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Tax Newsletter- September 2024

NEWSLETTER

REGULATIONS OF INTEREST

Transfer Pricing provisions in the Income Tax Law (LIR) are amended.- On September 24, 2024, Legislative Decrees No. 1662 and 1663 were published amending the LIR with respect to Advance Pricing Agreements (APAs) and the application of other valuation methods under the Transfer Pricing rules:

  • Legislative Decree No. 1662 amends subsection f) of Article 32-A of the LIR for the purpose of retroactively applying advance transfer pricing agreements, provided that the relevant facts and circumstances of such years are the same as in the years covered by the advance agreements and SUNAT’s action to determine the income tax liability is not time-barred.
  • Legislative Decree No. 1663 amends numeral 7 of paragraph e) of Article 32-A of the LIR in order to establish that, when it is not possible to use the six valuation methods provided for in the regulation, other valuation methods may be applied (for example, the discounted cash flow method for shares or participations), provided that they comply with certain conditions and rules. The manner of application of these methods is established by Supreme Decree.
  • The changes in both regulations will become effective on January 1, 2025.

Additional provisions are established for the use of digital services rendered by non-domiciled persons and import of intangibles through the internet.- Legislative Decree No. 1644, published on September 13, 2024, provides for the following:

  • It postpones, until December 1, 2024, the beginning of IGV withholdings or perceptions in charge of non-domiciled suppliers that are already operating or start operations until November 30, 2024.
  • Foreign companies that provide digital services and act as IGV withholding or perception agents will not be obliged to keep accounting or other books or issue payment vouchers according to Peruvian regulations.
  • Application of the Selective Consumption Tax (ISC) to remote games and remote sports betting.- Through the aforementioned Legislative Decree No. 1644, the following is established:
  • Adjustments are incorporated for the application of the Selective Consumption Tax to remote gaming and remote sports betting.
  • The applicable ISC rate will be 1%. Such rate may be modified by Supreme Decree, but it may not be less than 0.3% or more than 50%.
  • In those cases, in which the entity authorized to operate the technological platform is a foreign legal entity, the ISC taxpayer will be the player.
  • The foreign legal entity authorized to operate the technological platform will act as the agent for the collection of the ISC payable to the player with habitual residence in the country. In these cases, the ISC declaration and payment may be made in local currency or in US dollars and will be made according to SUNAT’s regulations. In addition, in order to determine the tax liability, the time zone corresponding to the Peruvian official time (GMT-5) will be considered as the time zone.
  • If the foreign legal entity does not comply with its obligations as a collection agent for two or more consecutive or alternate months, the entities appointed as “payment facilitators” will be in charge of collecting the ISC (after the corresponding formal procedure is followed).
  • Foreign legal entities acting as ISC collection agents are not required to keep accounting (or other) books or issue payment vouchers according to Peruvian regulations.
  • These provisions will be in force when the corresponding regulations enter into force.

Additional provisions are established for the application of the Tax on Remote Gaming and Remote Sports Betting.- Through the aforementioned Legislative Decree No. 1644, the following is provided in relation to the tax in reference:

  • The holders of the authorizations to operate the technological platforms may grant welcome bonuses or similar, provided that they do not allow their exchange for money until the corresponding condition is met.
  • In those cases, in which the taxpayer (i.e., the holder of the authorization to operate the technological platform) is a foreign legal entity, the payment of the tax may be made in local currency or in US dollars and shall be made as established by SUNAT. In addition, in order to determine the tax liability, the time zone corresponding to the Peruvian official time (GMT-5) will be considered as the time zone.
  • If SUNAT detects that the foreign taxpayer fails to declare and pay the tax within the established deadlines, the bank or financial entity holding the products through which the credits to the players’ accounts are channeled will begin to act as a withholding agent (after the corresponding formal procedure is followed). The withholding rate (which may not be less than 0.5% or more than 4.6%) will be set by Supreme Decree.
  • In the above case, the amounts withheld will qualify as payments on account and may be used as credits against the tax. The unused credit may be carried forward to the following months or may be refunded.
  • Foreign legal entities will not be required to keep accounting (or other) books or to issue payment vouchers according to Peruvian regulations.
  • These provisions will be in force when the corresponding regulations come into effect.

Several provisions on the annotation of payment vouchers in the Purchase Register and the exercise of the tax credit are amended by Legislative Decree No. 1669, published on September 28, 2024:

  • Article 2 of Law No. 29215 -which refers to the exercise of the tax credit- is amended in order to eliminate the 12-month term following the issuance of the voucher or payment of the tax for the annotation of the documents in the Purchase Register. Accordingly, the following is established:
    • Electronic vouchers and other documents must be noted in the same month of their issuance or of the payment of the tax, as applicable. If the above is not complied with, the right to the tax credit will be lost.
    • Physical vouchers may be recorded up to 2 months following the month of their issuance, maintaining the validity of the tax credit.
  • Article 19 of the IGV Law is amended to establish that SUNAT may generate the Sales and Purchase Records, under the following scheme:
    • SUNAT prepares the proposal and makes it available to the taxpayer.
    • The taxpayer has the possibility of confirming, rectifying or complementing the information contained in the proposal within the maximum delay period for each record.
    • If there are no objections, SUNAT will generate both records automatically, thus determining the VAT payable for the corresponding period.
  • The provisions described above will come into force when the Superintendence Resolution that regulates, among others, the means, form, requirements and/or conditions for taxpayers to confirm, rectify or complement the information recorded by SUNAT with respect to the Sales Register and the Purchases Register is in force.

A new electronic system is created for the proceedings during the appeal procedure in the Tax Court.- On September 27, 2024 Ministerial Resolution No. 300-2024-EF/40 was published, which approved the “Guidelines for the proceedings of the parties before the Tax Court, in the appeal instance of the contentious tax procedure, through the use of electronic, telematic or computer systems in procedures with electronic file”.

The following is the detail:

  • As of October 1, 2024, a new Portal will be available on the Tax Court’s website, which will be accessed with user and password created by the taxpayer itself.
  • It is only applicable for appeals arising from an electronic file, so it will not be used for procedures arising from:
    • Tax audits of non-domiciled taxpayers who do not have RUC and/or CLAVE SOL.
    • Returns filed with Form No. 4949 (i.e. without using Virtual Form 1649).
    • Cross-referencing of information whose file is not electronic
    • Attributions of joint and several liability.
    • Compliance of RTF that was not issued in an electronic appeal file.
    • Compliance of the Judiciary
    • Interventions excluding property
  • Only files in PDF/A format, with digital signature or scanned signature will be allowed. If this requirement is not met, the documents will not be part of the file, and therefore, will not be considered at the time of resolution.
  • When written submissions are filed between 00:00 hours and 23:59 hours of a business day, they will be considered filed on that day.

Electronic appeal files are incorporated to SUNAT’s Integrated Virtual File System (SIEV).- By means of Superintendence Resolution No. 000190-2024/SUNAT, published on September 27, 2024, the regulation that approved the SIEV is modified in order to incorporate electronic appeal files to said system.

Through said system, appeals, as well as other writs and requests related to said files, must be filed when the admissibility is in process or when the order of the Tax Court is pending compliance.

NATIONAL CURRENT ISSUES

Communication of third party designation.- Report No. 067-2024-SUNAT/7T0000 states that – within the scope of application of Article 5-A of the Means of Payment Law – the representative designated by a creditor, supplier of goods or service provider, whose representation registered in the PR entitles him to receive the payments originated in the transactions carried out by the latter, qualifies as a third party; and therefore, the referred designation must be communicated to SUNAT before such disbursements are made.

Benefit test for transactions between related companies.- With Report No. 070-2024-SUNAT/7T0000, it is stated that compliance with the “benefit test” regulated by paragraph i) of Article 32-A of the LIR is not applicable to the lease of real and personal property or to the granting of the license to use a trademark between related companies, without prejudice to other provisions of said article that may be applicable.

Scope of application of the Book Law.- A new report, No. 0062-2024-SUNAT/7T0000, on the IGV exemption provided for in Law No. 31893 and its Regulations, is published with the following detail:

  • Allowing online access and use of interactive books that are made available to a user for a limited time through a technological platform in exchange for a one-time payment or a periodic consideration, as long as the consideration is paid, does not constitute an operation exempted from IGV.
  • The operation described in the previous paragraph is also not exempt even if access and use is allowed for an unlimited period of time.
  • The single remuneration paid by an individual domiciled in Peru to a foreign company for accessing interactive books on a technological platform for unlimited time constitutes income from Peruvian source for digital services economically used, used or consumed in the country subject to IR withholding.
  • The basis contained in the eighth paragraph of numeral 2 of the “analysis” section of Report No. 000013-2024-SUNAT/7T0000, according to which the operation in question qualifies as a service, in the following paragraph: “(…) since the non-domiciled supplier temporarily grants the user the use of an interactive book”, is hereby annulled.

In this sense, the second conclusion of the aforementioned report should be understood in accordance with the criteria established in number 3 of the “analysis” section of this report.

Guidelines for the calculation of EBITDA.- By means of Report No. 064-2024-SUNAT/7T0000, SUNAT states that in relation to the limit applicable to the deduction of interest expenses provided for in numeral 1 of paragraph a) of Article 37 of the LIR, the calculation of the EBITDA of the previous year shall be made excluding from the “net interest” those interests considered non-deductible in such year for having exceeded the limit.

Communication to SUNAT under the Sixth Method.- Legislative Decree No. 1537, in force as from January 1, 2023, amended Article 32-A of the LIR in order to establish that – within the scope of application of the Uncontrolled Comparable Price Method – the communication of the date or period of quotation must be filed up to the date of commencement of the shipment or disembarkation.

If the aforementioned communication is not submitted or is submitted late or incomplete, or contains information not in accordance with the agreement, the date of shipment of exported goods and, in the case of imported goods, the date of disembarkation is considered as the date of the quotation value.

Through Report No. 063-2024-SUNAT/7T0000, SUNAT has indicated that the penalties for the infringements related to the above mentioned communication, may be subject to the gradual regime provided in Resolution of Superintendence No. 063-2007/SUNAT, provided that the omitted communication is presented or that it is presented again to add the omitted information, without affecting the legal consequence provided in the previous paragraph.

CASE LAW

Graduality Regime for failure to file returns (RTF of Mandatory Observance No. 08082-5-2024).- The Tax Court establishes the following precedent of mandatory observance:

“Article 13-B of the Regulations of the Gradualness Regime applicable to infractions of the Tax Code, approved by Superintendence Resolution No. 063-2007/SUNAT, modified by Superintendence Resolution No. 000078-2021-SUNAT, is applicable in the case of the infraction typified by numeral 1) of Article 176 of said code, for infractions for not filing returns containing the determination of the tax debt related to other taxes other than Income Tax, in addition to the Third Category Income Tax”.

Observations not made in a partial audit cannot be included in the final audit of the same tax and period (RTF No. 07513-4-2023).- In this case, SUNAT carried out a partial audit and issued the corresponding determination resolution without making observations regarding the objection for “expenses rendered by third parties”. However, it then carried out a definitive audit and added observations on this same objection.

The Tax Court declared the nullity of the value issued in this last audit since the observations could have been established by SUNAT in the first audit and there was no evidence to the contrary.

Application of binding constitutional precedent No. 3525-2021-PA/TC to contentious administrative proceedings in process (Cassation 36808-2023, Lima).- The Fifth Constitutional and Social Transitory Chamber of the Supreme Court affirms that it is appropriate to evaluate the application of the aforementioned precedent, which prohibits the computation of late payment interest after the expiration of the legal term to resolve the challenge, to the administrative contentious proceedings in process and, therefore, the jurisdictional body has the obligation to analyze the pertinence of exercising the diffuse control over Article 33 of the Tax Code, to evaluate declare the nullity of the administrative act that would have made such unconstitutional computation and, if applicable, to correct it.