On May 4, 2023, Law Nº 31735 was published in the Official Gazette “El Peruano”, which amends several articles of Law No. 29230, “Law that promotes regional and local public investment with participation of the private sector” (“Law of Works by Taxes”). The purpose of this law is to promote public investment under the mechanism of works for taxes in different projects, granting a series of additional benefits to the private sector.
Among the amendments approved through Law Nº 31735, the following stand out:
The purpose of the Works for Taxes Law is expanded, including the execution of public execution projects under Investments in Optimization, Marginal Expansion, Replacement and Rehabilitation (“IOARR”), Emergency IOARR and the maintenance of infrastructure that had been executed under works for taxes and other modality.
The scope of application of the “Regional and Local Public Investment Certificates-Public Treasury” (“CIPRL”) has been expanded. Now they can be used not only for the payment of the Third Category Income Tax, but also for the payment of any other tax, debt or tax obligation that is income of the Public Treasury and administered by SUNAT.
The amendment also increases the maximum amount of income tax to be paid through CIPRLs from 50%, as it was before the amendment, to 80% of the amount of such tax.
Law 31735 makes all CIPRLs negotiable. Private companies that are, in turn, project executors (construction companies) will be able to negotiate the CIPRLs obtained.
The limit established by the Works for Taxes Law for variations in the total amount of the investment agreement is increased from 30% to 50%. It is also established that this 50% limit may be exceeded as long as the purpose of the work is to protect health, safety or human life.
The regulation of the dispute resolution procedure is modified. It is established that the Direct Treatment stage will have a maximum term of 30 working days. Once this period is exceeded, any of the parties will have the right to go to arbitration.
The Registry of Private Supervising Entities and Supervisors for Works for Taxes is created, which will be administered by PROINVERSION.
Priority is given to the financing and execution of projects aimed at reducing anemia and child malnutrition, as well as the construction of rural housing in areas of extreme cold and frost declared by the Government.
For further information, please contact Diana Briones (dbriones@estudiorodrigo.com); Sebastián Heudebert (sheudebert@estudiorodrigo.com) and/or Sebastián Velarde (svelarde@estudiorodrigo.com).
