in maritime or air transport, as well as those located within 50km of Perus
border or in protected natural areas.
Moreover, the acquisition of shares belonging to local investors is freely allowed, both
through the stock market as well as over the counter operations. Investors have the
right to organize and carry out their business activities in any form envisaged by the
law. For example, companies have complete freedom to maintain deposits overseas
and remittance of profits, dividends and royalties are not limited in any way. They are
allowed to access local and overseas credit, and have free access to foreign exchange to
cover obligations or acquire goods.
In addition, Peru participates in the Investment Committee of the Organization for

Economic Cooperation and Development (OECD) and promotes the implementation of
OECD guidelines for Multinational Companies.
Respect for foreign investments is guaranteed in

the Political Constitution and other complementary
legislation. Thus, the laws of Peru establish:
Non-discriminatory treatment of the foreign investment.

Unrestricted access to most economic sectors.
Free transfer of capital.
Free competition
Protection on private property.
Freedom to buy shares.
Free access to local and overseas credit.
Free remittance of royalties.
Free access to foreign exchange and complete
freedom to maintain deposits overseas.
Access to international mechanisms for the
resolution of disputes
34
Furthermore, the legal framework for investment promotion provides special regimes
among which the following terms prevail:
a) The Legal Stability Agreement by which the State Guarantees the investor:
Stability in the regulations for non-discriminatory treatment.
Stability in the Income Tax Regime (dividends).
Stability in the right to use the most favourable market exchange rate.
Stability in the regime of freely available foreign exchange and right of free remittance
of profits, dividends and royalties.
b) The agreement for Early Recovery of V.A.T. in which the state authorizes the
benefit of:
Reimbursement of Value Added Tax during the pre-operation stage (minimum duration
of 2 years) which is applicable to all sectors of the economy.
The minimum investment is US$ 10 million for mining or hydrocarbon activity, US$5
for other activities, except for agricultural activities where there is no such requirement.
The project can be divided into stages, segments or similar.
In Peru, the authority responsible for promoting private investment is the Private Investment
Promotion Agency (Proinversin). Among its main activities are the proposal and execution
of the national policy to promote private investment in infrastructure projects and public
services; investors guidance in the stages of pre-establishment and post-establishment;
subscription of Legal Stability Agreements and Investment Agreements (for the early
recovery of VAT), and foreign investment registration. Regional governments also promote
private investment projects in their territorial jurisdictions and within the framework of
their functions and competencies.
Source: Proinversin
Direct foreign investment in Peru US$ Millions
23,867.6 24,144.2 24,146.7

22,680.4
22,016.7
21,310.9
19,398.4
17,600.6
15,639.8
15,247.5
14,031.4 14,158.3 14,042.7 13,769.8
13,018.8
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 (1)
(1) Until June, 2015

CAGR '01-'15 = 5%

1.5. Pacific Alliance
The Pacific Alliance is a regional integration initiative created on 28 April 2011 by Chile,
Colombia, Mexico and Peru.
Costa Rica began the process of joining the Alliance on 10 February 2014.
Objectives
To build, in a participatory and consensual manner, an area of deep economic integration

and to move gradually toward the free circulation of goods, services, capital and persons.
To promote growth, development and competitiveness of the Parties economies, aiming
at achieving greater welfare, overcoming socio-economic inequality and achieving
greater social inclusion of their inhabitants.
To become a platform for political articulation, and economic and trade integration,
and project these strengths to the rest of the world, with a special emphasis on the Asia-
Pacific region.
Strengths
As a whole, the Pacific Alliance constitutes the eighth largest economy and represents
the eighth largest exporting entity worldwide.
In Latin America and the Caribbean, the block represents 38% of GDP, concentrates 50% of
total trade, and attracts 45% of the direct foreign investment that flows to the region.
The four countries hold a combined population of 214.1 million people, with an average
GDP per capita of 16,500 dollars (in terms of purchasing power parity).
The population, mostly young, provides a skilled labour force, in addition to an attractive
market with purchasing power in constant growth.
The Pacific Alliance is a suitable platform to encourage joint ventures. It provides
opportunities for foreign investment and it is open to entrepreneurship and innovation
in various areas.
It has competitive advantages in mining, forest resources, energy, agriculture,
automotive, fishing and manufacturing.
36
1.6. Trans-Pacific Partnership
Agreement (TPP)
The Tran-Pacific Partnership Agreement (TPP) is an initiative developed by 12 members
of the Asia-Pacific Economic Cooperation forum (APEC): Australia, Brunei Darussalam,
Canada, Chile, United States of America, Japan, Malaysia, Mexico, New Zealand, Peru,
Singapore and Vietnam.
TPP has been one of the most ambitious and wide-ranging multilateral negotiation
processes between countries in 3 continents (The Americas, Asia and Oceania).
The goal of this agreement is to build a high quality inclusive agreement that underpins
economic growth, development and job creation in its 12 member countries, which in turn
sets the foundation for a future Free Trade Area of Asia Pacific (FTAAP). To this end, the
TPP will remain open to other members of APEC and to the development of mechanisms
that allow for its flexibility and evolution.
Goals of the TPP:

To promote greater economic growth in member countries.
To increase job creation and contribute to development.
To establish a future Free Trade Area of Asia-Pacific (FTAAP).
To develop mechanisms that allow for its flexibility and evolution.
Other economies that have expressed an interest in joining TPP are Thailand and the
Philippines (APEC members), as well as Colombia and Costa Rica.
Benefits of the TPP:
It generates knowledge by providing access to other countries innovation and technology

Promotes the inclusion of Peruvian small and medium enterprises (SMEs) in global
value chains.
Improves the countrys competitiveness and national standards, bringing them to par
with the worlds most advanced economies.
Helps the countrys image as a stable and investment friendly economy, allowing Peru to
attract more investment from TPP partners.
Benefits providers of services with access to a vast market with lower barriers and higher
legal stability.
Promotes protection of traditional knowledge associated to genetic resources and
geographic indications, while respecting biodiversity.
Protects national production through trade defence tools such as antidumping measures
and safeguards.
Source: Mincetur (http://www.acuerdoscomerciales.gob.pe)

1.7. Trade agreements
In recent years, Perus foreign trade policy has promoted aggressive trade liberalization to
successfully insert Peru in the global economy. During this time, the State has implemented
a trade policy focused primarily on expanding the market for Peruvian exports, and
increasing and diversifying trade to foster job creation and cost reduction, and improving
the countrys general competitiveness and development.
As part of this long-term commercial strategy, Peru has signed 20 trade agreements to
increase and consolidate access to the markets of its main trading partners for its main
products with the goal of developing a competitive export offer.
Partner Year of enactment

Multi-lateral agreements World Trade Organization 1995
APEC 1998
Regional agreements Andean Community: Bolivia, 1969
Colombia and Ecuador
Bilateral agreements Mercosur: Argentina, Brazil, 2005
Paraguay, Uruguay and
Venezuela
EFTA: Switzerland, Iceland, 2011
Liechtenstein and Norway
European Union 2013
US 2009
China 2010
Canada 2009
Japan 2012
Singapore 2009
South Korea 2011
Thailand 2011
Chile 2009
Mexico 2012
Costa Rica 2013
Panama 2012
Cuba 2001
Venezuela 2013
Pacific Alliance: Colombia, 2011
Chile and Mexico
Peru has also signed three trade agreements soon to be effective with Guatemala, Honduras
and the Trans-Pacific Trade Partnership (TPP), and is currently negotiating four additional
agreements: with Turkey, El Salvador, the Trade in Services Agreement (TISA), and the
Doha Development Round.
This framework of international agreements has allowed over 90% of exports to enter over
50 countries under favourable conditions with reduced or no tariffs or other trade barriers.
This has contributed to a threefold growth in exports over the last ten years (2004-2014),
jumping from US$ 12.5 billion to US$ 38.6 billion. Trade agreements have also facilitated
an increase in the flow of foreign direct investment.
38
1.8. Integrated Latin American
Market - MILA
The Latin American Integrated Market (MILA) is the result of an agreement signed by the
Santiago Stock Exchange, the Colombia Stock Exchange, and the Lima Stock Exchange,
along with the central securities depositories (CSD) DCV, Deceval and Cavali, respectively.
Recently, in December 2014, Mexico joined these three countries through the Mexico
Stock Exchange and its CSD Indeval. The agreement establishes a regional market to trade
equities from the four countries, opening up a great number of opportunities for investors
and brokers from Chile, Colombia, Peru and Mexico, who can now purchase and sell shares
from the four stock exchange markets through a local broker.
MILA is the first cross border initiative to integrate equity markets without any sort of
merger or corporate integration, achieved using only technological tools along with
adaptation and standardization of regulations on trading in capital markets and the custody
of securities. One of the most important characteristics of MILA is the fact that one market
sacrifices its independence or regulatory autonomy, in exchange for the growth of the joint
market, since they complement each other. Likewise, all MILA transactions are performed
in the respective local currency without the need to leave the country, and with book entry
through the local broker, thereby, enabling easier international transactions with this tool.
The main benefits of the MILA for the investors include more alternatives of financial
instruments for diversification and the possibility of creating new portfolios. For
intermediaries, it promotes more attractive and competitive stock markets, increases the
type and number of products to distribute to their clients, and enables the creation of new
investment vehicles and new portfolios. For issuers, it reduces the cost of capital, provides
access to a wider market than their local ones and expands the demand for their financing.
Finally, for the country, it supports the integration process of the economies that comprise
the MILA, providing greater stability in the rules of the game and making the region much
more competitive.

2. Corporate
aspects
30
2.1. Incorporating a legal entity in Peru
Guide to doing business entities
Choice of entity
A corporation (sociedad annima) is the legal vehicle most commonly used by foreign
and domestic investors. However, foreign investors may also set up a partnership, limited
liability entities or establish a branch, which is taxed like a corporation, with the differen-
ce that branches are only subject to income tax on Peruvian source income.
Capital requirements
There are no specific rules establishing percentages for foreign or domestic investment
participation. However, the Peruvian Companies Law (Ley General de Sociedades LGS)
requires every corporation or partnership to have at least two shareholders/partners. This
requirement does not apply for branches.
There is no minimum capital requirement, except for banks, financial entities and certain
other controlled companies. However, all companies must deposit their capital in a Peru-
vian financial entity, and there are minimum amount requirements for opening a bank
account, which may vary according to each financial entity.
Shareholders requirements
The minimum number of shareholders required is two. There is no requirement for share-
holders to be Peruvian.
There is no general requirement stating directors or managers must be Peruvian residents
or nationals. However, directors shall formally accept the designation in order to carry
out the registration of their appointment at the Peruvian Public Registry (Sunarp). Also,
appointing at least one Peruvian citizen or resident as representative of the company is
recommended for practical reasons.
Repatriation of funds
Repatriation of funds is totally unrestricted.
Tax considerations
Capital gains, as defined by the Income Tax Law, are taxed as ordinary corporate income.
Forms of business enterprise
The Peruvian Companies Law and a number of other laws, decrees and regulations govern
financial, commercial and industrial activities. The Companies Law regulates the incorpo-
ration and conduct of business entities in general. Special laws may affect the conduct of in-
dustrial, mining, telecommunications, banking and insurance activities to varying degrees,
as well as companies operating under special conditions.

The main legal vehicles regulated under the Peruvian Companies Law are the following:
Sociedad Annima (S.A.) Corporation:

Private Corporation (Sociedad Annima - S.A.):
The Private Corporation is the most commonly used business entity, and constitutes the
basis for the other forms of S.A. (below). Contributions to capital are represented by
shares. Liability is limited to the amount of the contribution. It must have a Board of
Directors and a General Manager.
Private Closed Corporation (Sociedad Annima Cerrada - S.A.C.):
No more than twenty shareholders are allowed, its shares are not listed on the stock
exchange, and the transfer of shares is subject to restrictions. The Board of Directors is
optional, but the Corporation must have a General Manager.
Public Corporation (Sociedad Annima Abierta - S.A.A.):
One or more of the following requirements must be met:
An initial public offering of shares or convertible bonds has been carried out, it must
have more than 750 shareholders, and/or over 35 percent of the share capital has to be
distributed among 175 or more shareholders.
All its shares must be registered with the Stock Exchange, and the Corporation is subject
to the supervision of the Stock Market Superintendence (Superintendencia del Mercado
de Valores SMV). The Board of Directors and General Manager are both mandatory.
Sociedad Comercial de Responsabilidad Limitada (S.R.L.)

Limited Liability Company:
No more than twenty partners are allowed. All partners have limited liability, and the
capital is divided into participations, for which no documents or titles are issued. The
partners and participations are registered in the Peruvian Public Registry, as well as every
participations transfer.
Sucursal Branch
It is a permanent establishment of a local or foreign company outside its legal domicile,
dedicated to one or some of the activities which constitute the corporate purpose of its
head office. A Branch does not have legal independence or a different legal status from
its head office. However, it is considered as an independent company for tax purposes. A
Branch must have a permanent legal representative, who acts as General Manager.
Government supervision
On a general basis, the Peruvian Government supervises certain industry activities, such us:
Insurance, financial and banking operations, as well as the companies under the control
of the Banking and Insurance Superintendence (Superintendencia de Banca, Seguros
y AFP SBS) and the Superintendence of the Stock Market (Superintendencia del
Mercado de Valores SMV);
Mining and energy;
Drug and chemical use;
Education;
Public infrastructure;
Transport and telecommunications;
Water and sewage services, among others
42
2.2. Corporation (S.A.)
Incorporation process
The incorporation of a local company is a straightforward process. The company should be

incorporated by two or more individuals or legal entities (acting on their own or by means
of duly accredited legal representatives), by means of a Public Deed of Incorporation issued
by a Notary Public and registered at the Peruvian Public Registry.
The Incorporation Public Deed must contain the following:

The articles of association and bylaws of the company;
The share capital amount and the number of shares into which it is divided;
The form of payment of the share capital by each shareholder, which may be in monetary
or in-kind contribution; and,
The appointment of the first Board of Directors of the company and its General Manager,
if applicable.
The main topics that must be included in the bylaws are:

The name, corporate purpose and address of the Company;
The amount of the share capital and the number of shares into which it is divided, as
well as their face value and the amount paid-in for each share;
The Shareholders Meeting and management regime (Board of Directors and General
Manager);
The requirements for increasing or reducing the share capital, modifying the
corporations bylaws and the dissolution and liquidation process;
Rules for the distribution of profits.
A copy of the Public Deed must be delivered by the Notary Public in order to be registered
at the Peruvian Public Registry.
Registration formalities normally take about 10 working days. The Notary Public and
Public Registrys fees will depend on the extension and complexity of the Public Deed, as
well as the amount of the capital stock.

Capital structre
Except for banks, financial entities, insurance companies, pension fund administrators,
labour service intermediation entities, and some other regulated entities, there is no legally
required minimum authorized capital. However, all companies must deposit its capital in a
Peruvian financial entity, and there are minimum amount requirements for opening a bank
account, which may vary according to each financial entity.
Shares are nominative and different classes are allowed (bearer shares are prohibited).
However, all shares must have the same face value, which cannot be zero. The issuance of
shares with and without voting rights is permitted.
Shares can be issued once they have been fully subscribed and paid-up at least 25 percent.
Bylaws may establish limitations on the transfer of shares but may not prohibit them.
The Corporation may not grant loans or guarantees with the guarantee of its own shares,
not even for the acquisition of the latter, under responsibility of the Board of Directors or
the General Manager, in case there is no Board of Directors.
44
2.3. Relationships of shareholders,
directors and officers
Management of the company
The shareholders exercise the control of a company through the General Shareholders
Meeting. The management of the company is normally delegated to a Board of Directors
and to the managers, one of whom must be the General Manager. In the event that the
company does not have a Board of Directors, the management will be delegated to the
General Manager.
Powers of each body are defined in the Companies Law and in the bylaws of the corporation.
Directors and managers are not required to hold shares. Minutes of all shareholders and
directors meetings must be kept in legalised minute books or on loose-leaf pages. Every
corporation must keep a legalised share registry book in which the creation, issuance,
rights, transfer, liens and guarantees granted in respect of the companys shares must be
registered. At the official year-end, the directors must prepare and submit to the shareholders
the corporate financial statements, along with their report on the corporations activities.
General shareholders meetings
An annual mandatory shareholders Meeting must be held within three months of the year-
end. At this meeting, shareholders approve, among other matters, the management, the
financial statements of the past year, the dividend distribution (if any), and the renewal of
the Board of Directors.
Other meetings are held when required by the company, for which a fixed agenda and
meeting date should be set.
Capital increase and decrease, and bylaws amendment
Increase or decrease of capital stock and bylaws amendment should be decided by an absolute
majority of shareholders at a General Shareholders Meeting. Shareholders representing not
less than two-thirds of the subscribed shares with voting rights must be present or represented
by proxy in a first citation, and representing no less than three-fifths in a second citation, in order
to meet the required quorum. No agreed resolution will be valid if the required representation
of shareholders is not present at either of these two meetings.

Voting rights
Voting rights for the different classes of shares are normally established in the bylaws, each
share being entitled to one vote. Proxies for Shareholders Meetings may be granted by
letter, fax and other similar methods, if provided in the bylaws.
Non-voting-right shares are allowed by Peruvian law. These shares are not taken into
account in determining the quorum of the General shareholders meeting. However, they
grant preferential rights for profit distribution.
Dividends
Unless otherwise stated in the bylaws, the shareholders at the annual Mandatory
Shareholders Meeting decide the distribution of dividends. The rules for dividend
distribution are as follows:
Dividends are only to be paid based on profits obtained or on free reserves, and provided
the companys net worth is not lower than the paid-up share capital.
Unless otherwise stated in the bylaws or agreed on by the General Shareholders
Meeting, all shares of the corporation (even if not fully paid-in) have the same right to
dividends, no matter when they have been issued or paid.
Distribution of dividends in advance is valid, except for those corporations that have an
express legal prohibition.
In the event that the General Shareholders Meeting approves the distribution of dividends
in advance, with no favourable report from the Board of Directors, the shareholders who
voted in favour of such a distribution shall be jointly, severally and exclusively responsible
for the payment.
Directors may be empowered to decide on the distribution of dividends in advance.
Dissolution and liquidation
Dissolution must be agreed by the General Shareholders Meeting. Such resolution must
be published on three consecutive occasions within ten days following the agreement. The
registration of the dissolution resolution at the Public Registry must be performed within
ten days following the last publication.
A company must enter into a liquidation process if it incurs in losses that exceed two-thirds
of its paid-in capital. A company that continues to operate after accumulating losses in
excess of more than two-thirds of its paid-in capital is deemed as an irregular company
and, as such, loses its limited liability status, whereupon its shareholders, directors and
managers assume personal and unlimited responsibility for all obligations incurred.
Liquidators designated by the shareholders conduct the liquidation process. Liquidators
are empowered to sell the companys assets, pay its debts and obligations and distribute any
remaining equity among the shareholders.
The General Bankruptcy System Law is also applicable, when creditors request the
beginning of a bankruptcy procedure at the Antitrust Law and Costumers Protection
Institute (Indecopi).
46
Books, records and publications
All companies must have corporate books for recording resolutions that have been taken by
their governing bodies. The corporate books are used for:
General Shareholders Meetings minutes.
Board of Directors resolutions (if applicable).
Shares Registry.
Banks, insurance companies and other supervised entities are required to publish their
balance sheets and profit and loss statements in the Peruvian Official Gazette El Peruano,
and another daily newspaper.
A standard form for presentation is requested, but the information required is minimal.
Statutory audit
Annual audits by independent public accountants are mandatory in the following

circumstances:
For banks, insurance companies and, in general, entities listed on the Lima Stock
Exchange Market.
When established in the companys bylaws.
When specifically requested by shareholders representing not less than 10 percent of the
companys subscribed shares with voting rights.
In a closed corporation, when it is requested by shareholders representing at least 50
percent of subscribed shares with voting rights.
When the company qualifies as an open corporation (Sociedad Annima Abierta
S.A.A.).
If the entity has either assets or revenue equal to or in excess of 3,000 Peruvian Tax Units
(UIT), in a given year.

2.4. Limited Liability Company (S.R.L.)
In Limited Liability Companies (S.R.L.), the capital is divided into equal, accumulative and
non-divisible participations, which must not be treated as shares. No title or document is
issued to the holder. It can have up to 20 partners, and they do not have personal liability
for the companys obligations.
Limited Liability Companies are incorporated by Public Deed, which must contain the
following:
The contribution of each partner indicating the manner in which it is carried out, along
with a valuation report for in-kind contributions.
Ancillary services to which the partners have committed, indicating their form, the
remuneration to be received by those who will perform said services, and reference to
the possibility that they may be transferred with the sole consent of the managers of the
company.
Procedures and timing for calling partners meetings, which are to be carried out by the
manager via fax, e-mail or any other means that allows a record of receipt to be kept.
Communications shall be addressed to the domicile designated by the partner for that
purpose.
Requirements and other formalities for the modification of the articles of association
and the bylaws, for the extension of the companys duration and for its transformation,
merger, spin-off, dissolution, liquidation and extinction.
Formalities to be followed for the increase and reduction of the capital, indicating the
eventual pre-emptive right of the partners and the conditions under which capital not
assumed by the partners may be offered to third persons.
Preparation and approval of the financial statements, quorum and voting procedures
and the right to the distribution of profits in relation to the participation of each partner
in the capital, unless otherwise provided for in the bylaws.
Other rules and procedures deemed convenient for the organization of the company, as
well as any other lawful agreements that do not contradict the principles of the S.R.L.
The articles of incorporation or bylaws may impose restrictions and conditions for the
transfer of the companys participations, but they cannot prohibit transfers altogether.
Management of the company is entrusted to one or more managers, who may or may
not be partners, and who represent the company in each and every matter related to its
corporate purpose. As a consequence of their appointment, managers hold general and
special representation powers.
40
2.5. Branch of a Foreign Company
Under Peruvian legislation, a Branch is any secondary establishment by means of which
a company performs certain activities included in its corporate purpose in a different
location from its legal domicile.
A Branch foreign company is registered by means of a Public Deed, issued by a legal
representative of the head office in Peru. The following documents must be attached to the
Branchs Public Deed:
Board of Directors or competent bodys resolution to establish the Branch in Peru. This
resolution should specify:
The activities to be performed by the Branch, and that they are within the head
offices corporations purpose;
Domicile of the Branch;
Name of the person designated as permanent legal representative and other
representatives in Peru, the powers vested in them and the express submission of the
head office to Peruvian Law, for covering the obligations of the Branch.
Affidavit or certification confirming that the Directors or legal representatives of the
Head Office that signed the resolution were entitled to decide upon the establishment
of a Branch in accordance to the Head Office countrys law.
Copy of the bylaws (memorandum and Articles of Association) of the head office.
Certification of the head offices existence issued by a local authority (Certificate of
Good Standing).
The above mentioned documents require certification by a Notary Public or appropriate
government officials in the country of incorporation of the head office, and to be duly
apostilled or certified by the Peruvian Consulate in the country of the company.
A Peruvian official translator must translate any document that is not in Spanish, in order
to submit it to the Peruvian Public Registry for registration.
The business of the Branch is directed by a permanent legal representative, appointed by
the head office, whose powers of attorney must be duly registered at the Peruvian Public
Registry. Such powers may be revoked only by the head office company or by the holder
of an overriding power of attorney in Peru. The scope of the representatives powers of
attorney may vary according to the head offices policy but should be sufficiently extensive
to allow adequate representation in Peru.
There is no regulation requiring filing of the financial statements of the parent company
in Peru.
It is important to note that the Peruvian Government has adopted the Hague Convention
of 5 October, 1961, which abolishes the requirement of legalization for foreign public
documents to be used only in signatory countries.
The referred convention entered in force in Peru on 1 October, 2010.

2.6. Participation Account Agreement
Pursuant to this agreement, two or more parties can agree to carry out a particular business
activity, without incorporating a separate legal entity. One of the associates will act as the
managing (active) partner, who agrees to share the results or profits of a particular business
with another individual or legal entity, which will act as a silent partner (or partners), in
exchange of a contribution of assets or services to such business.
The managing partner operates the business and will be the sole responsible towards third
parties. This agreement does not involve the incorporation of an entity different from the
managing partners.
2.7. Consortium or
Joint Venture Agreement
Under this form of collaboration agreement, two or more parties associate to actively and
directly participate in a certain business for the purpose of obtaining an economic profit.
However, each party will maintain its independence at all moment.
Each party will be individually liable to third parties for the activities that it carries out
under this agreement. When the Consortium or Joint Venture enters into agreements with
third parties, there is joint liability for the partners if it is stated in the agreement or when
determined by law.
The parties should determine the extent of participation in the results; or otherwise it will
be deemed to be equal for all parties. For tax purposes, a Consortium or Joint Venture is
considered as a separate taxable entity when independent accounting records are kept (in
certain circumstances, one party can keep the accounting of its shares in the agreement).
3
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3.
Labour
legislation
3.1. Labour relations
Labour and management relations
Peruvian labour legislation is characterised for being atomised into many laws and
regulations.
With regard to the labour relationship, it should be noted that once it is initiated, employees
undergo a trial period of three months, during which they can be dismissed for any cause
without indemnity. The trial period can be extended to six months or one year for skilled
employees, or those appointed for management positions and positions of trust.
Unlimited term agreements are those entered into for an unlimited (i.e. open-ended)
period of time (permanent employees). In the event of unjustified dismissal, employees are
entitled to an indemnity that equals 1.5 times their monthly remuneration per each year of
service, up to a limit of 12 monthly remunerations. This type of agreement does not require
compliance of any special formality.
Fixed Term agreements are those signed for a limited period of time. Employees hired under
this type of work contract, are entitled to an indemnity that equals 1.5 times their monthly
remuneration per each month pending until the end of the contract (with a maximum of 12
remunerations), in the event of work termination due to unjustified dismissal. These types
of agreements are exceptional, and are only acceptable for temporary positions and certain
specific jobs. If they do not correspond to the nature of the tasks performed, they could be
considered by the labour authority as unlimited term agreements, which would imply the
obligation of providing all the legal rights originated by this type of contract. According to
law, fixed term agreements must be formalised in writing and the purpose of each one of
them must be duly detailed in the contract.
Payroll
Peruvian employers are obliged to use the Electronic Payroll System to register employees
and to comply with their monthly payments.
This system is formed by T- Registro, which contains information of the employees,
professional services agreements, trainees, outsourced personnel, among others; and
PLAME, which contains the monthly payments.
Both registries are carried out electronically, and have to be submitted monthly to the tax
authority.
52
Indirect hired employees
Currently, the Peruvian labour legislation establishes two kinds of agreements in order to
indirectly hire employees: intermediation and outsourcing agreements.
Intermediation agreements consist of the rendering of temporary, complementary and
highly specialised services. Through this type of agreement, the intermediary entity assigns
employees to a company in order to perform services under instructions of the latter, while
their labour relationship continues to be with the intermediary entity. It is important to
highlight that intermediary entities assume the labour costs involved in the employees
assignment. Moreover, they need to be registered before the labour authority, and must
post a guarantee letter to cover any possible unpaid social benefit while rendering services.
On the other hand, an outsourcing company is an entity that is hired to render specialised
service or work, as long as it assumes the services to be rendered under its own risk, with
its own financial, technical and material resources, assumes responsibility for the result of
its activities and its employees are its exclusive subordinates. Some characteristic elements
of an outsourcing company are, among others, evidence of having more than one client,
its own equipment, capital investment and that the service fee must not be determined per
employee but for a comprehensive service.
Companies that hire employees through intermediation agencies or outsourcing services
are jointly responsible with the employer for the fulfilment of labour and social security
obligations accrued during the employees assignment term.
Unions
Employees in construction, transportation and industrial companies commonly form the

strongest unions, the most important being the Confederacin General de Trabajadores del
Peru (C.G.T.P.) and the Central de Trabajadores del Per (C.T.P.).
In order to form a union, a minimum of 20 workers is required in case of a company union
and 50 in other kinds (activities, professions, specialties).
Unions or workers representatives usually negotiate salary increases, fringe benefits and
other special conditions through collective bargaining with employers.
Agreements reached with unions that comprise more than one-half of a companys
employees are applicable for all employees, even if they are not members of the union.
Fringe benefits
Voluntary and statutory fringe benefits usually granted to personnel, are deemed by the
employers as an additional cost of employment. In this regard, fringe benefits established
are those related to medical care, vacations, recreational expenses, bonuses, among others.
Legal bonuses paid in July and December are not subject to any social contribution and only
to income tax.

3.2. Employers payroll costs in Peru
Salaries
Compensation is commonly paid in the form of wages and salaries or by way of commissions,
and may be paid in either Peruvian or foreign currency. Compensations are subject to
statutory social contributions and employees taxes.
Supreme Decree 007-2012-TR dated 17 May, 2012 increased the minimum wage to seven
hundred and fifty (750) Soles (PEN) from 1 June 2012.
The employer may also agree with employees whose monthly compensation is not less than
two Tax Units (equivalent to S/. 7,700 or approximately US$ 2,333.33, at an exchange rate
of 3.03) that their compensation be paid as an annual package calculated on an annual
basis, including all legal and conventional benefits with the exception of profit sharing.
Profit Sharing
There is a general system of participation in the companys profits. Employees of companies

which perform activities generating corporate income are entitled to participate in the
profits of the company, provided the company has more than 20 employees, and they are
subject to the labour regime for private company employees.
Employees share the profits of the company through the distribution of a percentage of
the companys net income before taxes. This percentage varies according to the employers
business:
Fishing 10%
Telecommunications 10%
Industry 10%
Mining 8%
Wholesale, retail and restaurants 8%
Other activities 5%
54
Legal bonuses
According to Law N. 27735, employers must pay a bonus equal to one monthly salary on
July and December.
Legal bonuses are not subject to social benefits and contributions, and instead, this amount
is given to employees as an extraordinary bonus. They are only subject to income tax.
Overtime
Overtime, including work on statutory holidays, is payable at a premium agreed on between

the parties, which may not be lower than 25% of the ordinary hourly rate for the first two
hours, and 35% for the following hours.
The employer and employee may agree, instead, to compensate overtime with rest periods.
Normal working hours should not exceed 8 hours per day or 48 hours per week. This 48
hour work per week period applies to all employees with the exception of those appointed to
management positions and positions of trust, and those whose activities are not performed
under the employers supervision.
Night shift additional payment
Employers with employees who work between 10:00 p.m. and 6:00 a.m. are obliged to
make an additional payment of 35% of the ordinary work hour wage if the employees earn
the minimum salary (S/750).
Vacations
Employees are entitled to paid annual vacations of one month upon completion of each
year of service, with a minimum attendance of 260 days per year if the work week is six
days long, and 210 days if the work week is five days long.
The employer and the employee may agree to allow up to two years vacation to accumulate.
However, at the end of the first year, the employee should take a seven-day vacation period.
If the employer does not grant vacations to the employee, a payment equivalent to two
monthly compensations must be made (one corresponding to the work performed, and the
other as indemnity for not having taken vacations).

Severance indemnity (CTS)
Employees are entitled to a tax-free severance indemnity to be received upon death,

retirement, resignation, or dismissal. This indemnity is equivalent to one months salary
plus one-sixth of a salary for each year of service.
Employers are obliged to deposit the CTS on a semi-annual basis in banking or financial
institutions and in the currency (national or foreign) chosen by the employee. These
deposits must be made within the first fifteen (15) days of May and November of each year,
on the basis of the same number of twelfth parts (1/12) of the computable remuneration
earned by the employee during the months of April and October respectively, as the number
of complete months worked by said employee in the respective semester.
Employees are entitled to dispose of 100% of the deposited amount exceeding four gross
salaries.
Termination of employment
The employer may not dismiss an employee for reasons of behaviour or qualification without
granting the employee a reasonable term of not less than six calendar days to defend him/
herself in writing against such charges, unless a serious misdemeanour is involved; or a
term of thirty calendar days to prove his/her qualification or correct the behaviour.
Should the employee be terminated and no fair cause exists (dismissal without grounds),
the employee will have the right to receive a severance payment equal to 1.5 monthly
salaries for each year of service, up to a maximum of 12 salaries for indefinite term labour
contracts and 1.5 salaries for each month left in the contract terms for fixed term contracts.
56
Social Security Administration for Health Services (EsSalud)
There is a general state system of social security for health services, which is administered
by EsSalud, providing health coverage as established by law. In general, all dependent
employees registered on the payroll are covered by EsSalud, the labour relationship being
the only requirement for obtaining coverage, regardless of the term of employment or the
number of hours worked per day, week or month.
Employers must contribute for all their employees, including foreign employees registered
on the payroll, based on the total monthly compensation, including compensation in kind,
with certain exceptions such as profit sharing payments and extraordinary bonuses. The
rate of this contribution is 9% of his/her compensation.
National Pension Fund System
The National Pension Fund System, managed by the Oficina de Normalizacin Previsional
(ONP), provides pensions to retired employees who have reached the age of 65, provided
they have fulfilled their contribution for a minimum of 20 years. This contribution amounts
to 13% of the employees compensation.
Private Pension System
Private pension fund administrators, locally known as AFP (Administradora de Fondos de

Pensiones), manage an alternative pension system. AFPs guarantee pensions for retirement,
handicap and survivorship pensions, and burial expenses.
For these purposes, employees must contribute 10% of their monthly compensation, plus
commissions for the AFP and insurance premiums for handicap and burial coverage.
In accordance with the reform of the Private Pension System Law, until 31May, 2013,
current Private Pension System affiliates were able to exercise their right to choose where
the commission will be discounted from: (i) from the salary, discounted from their monthly
remuneration or, (ii) from the fund.
Under the latter commission system, for the following ten (10) years, a percentage of
the commission will be discounted from the salary and the rest from the affiliates fund.
After this period, it will be discounted solely from the affiliates fund. This new scheme
was applicable from June 2013 onwards. New private pension system affiliates will
automatically be included in this last scheme and enrolled in AFP Habitat until 2017.

Life insurance
Legislative Decree N. 688 states that employees who have worked for the same employer
for 4 years (consecutive or not), are entitled to a mandatory life insurance provided by the
employer.
In addition, the life insurance contract must be registered before the labour authority.
Industrial Work Training National Service (Senati)
According to Law 26272, individuals or legal entities that develop industrial activities
included in Category D of the International Standard Industrial Classification of all
Economic Activities (CIIU) are obliged to make contributions to SENATI (Servicio
Nacional de Adiestramiento en Trabajo Industrial), paying a percentage of 0.75% over all
remunerations paid to their workers.
Safety and health regulations at work
The employer is in charge of the Occupational Safety and Health Management System and
its implementation in each of its workplaces.
Among the employers main obligations, are:
Companies with twenty (20) or more employees must prepare an Occupational Safety
and Health at Work Manual.
Companies with twenty (20) or more employees must establish an Occupational Safety
and Health Committee, with participation of employees and companys representatives.
In workplaces with less than twenty (20) employees, a Supervisor must be designated.
To be able to identify the Supervisor and the members of the Committee, the employer
must provide an identification card or visible insignia to each of the members.
Companies must implement registries (for accidents, diseases, trainings, medical
examinations, statistics, safety and health equipment, etc.) and documentation of the
Occupational Safety and Health Management System, through magnetic or physical
means. These documents must be kept updated and available to employees and to the
labour authority.
Companies must ensure the presence of a doctor in the workplace in accordance with
the following rules:
In any workplace with more than 500 employees, the doctor must remain for at least
6 hours a day 5 days a week;
In any workplace with less than 500 employees, health supervision is in charge of a
doctor, without the requirement of a minimum of hours, which will be verified with
the following information:
Occupational Annual Health Plan
Employees Health Supervision Program
Compliance with the above-mentioned documents is the employers responsibility.
58
People with disabilities
The General Law of Disabled People, Law N 29973, states that people with disabilities
have the right to work in equal conditions to other employees.
Hence, private employers with more than fifty (50) workers are obliged to hire people with
disabilities at a rate not lower than 3% of their payroll.
The labour authority will begin verifying compliance of said obligation since 1 January
2016.
Labour Audit System
The labour authority is in charge of supervising and ensuring that employers fulfil labour
and social security provisions. Also, this entity is in charge of providing technical assistance
to employers as well as employees, protecting their corresponding rights.
The labour authority is entitled to impose fines on employers who infringe the Labour law.
In January 2013, the National Superintendence of Labour Inspection (Sunafil) was created.
This is a technical and specialised organism attached to the Labour Ministry, which will be
in charge of the Labour Audit System. Maximum fines (if infringement affects more than
141 workers) have been increased as detailed in the following chart.
Infringement Fine
Slight infringement (50 Tax Units) S/ 192,500
Serious infringement (100 Tax Units) S/ 385,000
Very serious infringement (200 Tax Units) S/ 770,000
Infringement accumulation S/ 1155,000 per year
By Law 30222, fines imposed by Sunafil were capped up to 35% of the original amount
after evaluation of each particular case, considering principles of reasonableness and
proportionality. This benefit will be applicable until 12 July, 2017 but will not apply to very
serious infringements, such as the ones that affect unionization, non- discrimination rules,
prohibition of child labour, forced labour, infringements regarding rules on safety and
health at work that lead to employees death or permanent disability, labour inspection
obstruction, and repeated infringements-understood as the commission of the same offense
within a six month period after the previous resolution that punished a prior infringement
was confirmed.

4. Tax
aspects
60
4. 1. Corporate Income Tax
Overview
Companies incorporated in Peru are considered domiciled for Income Tax purposes and,
therefore, subject to income tax at a 28% rate (2015-2016), 27% rate (2017-2018) and 26%
rate (as from 2019), on net income determined on a worldwide basis. Branches, agencies
and permanent establishments incorporated in Peru of non-domiciled companies or
entities are subject to Income Tax at the same rates on their Peruvian source income only.
In order to fulfil their annual income tax obligation, the aforementioned entities must
comply in advance with monthly estimated tax payments by choosing the higher amount
of: i) the quota obtained by applying to the net income a coefficient that results from
dividing the tax determined in the prior fiscal year (or in the preceding year, in the case of
January and February) and the total net income of said fiscal year, or ii) the one obtained
by applying 1.5% to the months net income.
If no tax is calculated in the prior fiscal year (or in the preceding year) the advance payments
shall be determined by applying 1.5% to the months net income. Any unpaid balance or
excess payment is paid or credited, respectively, upon the filing of the annual Income Tax
return. The Income Tax must be filed and paid within the first 3 months of the fiscal year
following the one in which the tax obligation arises (e.g. 2014 annual income tax return
must be filed no later than March 2015). The fiscal year is the calendar year.
For the purposes of determining their taxable income, entities are allowed to deduct
business expenses, to the extent that they are needed, in order to produce taxable income
or to maintain its source. Requirements, limits and/or caps may be applicable for the
deduction of certain expenses, such as finance expenses (thin capitalization rules apply),
bad debt provisions, salaries, travel expenses, gifts, among others.
However, certain expenses are disallowed, such as those derived from transactions with:
(i) entities domiciled in tax havens included in the list attached to the income tax Law, (ii)
permanent establishments located in tax havens, or (iii) entities that obtain revenues or
income through tax havens. Notwithstanding this, expenses derived from the following
transactions are excluded from the above mentioned limitation: (i) interest on loans, (ii)
insurance premiums, (iii) lease of aircraft and ships, (iv) maritime freight, and (v) toll for
transit through the Panama Canal.
Depreciation allowance of assets is available using the straight line method. The depreciation
allowance is limited to the one recorded for accounting purposes (financial depreciation);
however, the depreciation allowance is limited to the following maximum rates:

Buildings 5% or 20% (*)
Cattle (both labour and reproduction), and fishing nets 25%
Vehicles (except railroads) and any kind of ovens 20%
Machinery and equipment used for mining, petroleum and construction activities,
20%
except furniture, household and office equipment
Equipment for data processing 25%
Machines and equipment acquired as from 1 January, 1991 10%
Other fixed assets 10%
(*) Buildings are subject to a flat 5% depreciation rate (regardless of financial depreciation) and a flat 20% depreciation rate, in case the
construction of the building started as from 1 January, 2014 and, until 31 December, 2016, the construction reached 80% of the works
4. 2. Withholding taxes
Income paid to non-domiciled entities is subject to the following withholding tax rates:
Interest paid on loans with non-related parties, provided certain require-

4.99%
ments are met
Interest paid on loans with related parties 30%
Interest paid by Peruvian financial entities or banks to foreign beneficiaries,
4.99%
for credit lines used in Peru
Capital gains derived from the sale of stock 30%, 5% or exempted
Royalties 30%
Dividends or profit distributions paid by Peruvian entities (*) 6.8% (2015-2016), 8% (2017-2018) and 9.3% (from 2019)
Technical assistance (**) 15%
Other income 30%
Lease of aircraft and vessels 10%
(*) Dividends paid out of undistributed profits as of 31 December, 2014 will be subject to a 4.1% withholding tax.
(**) The user of the technical assistance has to have a report issued by an audit firm stating that the technical assistance was effectively
rendered, if the consideration for the services exceeds 140 Tax Units (PEN 539,000).
Note that domiciled taxpayers cannot deduct the withholding tax paid on behalf of a third
party, except in the case of loans provided by non-domiciled creditors, to the extent that the
domiciled debtor has expressed its agreement to bear the withholding tax.
Capital gains derived from the sale of securities through the stock exchange received by
non-domiciled entities or individuals are subject to income tax at a rate of 5%.
62
Nonetheless, an exemption has been granted from January 2016 until December 2018
when no more than 10% interest is transferred and the stock has market presence. If the
security is not traded in the stock exchange, a 30% income tax rate will be applicable.
In the case of the following services in which activities are performed both within Peru and
abroad, non-domiciled entities generate Peruvian source income at the following percentages:
Taxable Transaction Peruvian source income Effective tax rate
Insurance 7% 2.1%
Lease of vessels 80% 8%
Lease of aircrafts 60% 6%
Air transport 1% 0.3%
Maritime transport 2% 0.6%
Telecom services 5% 1.5%
International news services 10% 3%
Distribution of movies, records and similar products 20% 6%
Supply of containers 15% 4.5%
Demurrage 80% 24%
Right for broadcasting within Peru live foreign TV shows 20% 6%
4. 3. Indirect sale of shares

Income obtained from the indirect sale of shares issued by entities incorporated in Peru is
deemed as Peru sourced. A taxable indirect transfer of Peruvian shares is deemed to occur
when shares of a foreign entity which in turn owns, directly or indirectly through other
entities, shares of a Peruvian entity, are transferred and both of the following conditions
are met:
During the 12 months prior to the transfer, the market value of the shares of the Peruvian
entity owned by the foreign entity equals 50% or more of the market value of the shares
of the foreign entity; and,
During any given 12-month period, shares representing 10% or more of the foreign
entitys share capital are transferred.

4.4. Market value and transfer
pricing rules
For tax purposes, the value assigned to any transaction must meet market value standards
(arms length). If the value assigned to a transaction differs from market value, either by
overvaluation or sub-valuation, the tax administration may adjust it for both the purchaser
and the seller. In the case of transactions between related parties or transactions with
tax havens, the value of the goods and services must be determined in accordance with
transfer pricing rules, subject to the mandatory requirement to support such value with a
transfer pricing study when accrued income exceeds S/ 6000,000 and the amount of the
transactions exceeds S/ 1000,000 (when transactions exceed S/ 200,000 per year, only an
annual informative statement is needed); otherwise penalties may be imposed.
4.5. Stability agreements

Investors may enter into stability agreements with the Government, either under the
general regime or specific regimes (i.e. mining and oil & gas).
Under the general regime, investors may enter into stability agreements that guarantee
them, for a 10-year period, the following:
Stability of the income tax regime with respect to dividends and profits distribution in
force at the time the agreement is entered into.
Stability of the monetary policy of the Peruvian Government, according to which there
is a total absence of exchange controls, foreign currency can be freely acquired or sold
at whatever exchange rate the market offers and funds can be remitted abroad without
any prior authorizations.
Right of non-discrimination in relation to local investors.
On the other hand, under the General Mining Law, local mining companies may enter into
stability agreements of guarantees and investment promotion measures that grant them,
for 10, 12 or 15 years, among others, the following:
Stability of the overall tax regime.
Stability of the overall administrative regime.
Free availability of funds (foreign currency) arising from export operations.
No exchange rate discrimination.
Free trade of products.
Stability of special regimes in relation to tax refunds, temporary import and similar
regimes.
Oil & gas companies may enter into stability agreements that guarantee, for the term of
the contract, among others, the following:
Stability of the overall tax regime.
Free availability of funds (foreign currency) arising from export operations.
Free convertibility of its funds.
Free trade of products
60
4.6. Income tax on individuals
Individuals are taxable in Peru by reason of their domicile rather than by residence criteria.
Foreign individuals are deemed to be domiciled in Peru for tax purposes, if they are
physically present in Peru for more than 183 calendar days within a 12 month period.
Temporary absences up to 183 days within a 12 month period do not interrupt the
continuity of their presence.
The tax status of the individual (domiciled or non-domiciled) is determined at the beginning
of each fiscal year. Changes regarding such condition that may occur during the fiscal year
shall enter in force as of the next fiscal year. This means that non-domiciled individuals will
be considered domiciled in Peru the next year they meet the conditions mentioned above.
Domiciled individuals are subject to income tax on their worldwide income, whereas non-
domiciled individuals are only taxed on their Peru source income. In such case, however,
individuals are entitled to a foreign tax credit for the taxes paid on foreign income taxable
in Peru determined by their average Peruvian tax rate applied on their foreign income, with
a limit of the tax paid abroad.
Income tax rate is based on a progressive rate schedule on salaries, retribution for services
and foreign source income, as shown below:
Bracket Reference in tax units Tax rate

1st Up to 5 Tax Units (*)(**) 8%
2nd From 5 to 20 Tax Units 14%
3rd From 20 to 35 Tax Units 17%
4th From 35 to 45 Tax Units 20%
5th Above 45 Tax Units 30%
(*) For fiscal year 2015, 1 Tax Unit is equal to S/. 3,850.
(**) The first 7 Tax Units are exempt from Income Tax
Rental income is subject to an effective 5% rate.

Capital losses are allowed only as an offset to capital gains which arose in the same fiscal
year. They cannot be carried forward.
Income tax must be paid upon the filing of the annual income tax return, unless it is
withheld by a withholding agent.
No deductions or credits are allowed for non-domiciled individuals.
Income tax on non-domiciled individuals is imposed at the following rates on their Peruvian
source income:

Dividends or profit distributions paid by Peruvian entities 6.8% (2015-2016), 8% (2017-2018) and 9.3% (from 2019)
Income derived from the sale of real estate 30%
Interest paid on loans with non-related parties, provided certain
4.99%
requirements are met
Capital gains derived from the sale of stock 30%, 5% or exempted
Business income 30%
Work income 30%
Royalties 30%
Income of artists and performers for live shows, made in the
15%
country
Other income 30%
Capital gains derived from the sale of stock are levied with a 5% rate, provided that:
The shares are listed in the Stock Public Registry; and,
The shares are traded through the Lima Stock Exchange.
The aforementioned capital gains will be exempted as from January 2016 until December
2018 if:
No more than 10% interest is transferred; and,
The shares have market presence.
Otherwise, a 30% rate is applicable.
Withholding obligations:
Non-domiciled individuals are subject to withholding taxes as a mechanism to collect
the final income tax by the Tax Authority. Said obligation is not applicable when the
sale of stock is conducted through the Lima Stock Exchange. In this case, the Peruvian
Clearing House (Cavali) has the obligation to withhold the corresponding income tax.
Tax exemptions
Capital gains made by the direct or indirect sale of securities underlying an Exchange
Traded Fund (ETF) when such sale or conveyance is performed for the constitution of
the ETF, the sale of the ETF unit or the management of its investment portfolio.
Capital gains derived from the sale of treasury bonds.
Interest from bank deposits when the beneficiary is an individual will be tax exempt.
66
4.7. Controlled Foreign Corporations
(CFC) rules
In Peru, CFC rules are applicable in order to avoid the deferral of Peruvian income tax
liabilities derived from passive income received by determined foreign entities controlled
by domiciled taxpayers. Concepts, such as dividends, interest, royalties and capital gains,
are considered passive income.
Pursuant to the CFC rules, when a domiciled taxpayer owns (directly or indirectly) more
that 50% interest in a foreign entity located in a tax haven or jurisdiction with reduced
tax rates (i.e. where the applicable tax rate on similar income is less than 75% of the rate
which would apply in Peru), the passive income obtained by the foreign entity would be
attributed to said domiciled taxpayer. Therefore, the shareholder will pay the income tax
on foreign passive income obtained by the foreign entity in the fiscal year when said entity
actually receives it, and not when a dividend is distributed to the shareholder.
4.8. Tax treaties in force

Peru has entered into treaties with Canada, Chile, Brazil, Mexico, Switzerland, South
Korea and Portugal regarding double taxation on income tax under the Organisation for
Economic Cooperation and Development (OECD) model.
Treaties with Spain and Thailand are not in force, as ratification by the Peruvian Congress
is still pending. In addition, Peru, as a member of the Andean Community, which also
includes Bolivia, Colombia and Ecuador, is subject to a double taxation standard (based on
source income and not on the OECD model).

4.9. Payroll taxes
Health contribution (EsSalud)
Employers shall make mandatory monthly payments equal to 9% of the compensation
paid to employees.
Employees shall be affiliated either to the National Health System (EsSalud) or the
Private Health System (EPS). If the EPS is chosen, of that 9%; 6.75% is distributed to
EsSalud and 2.25% goes to the EPS, this last amount may be used as credit by the em-
ployer against health contribution.
Complementary insurance for risky work
Employees who perform high risk activities established in Law N.26790, such as mi-
neral extraction, iron and steel smelting, among others, must have a complementary
insurance for risky work, coverage of which includes healthcare, temporary or perma-
nent disability pensions and burial expenses, as a consequence of a work accident or
professional disease suffered by employees. This insurance is compulsory and must be
paid by the employer.
Employees hired through workers cooperatives; special, temporary or complementary
services companies; contractors and subcontractors; as well as any other intervening
institution that assigns personnel to a company where risky activities are performed, are
obliged to contract the complementary insurance for risky work.
Employers that hire work services or labour through the abovementioned companies are
obliged to verify that all the employees assigned to their offices have been duly insured
according to the corresponding legal provisions. Otherwise, they will have to contract
the insurance (for their own account), in order to guarantee the coverage of the referred
employees, under penalty of being jointly liable with said companies to those employees
and the National Health System, for the obligations established by law.
Pension fund contributions
Employers shall apply monthly withholdings for pension fund contributions equal to
13% of the compensation received by the employee, in case he/she is affiliated to the
National Pension System, or approximately 12.4% in case he/she is affiliated to the Pri-
vate Pension System (in this case, 10% corresponds to the personal pension account and
almost 2.4% to the insurance and commissions for managing the fund).
Should the labour contract of the foreign individual end, and he/she leave Peru, the pen-
sion funds deposited in the Private Pension System may be transferred to an account of
the employee in a foreign bank (the aforementioned 10%).
We set forth below a summary of the payroll contributions:
Payroll tax Employer Employee Rate

Health contributions X 9%
Complementary insu-
X 0.53 % approx.
rance for risky work
National pension fund X 13%
Private pension fund X 12.4 % approx.
68
4.10. Financial Transactions Tax (FTT)
FTT is applied at a rate of 0.005% on credits and/or debits on bank accounts held by the
taxpayers.
However, operations made between accounts of same holder, credits to bank accounts for
payment of salaries, among others, are exempted from the FTT.
Payments of FTT are deductible as an expense for income tax purposes.
4.11. Temporary Net Assets Tax (TNAT)

Companies subject to Income Tax are obligated to pay TNAT, except for companies that are
in preoperative stages or that commenced business on 1 January of the fiscal year in which
TNAT must be paid.
The taxable basis is the value of the net assets set forth in the taxpayers balance sheet
as of 31 December of the year prior to that of the tax payment, adjusted for deductions
and amortisations accepted by the Peruvian law. The amount of TNAT is determined by
applying the following rates on the taxable basis:
Rates Net assets

0% Up to S/.1000,000
0.4% In excess to S/.1000,000
The amount paid for TNAT may be credited against the taxpayers income tax. If not
totally utilised, the remaining TNAT may be refunded by the tax administration.
4.12. Value Added Tax (VAT)

The rate of VAT is 18% and is applicable to the following operations:
Sale of movable goods within Peru;
Rendering or first use of services within Peru;
Import of goods;
Construction agreements;
The first sale of real estate performed by constructors.
The VAT Law follows a debit/credit system and input VAT may be offset by output VAT.
Any VAT credit that is not offset in a certain month can be carried forward to be offset with
any future output VAT. VAT credit cash refunds are only available for exporters and some
entities at pre-operative stages, provided certain conditions are met.

4.13. Obligatory Tax Payment
System (SPOT)
The SPOT is applicable to the sale of certain goods and the rendering of services subject to
Peruvian VAT. The main purpose of the SPOT is to generate funds to enable the payment of
tax obligations by the VAT payer.
According to the SPOT, all sales of goods and rendering of services listed in the appendices
of Resolution No.183-2004/SUNAT that are levied with VAT, will be subject to withholding,
applying the rates established for each kind of good and service. Regarding services,
Appendix 3 of the Resolution establishes that the services subject to the SPOT are:
Labour intermediation (10%);
Lease of goods (10%);
Maintenance and repair of movable goods (10%);
Cargo movement (10%);
Other entrepreneurial services (10%);
Business commission (10%);
Fabrication of goods by order (10%);
People transport services (10%);
Construction agreements (4%);
All services subject to VAT (there are some exceptions) which have not been mentioned
above (10%).
The purchaser or service recipient must withhold a percentage of the transaction price and
deposit said amount within the sellers or service providers State Bank account (Banco de
la Nacin). It is important to note that the right of the purchaser or user of the service to
offset input VAT related to such goods and services may be exercised only after the deposit
with the State Bank has been executed.
The amount deposited is applied towards the payment of the sellers or service providers
Peruvian tax obligations (not just VAT). If after four consecutive months said amount is
not utilised, the seller or service provider may apply for a refund or use the amount to pay
withholding applicable to purchasers or service recipients.
4.14. Early recovery of VAT

Companies in a pre-operative stage with large projects that require at least two years for
maturity may apply for the early recovery of VAT, which allows for a VAT credit refund prior
to commencing operations. An investment agreement with the Government is required and
a minimum investment of US$ 5000,000 must be met. Minimum amount mentioned does
not apply to agriculture projects.
60
4.15. Recovery of VAT on exploration
activities for mining and oil & gas
Holders of mining concessions have the right to recover the VAT paid in connection
with their activities during the exploration stage. In order to access this regime, mining
companies must comply with certain conditions, such as being entirely at a pre-operative
stage and performing exploration activities of minerals within the country, and entering
into an exploration investment contract with the Government, for a minimum investment
of an amount in national currency equivalent to US$ 500,000.
Likewise, entities that enter into oil & gas agreements with the Government (Perupetro)
have the right to recover the VAT paid in connection with their activities during the
exploration stage.
4.16. Exporters positive VAT balance

Export of goods as well as some services performed for foreign entities, are taxable at 0%
rate. VAT paid upon the acquisition of goods, services, construction agreements and import
of goods related to the exported goods or services, grants exporter a positive balance which
may be refunded by the tax administration.
The positive balance may be offset with: (i) output VAT, (ii) income tax, (iii) any other
outstanding tax debt in favour of the Central Government. In case the positive balance is
not completely offset, because the amount of the aforementioned tax obligations does not
fully absorb the balance, the taxpayer may apply for a refund.
4.17. Excise Tax

The sale of specific goods, including fuel, vehicles, among others, is subject to
Excise Tax.
Tax rates, and the manner in which the tax is applied, depend on the type of goods or
services. For example, in the case of fuel, the taxpayer is obliged to pay a determined
amount per gallon sold locally or imported (between PEN 0.00 and PEN 1.93 per gallon,
depending on the type of fuel); and in the case of vehicles, the tax rate is 0%, 10% or
30%, depending on the type of vehicle.

4.18. Customs duties
Customs duties are imposed on the CIF value of imported goods, at rates of 0%, 6%, 11%.
There are no restrictions on imports and exports, although there is a limited list of products
which cannot be imported or exported. Exports are not subject to any tax. The import of
most capital goods is subject to a 0% rate.
Peru is a member of the World Trade Organization (WTO) and has various bilateral
agreements based on most favoured nation treatment on a reciprocal basis. Peru is also a
member of the Andean Community and the Latin American Integration Association - LAIA
(formerly the Latin American Free Trade Association).
The Government is empowered to grant duty exemptions under certain circumstances and
also to temporarily suspend the assessment of duties on certain products. Customs duties
are imposed on an Ad-Valorem basis (the CIF value of the imported goods). Goods are
classified for customs duty purposes under the Harmonised System.
Drawback regime
Pursuant to the drawback regime, an exporter may apply for a refund of the customs duties
that it paid upon: (i) the importation of goods contained in the exported goods, or (ii) the
importation of goods that are consumed during the production of the exported goods.
The refund rate is currently 4% of the FOB value of the exported good, provided such
amount does not exceed 50% of the goods production cost. The refund will be applicable
for each type of good exported by the exporter and for the first US$ 20000,000 worth of
goods exported per year (the excess will not be subject to refund).
For said purpose, the beneficiaries of the drawback regime are the manufacturer/exporter
companies whose cost of production has been increased by the customs duties paid upon
the importation of: (i) raw material, (ii) intermediate products, or (iii) pieces incorporated
or consumed in the production of the exported good. Note that fuel or any other energy
source used to generate heat or energy for the purposes of obtaining the exported good, is
not considered as raw material.
4.19. Free Trade Agreements (FTA)

Peru has entered into FTA with the United States, Canada, Singapore, China, the European
Union, Thailand, Chile, Panama, South Korea, Japan, Mexico, the European Free Trade
Association (Island, Liechtenstein, Norway and Switzerland), Costa Rica, the Andean
Community (Colombia, Ecuador and Bolivia), the Southern Common Market (Argentina,
Brazil, Paraguay and Uruguay), Cuba and Venezuela.
4.20. Foreign Account Tax Compliance

Act (FATCA)
5
A Model 1 Intergovernmental Agreement (IGA) is treated as in effect by the US Treasury as
of 1 May, 2014. The US and Peruvian governments have reached an agreement in substance
and Peru has consented to disclose this status. In accordance with this status, the text of
such IGA has not been released and financial institutions in Peru are allowed to register on
the FATCA registration website, which is consistent with the treatment of having an IGA in
effect, provided that the jurisdiction continues to demonstrate firm resolve to sign the IGA
as soon as possible.
72
5.
Financial
accounting &
reporting
5.1. Application of International
Financial Reporting Standards
(IFRS) in Peru
In order to determine which companies are required to apply IFRS (mandatorily or

voluntarily) it is necessary to distinguish between the following groups:
Group Features Requirement for IFRS
Group 1 Listed companies (oversight of local regulator) IFRS mandatory since 2011
Private companies with assets or revenue abo-

Group 2 IFRS mandatory since 2013
ve 30,000 UIT(*) (approximately US$35 million)

ve 15,000 UIT (approximately US$17 million)

ve 10,000 UIT (approximately US$12 million)

ve 5,000 UIT (approximately US$5.8 million)

ve 3,000 UIT (approximately US$3.5 million)
Private companies with assets or revenue be-

Group 7 They continue to apply Peruvian GAAP
low 3,000 UIT (approximately US$3.5 million)
74
It is important to emphasize that Peruvian companies are required to adopt IFRS in
the consolidated financial statements as well as in the separate or individual financial
statements. This means there is no freedom of choice in adopting IFRS in the individual
financial statements as is possible, for example, in some European countries.
According to the previous chart, Group 1 consists of companies with equity shares or debt
instruments traded in the local markets or operating in specific business areas (broker
dealers, mutual funds and investment funds). These entities are overseen by the local
regulator of entities and securities (Superintendencia del Mercado de Valores - SMV), and
they were required to fully adopt IFRS for the preparation of their financial statements
of 2011; except for broker dealers, mutual funds and, investment funds, which have been
required to prepare their first IFRS financial statements for the year ended on 31 December
2012
Groups 2 through 6 consist of private companies (not overseen by SMV) with assets or
revenues greater than a specific level measured on the basis of UIT*; which, despite not
being public companies, are required to file their financial information with the local
regulator (SMV This means that the SMV has enhanced its functions in order to act as
an agent that compiles information presented by private entities and has the ability to
impose fines on entities that fail to comply with this requirement for an amount up to 25
UIT (approximately US$29,000). The minimum information required to be filed with SMV
consists of a set of basic financial statements (without notes), which will be made public to
any party making a formal request. The entities included in these groups have due dates for
filing their information based on a schedule informed by SMV which establishes maturities
in June of the year following the date of the information that is being presented.
Group 7 consists of private companies (not overseen by the SMV), with assets or revenues
below 3,000 UIT (US$3.5 million), which should apply generally accepted accounting
principles in Peru (Peruvian GAAP). Nevertheless, these companies may apply IFRS
voluntarily. In this regard it should be mentioned that the Peruvian standard-setter
(Consejo Normativo de Contabilidad (CNC) made official in November 2010 the IFRS for
small and medium sized entities issued by the IASB.
In summary, it should be emphasized that to date most Peruvian companies have adopted,
or are in the process of adopting, IFRS.

5.2. Major differences between IFRS
and Peruvian GAAP
Peruvian GAAP is based on the IFRS made official through resolutions issued by the
Peruvian standard-setter (CNC) and certain specific local accounting rules. Currently,
considering the most recent approvals of certain standards and pronouncements by the
CNC, the major differences between IFRS and Peruvian GAAP are as follows:
Under Peruvian GAAP, effective as of 31 December 2004, the financial statements were
required to be adjusted to reflect the effects of inflation, based on a methodology approved
by the CNC. The balances restated for inflation were considered to be the historical opening
balances to prepare the financial statements for 2005.
Under IFRS, Peru did not qualify as a hyperinflationary country after 1994; therefore,
the financial statements for years beginning on or after that date are not required to be
restated for inflation, in accordance with IAS 29 - Financial Reporting in Hyperinflationary
Economies.
For Peruvian GAAP purposes, it is permitted to apply the equity method to account for
investments in subsidiaries in separate financial statements. Under IFRS, until 31 December
2015, IAS 27 Separate Financial Statements (IAS 27), investments in subsidiaries
presented in separate financial statements are permitted to be accounted for at cost or
applying rules of IAS 39. However, it should be mentioned that the IASB published narrow-
scope amendments to IAS 27 in August 2014. The amendments to IAS 27 will allow entities
to also use the equity method to account for investments in subsidiaries, joint ventures and
associates in their separate financial statements. An entity which has decided to change to
the equity method shall apply the amendments for annual periods beginning on or after
1 January 2016 in accordance with IAS 8. Earlier application is permitted. It could be
reasonably expected that many companies will decide to apply the equity method in order
to reduce compliance costs.
In addition to the previous GAAP differences, although Peruvian GAAP includes most of
the IFRS, it shows, in practice, certain departures from a strict application of IFRS. For
example, most companies follow tax criteria to depreciate fixed assets, or do not apply
concepts such as componentization, or residual values or do not identify embedded leases
or embedded derivatives.
For entities required to apply full IFRS, it is necessary that their management assesses
the impact of IFRS on their financial reporting framework. The transition to the IFRS
framework may be much more complex than the technical accounting challenge arising
when adopting new accounting standards. This process implies focusing on complex issues
inherent to the financial information collection and formulation process as well as the
business processes and systems; in addition, but equally important, this conversion process
requires making sure awareness is raised company-wide of the implications of adopting this
new accounting framework. Careful planning and monitoring of the activities underlying
this conversion initiative will contribute to a smooth transition for the company, and will
mitigate any potential additional pressure that this initiative may place on the day-to-day
activities of the companys personnel.
6
(*) UIT = Unidad Impositiva Tributaria, which is an index generally used as a referential value for tax determination purposes in Peru, that is
updated on an annual basis to reflect changes in prices. Calculations based on UIT have been made with the value prevailing at the date of
this publication (PEN 3,950)
70
76
6. Business
associations
70 Doing business and investing in Peru 2016 21

Business associations
National Confederation of Private Business Institutions (Confiep)

www.confiep.org.pe
Confiep is the institution which brings together and represents Peruvian private business
activity both at local al international level. It aims to strengthen the relations between
businessmen in order to further develop a culture of free market. It is the main link between
the State and the private sector.
National Society of Industries (SNI)

www.sni.org.pe
The SNI is the institution that groups the private industrial companies of Peru. It represents
and defends the interests of its associates, and promotes the competitiveness, the creation of
value and the sustainable development of the industrial sector and the countrys economy.
Lima Chamber of Commerce (CCL)

www.camaralima.org.pe
The CCL is the largest business guild in Peru. Its main objectives are to exercise the
representation and defense of the businessmen interests before national and international
authorities and entities, to promote the free market and enterprise, and fair and honest
competition.
Foreign Trade Society (ComexPeru)

www.comexperu.org.pe
ComexPeru is a private guild that groups the main foreign trade related companies in Peru.
It has the objective of contributing to the improvement of competitive conditions in a free
market environment, with the aim to attract further private investment in Peru.
Association of Exporters of Per (ADEX)

www.adexperu.org.pe
ADEX is a business institution that represents exporters, importers and suppliers of trade
services. It also provides services of associative action, business advice, commercial
information, updating and training, commercial promotion, union management, business
services and certification center.
American Chamber of Commerce of Peru (AmCham Peru)

www.amcham.org.pe
This is an independent, non-profit organization, which represents Peruvian, American and
foreign companies. Its main objectives are to promote the free market by encouraging the
development of commerce, investment and trade between Peru and the US.
70
78
Association of Companies Promoting the Capital Market
(Procapitales)
www.procapitales.org
This union institution is oriented towards the promotion of investment. Its main objectives
are to support the creation of better conditions for private investment, strengthen good
corporate governance practices, and encourage financing through the capital market and
investment funds.
Association of Automobile Representatives of Peru (Araper)

www.araper.pe
This is a civil non-profit association that represents automobile sector associates, provides
information and specialized advisory services, organizes activities related to its market,
and supports authorities and civil organizations in the solution of problems that affect the
sector.
Peruvian Construction Chamber (Capeco)

www.capeco.org
Capeco is a non-profit civil association with union characteristics. It groups and represents
the companies that operate in the construction activity in Peru. It has the mission of
assisting its associates, promoting national development and improving the quality of life
through construction.
Association of Banks of Peru (Asbanc)

www.asbanc.com.pe
This association is a guild that brings together the private banks and financial institutions
of the country. Its main objective is to promote the strengthening of the private financial
system by providing its associates with information, advisory and consulting services in
matters related to their field.
Peruvian Association of Insurance Companies (Apeseg)

www.apeseg.org.pe
This non-profit institution groups and represents the insurance and reinsurance companies
established in the country. Its main objective is to represent its associates before the public
and private sectors in matters related to their professional activity. It also aims to strengthen
the insurance market in the country.
Peruvian Association of Pension Fund Administrators

(Asociacin AFP)
www.asociacionafp.com.pe
This is a private union organization that assembles the four Private Pension Fund
Administrators (AFP) that operate in Peru. Its objectives are to spread a culture of saving
for retirement, and to protect the interests of the private pension funds affiliates and
pensioners.

National Society of Mining, Petroleum and Energy
(SNMPE Procapitales)
www.snmpe.org.pe
The SNMPE is a business organization constituted as a non-profit civil association, which
assembles legal entities related to mining, hydrocarbon and electricity activity. Its functions
are to promote the responsible development of activities related to these sectors.
National Fisheries Society (SNP)
www.snp.org.pe
The SNP groups the Peruvian fishing companies that make responsible use of hydro-
biological resources. These companies are provided with union support services in their
planning, execution and control activities, which helps improve their operations and
contributes to the countrys foreign exchange.
Chambers of Per (Perucmaras)
www.perucam.com
Perucmaras groups the chambers of commerce of the country, with the objective to
contribute to the strengthening of the countrys chambers of commerce, support the
development of small and micro-provincial companies, and represent its associates
interests before the national government.
Association of Unions of Agricultural Producers of Per (AGAP)
www.agapperu.org
This non-profit civil institution represents the agro exporting companies of Peru before
public and private, both national and foreign institutions. Its main objective is to promote
the development of the national agricultural sector, seeking to improve its competitiveness.
Automobile Association of Peru (AAP)
www.aap.org.pe
The AAP is a non-profit private business union of the automobile sector. It represents its
associates throughout the country. It aims to bring together individuals and legal entities
related to the automobile sector, to protect their interests, and to represent them before the
authorities.
70
80
National Association of Pharmaceutical Laboratories (Alafarpe)
www.alafarpe.org.pe
This entity brings together companies of the pharmaceutical industry dedicated to the
production, commerce and promotion of pharmaceutical products for human use. Its main
function is to represent its associates, made up of national and foreign capital laboratories.
Peruvian Association of Poultry Farming (APA)
www.apa.org.pe
The APA is a business guild that seeks to add to the countrys development through
national poultry farming. Its objectives are to propitiate the development and profitability
of the sector, as well as to coordinate the development of the agricultural sector with the
government.
National Radio and Television Society (SNRTV)
www.snrtv.org.pe
The SNRTV is the union body in charge of promoting the growth and consolidation of the
commercial radio broadcasting services and television and radio production in Peru. It also
defends the principles of free and fair competition in radio broadcasting and television and
radio production.
Peruvian Association of Port Operators (Asppor)
www.asppor.org.pe
This association groups the sector companies that provide port, maritime, logistic and
storage services. Its main objectives are to promote the development of the maritime and
port operations of Peru, and represent the interests of the union with public or private
entities.

7. Regulatory
bodies

Regulatory bodies
Central Reserve Bank of Peru (BCRP)

www.bcrp.gob.pe
The BCRP is an autonomous public legal entity responsible for the preservation of monetary
stability. Its main functions are to issue bills and coins, regulate the currency and the credit
of the financial system, and to administer the international reserves. The BCRP is also
required to periodically inform the country of the state of national finances.
Presidency of the Council of Ministers (PCM)

www.pcm.gob.pe
The PCM is the institution responsible for coordinating and articulating national and
sectorial policies with the different governmental institutions and civil organizations. It is
its duty to be the link between the Executive Power, other government entities, the private
sector and the civil society.
Ministry of Economy and Finance (MEF)

www.mef.gob.pe
The Ministry of Economy and Finance is an organism of the Executive Power. It is responsible
for planning, directing and controlling matters related to the national budget, treasury,
indebtedness, accounting, fiscal policy, public investment and economic and social policy.
Ministry of Labour and Promotion of Employment (MTPE)

www.mintra.gob.pe
This entity is in charge of developing and evaluating the socio-labor policies related to
work, employability, job placement and self-employment nationally. It is also responsible
for guaranteeing the compliance of current labor legislation, the prevention and solution
of work-related conflicts, the improvement of working conditions, and for the protection of
workers fundamental rights.
Ministry of Energy and Mines (Minem)

www.minem.gob.pe
The main functions of this entity are to formulate and evaluate policies regarding the
sustainable development of mining and energy activities on a national level. Furthermore,
it is the competent authority in environmental matters corresponding to the activities in
these industries.

Superintendence of Banking, Insurance and Private Pension Fund
Administrators (SBS)
www.sbs.gob.pe
The SBS is the entity in charge of the regulation and supervision of the financial and
insurance systems, as well as the Private Pension System, and the prevention and detection
of money laundering of assets and financing of terrorism.
Superintendence of the Stock Market (SMV)
www.smv.gob.pe
The SMV is a specialized technical entity attached to the Ministry of Economy and Finance
that has the purpose of ensuring the protection of investors, the efficiency and transparency
of the markets under its supervision, the correct formation of prices and the dissemination
of all the necessary information for such purposes.
Supervising Body of Private Investment in Telecommunications

(Osiptel)
www.osiptel.gob.pe
Osiptel is a decentralized public entity in charge of regulating and supervising the market
of public telecommunication services. It seeks to promote fair competition, good quality
telecommunication services throughout the country, and to protect the rights of the users.
Supervising Body of Investment in Energy and Mines (Osinergmin)
www.osinergmin.gob.pe
This public institution is in charge of regulating and supervising the companies of the
electric, hydrocarbon and mining sector. Its main function is to ensure that the supervised
companies comply with the legal provisions of the activities they carry out.
National Superintendence of Sanitation Services (Sunass)
www.sunass.gob.pe
Sunass is a decentralized public entity, which aims to regulate, supervise and monitor
the provision of water and wastewater to users. It is its main objective to encourage the
improvement of quality and coverage of sanitation services in Peru.
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84
Supervising Body of Investment in Transport Infrastructure of
Public Use (Ositran)
www.ositran.gob.pe
Ositran is a public organism responsible for regulating, supervising and monitoring the
behavior of the markets involved in transport infrastructure and public transportation. It
is also in charge of solving controversies and handling complaints between companies and
the users.
National Institute of Defense of Competition and of the Protection

of Intellectual Property (Indecopi)
www.indecopi.gob.pe
This institution seeks to promote the market protect the rights of the consumers. It also
encourages the development of a fair and honest competition culture within the Peruvian
economy, safeguarding all forms of intellectual property: from distinctive signs and
copyright to patents and biotechnology.
National Superintendence of Public Registries (Sunarp)
www.sunarp.gob.pe
Sunarp is in charge of establishing the technical registration policies and norms of the
National System of Public Registries. It must also plan and organize, direct, coordinate and
supervise the inscription and publication of minutes and contracts in the Registries that
make up the system.
National Superintendence of Labour Inspection (Sunafil)
www.sunafil.gob.pe
This specialized technical organism attached to the Ministry of Labor and Promotion of
Employment. It is responsible for promoting, supervising and monitoring the compliance
of the socio-labour legislation and that of safety and health in the workplace.

National Superintendence of Customs and Tax Administration
(Sunat)
www.sunat.gob.pe
This is a specialized technical organism attached to the Ministry of Economy and Finance
in charge of promoting the compliance of tax and customs regulations, and of creating
tax awareness. It also is responsible for easing compliance procedures regarding tax and
customs..
General Directorate of Environmental Health (Digesa)
www.digesa.minsa.gob.pe
This is the technical-regulatory organ in aspects related to basic sanitation, occupational
health, food hygiene, zoonoses and environmental protection. Its main functions are
formulating policies, regulating and inspecting interventions related to environmental
health.
Organism of Environmental Evaluation and Control (OEFA)
www.oefa.gob.pe
This specialized technical organism is responsible for the evaluation, supervision, control
and sanctioning of environmental matters of business operations, as well as the application
of incentives in the mining, energy, fishing and industrial sectors.
30
8. PwC Peru
professional
services
30
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Finding the right solution to a problem often depends on knowing how to ask the right
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Transfer
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Innovation
Outsourcing
Transactions
& Corporate
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Assurance
Capital
Markets and Litigation
Accounting
Advisory Services
(CMAAS)
Systems
and Process
Assurance Foreign Trade
(SPA) & Customs
Legal
Assurance Consulting
30
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An excellent academic background and great experience in different industries, combined

with professional ethics based on freedom and independence when addressing each
case, are the elements that distinguish our tax and legal services. It is the combination
of these factors that gives us an advantage difficult to surpass.
Tax Tax Transfer Legal Foreign Trade

Labour Outsourcing Litigation
Consulting Audit Pricing Consulting & Customs
30
Assurance
Trust is the basis on which we build relationships with our customers. This value is
particularly important in our audit services, through which we provide our clients with
the reliability of financial information necessary to make appropriate and timely decisions
about their business.
It is this trust and certainty in the results of today that allows our clients can make decisions
that will enable them to build the future that they expect.
Capital Markets Systems

and Accounting and Process
Assurance
Advisory Services Assurance
(CMAAS) (SPA)

Our employees
157
countries
53,049
new employees
around the world
10,611
208,109
partners
employees around 163,513

the world client service
staff
33,985
administrative
employees
756
Our clients
PwC Peru
We have more than 90 years
and 1,200 professionals helping
organizations create the value
theyre looking for.
418 443
We work with all groups and Fortune Global FT Global
leading companies of Peru. 500 companies 500 companies
For more information, please visit pwc.com/annualreview

Our revenue
Global
10 % US$35.4bn
Assurance
6% US$15.2bn
A single global
Advisory network
18% US$11.2bn We are part of the largest global
network of professional services,
working with multidisciplinary
Tax and legal
approach to offer effective and
7% US$8.9bn innovative solutions to our clients.
We build sustainable value

orld relationships over time, building
trust and solving important
problems.
Corporate
We are one of the most powerful
responsibility brands in the world, leaders in
digital consulting and gender
equality, and one of the most
9%
58,000 attractive companies to work for.
volunteers
increase
537,000
4% hours
increase
Follow us:
Contacts
Esteban Chong
Country Senior Partner
esteban.chong@pe.pwc.com
Orlando Marchesi
Deputy Senior Partner
Tax & Legal Leader Partner
orlando.marchesi@pe.pwc.com
Hernn Aparicio
Assurance Leader Partner
hernan.aparicio@pe.pwc.com
Humberto Salicetti
Advisory Leader Partner
humberto.salicetti@pe.pwc.com
Juan Carlos Mandujano

Clients & Markets Partner
juan.carlos.mandujano@pe.pwc.com
PricewaterhouseCoopers PwC is the brand under which member firms of PricewaterhouseCoopers International Limted (PwCIL) operate and provide services. Together, these firms form the PwC
Santo Toribio 143, Piso 8 network. Each firm in the network is a separate legal entity and does not act as an agent of PwCIL or any other member firm. PwCIL does not provide any services to clients.
PwCIL is not responsible or liable for the acts or omissions of any of its member firms nor can it control the exercise of their professional judgement or bind them in any way.
San Isidro, Lima, Per
T: (511) 211 6500 PwC firms provide industry-focused assurance, tax and advisory services to enhance value for their clients. Close to 208,000 people in 157 countries in firms across the PwC
network share their thinking, experience and solutions to develop fresh perspectives and practical advice. See www.pwc.com/pe for more information.
F: (511) 211 6550
PricewaterhouseCoopers S. Civil de R.L (PwC Peru) is a member firm of the global network of independent and separate firms of PwCIL. It has operated throughout the
Peruvian territory for over 90 years with more than 1,000 professional talents devoted to building value-driven relations with its clients.
www.pwc.com/pe

PWC - Doing Business in Peru 2016

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PWC - Doing Business in Peru 2016

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What we do

build a positive future in a sustainable way.

Doing business and investing in Peru 2016 3

a higher value-added economy.

Peru: private investment US$ Millions

Source: Apoyo Consultoria

Doing business and investing in Peru 2016 9

Peru: exports prices (2006=100)

180 164 160

(Average annual variation - %)

Source: BCR, IMF

5-9 1,489,659 1,433,085 1,583,730 1,526,364

Doing business and investing in Peru 2016 11

This is testimony to its solid macroeconomic performance related to economic policies

South America: GDP 2015 based on Purchasing-Power-Parity(PPP)

Source: IMF World Economic Outlook Paraguay 60.85

Bloomberg Markets: the top 20 emerging markets, 2015 (score)

public investment in infrastructure projects.

Peruvian Real GDP: rates of growth (%)

Source: BCRP, IMF (Forecast)

Latin American countries: investment as a % of GDP

Doing business and investing in Peru 2016 13

Country S&P Moody's Fitch

Best countries to do business -Latin America

LAC World SA World

Country Rank Place Country

Countries with the best economic climate - Latin America

Doing business and investing in Peru 2016 15

Mining GDP Base Year 2007 PEN Millions

Source: Apoyo Consultora 2010 2011 2012 2013 2014 2015

Mining exports US$ Millions

30,000 27,525.7 26,422.8

Doing business and investing in Peru 2016 17

Phase Project name Company Investment (US$ Millions)

Minas Conga Yanacocha 4,800

Bayovar (expansion) Miski Mayo 520

Source: Apoyo Consultora

Mining investment by type (US$ Millions)

Source: Apoyo Consultora

agreements, increasing competitiveness and specialization in sectors in which Peru has

Manufacturing GDP Base Year 2007 PEN Millions

Source: Sunat 2011 2012 2013 2014 2015

Doing Business and Investing in Peru 2016 19

Nometallic minerals exports US$ Millions

722 720 696

Modern retail sales (PEN)

(*) Inluding supermarkets, department and

Construction GDP Base Year 2007 PEN Millions

35,000 31,353 31,956

Local cement sales Millions of metric tonnes

Source: INEI 2010 2011 2012 2013 2014 2015

Doing business and investing in Peru 2016 21

Source: Apoyo Consultora

studies will cause deferment of construction of new projects11.

Source: Apoyo, COES 2010 2011 2012 2013 2014 2015

Doing business and investing in Peru 2016 23

15,340 17,030 19,910 20,669

Source: Apoyo, COES 2012 2013 2014 2015

Private investment in electricity US$ Millions

Source: Apoyo Consultora

Annual growth of electricity consumption 2004-2014

10% 8.79% 8.61%

8.5% 6.5% 7.2%

Hydrocarbons GDP -11.5%