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Tax and Procedural Alert – April 2023

ALERT – TAX

Binding Precedent of the Supreme Court on payments on account and interest capitalization

 

On April 12, 2023, the Fifth Chamber of Constitutional and Social Transitory Law of the Supreme Court of Justice published its Cassation Nº 6619-2021-Lima, which establishes the following rules as Binding Precedent:

  1. Omissions in the determination of payments on account of Income Tax, as they are tax obligations, generate the payment of default interest provided for in Article 33 of the Tax Code (thus leaving without effect the previous Binding Precedent contained in Cassation No. 4392-2013-Lima).
  1. The capitalization of interest does not correspond, which would imply an excessive increase of the tax debt and, therefore, the transgression of the principles of non-confiscation and reasonableness.

This rule is not applicable: i) to contentious-tax proceedings that have been concluded or have the status of res judicata that rule on the calculation of late payment interest, therefore it is not applicable to proceedings that are in the execution stage; ii) to judicial proceedings (contentious-administrative or constitutional) that have a final judicial resolution or res judicata that rule on the calculation of late payment interest, therefore it is not applicable to the execution stage of this judicial resolution.

  1. Finally, it is reiterated that in the interpretation of tax regulations all methods admitted by law are applied, except to create taxes, establish penalties, grant exemptions, or extend tax provisions to persons or cases other than those established by law.

Download the Cassation Judgment here:

https://www.estudiorodrigo.com/wp-content/uploads/2023/04/CASACIO%CC%81N-N%C2%BA-6619-2021.pdf

For further information, please contact Alex Cordova (acordova@estudiorodrigo.com), Arturo Aza (aaza@estudiorodrigo.com) and/or Joan Tello (jtello@estudiorodrigo.com).