Tax Alert - September 2025
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LAW PROMOTING PRODUCTIVE, COMPETITIVE, AND SUSTAINABLE TRANSFORMATION OF THE AGRICULTURAL SECTOR WITH SOCIAL PROTECTION FOR MODERN AGRICULTURE APPROVED
On September 10, 2025, Law No. 32434 was published in the Official Gazette El Peruano, establishing a legal framework to promote the transformation of the agricultural sector, with an emphasis on formalization, associativity, and social protection for small producers. To this end, the law provides for tax benefits, as well as various rules related to agricultural property.
With regard to the tax regime, it establishes that agricultural companies that grow crops and/or raise livestock, as well as those that mainly carry out agro-industrial activities—to be determined by supreme decree—must apply the following:
- Income Tax: The annual tax will be determined at a reduced rate of 15% on net income for the fiscal years 2026 to 2035. Payments on account will be calculated at a rate of 0.8% on net income when Article 85(b) of the Income Tax Law applies.
- Depreciation: A depreciation rate of 20% per annum will be applied to investments in water and irrigation infrastructure acquired or constructed between fiscal years 2026 and 2035.
- Additional deduction for purchases from small agricultural producers: Agricultural companies may apply an additional deduction of 25% on the value of purchases made from small producers registered in the registry provided for by law, in accordance with the limits and conditions established in said regulation.
- VAT tax refund: They will be entitled to request a refund of the VAT shown on payment receipts related to purchases and/or imports, provided that it has not been used as a cost or expense for income tax purposes. This benefit applies to those who produce and sell agricultural goods exempt from VAT included in Appendix I of the VAT Law.
- VAT exemption: Agricultural companies that have previously waived the exemption may reapply to SUNAT within three months of the law coming into force.
This tax regime will take effect on January 1, 2026.
On the other hand, regarding real estate matters, the regulation eliminates the limitations and restrictions related to the extension of the property and the change of ownership, which were established in Legislative Decree No. 653 and its regulations. This eliminates any discussion about the validity of these latter restrictions, considering the new constitutional framework.
Likewise, the regulation reiterates that holders of state-owned rural properties can regularize their legal status with regional governments, provided that possession began before December 31, 2020. The regulation requires that current possession be public, peaceful, and continuous. Likewise, holders of state-approved wasteland designated entirely for agricultural activity may regularize their legal status through the direct award procedure, as long as possession began by December 31, 2020. Depending on the holder's status (small agricultural producer, an association, cooperative, or agricultural company), they may pay one-third of the land's tariff value or the full amount.