Discretionary powers to not sanction violations provided for by the Tax Code. By virtue of Order No. 010-2019-SUNAT/700000, the National Superintendency of Tax Administration (SUNAT) establishes the following criteria to sanction on a discretionary basis tax violations committed or detected until March 29, 2019 related to the obligation of filing the income tax return annually:
(i) Violation provided for by Section 176, Item 1 shall not be sanctioned if the taxpayer files his income tax return prior any SUNAT notice informing thereof comes into effect.
(ii) Violation provided for by Section 176, Item 8 shall not be applied in case the taxpayer has filed his income tax return via Online Tax Return Preparation Program (PDT) instead of Online Form.
Clearing of loss and expenses under the International Fiscal Transparency Scheme. By virtue of Report No. 011-2019-SUNAT/7T0000, the National Superintendency of Tax Administration (SUNAT) states that in order to determine the passive net income attributable to owners of Non-Domiciled Controlled Entities (ECNDs):
(i) Clearing of expenses referred to in the Income Tax Act Regulations, Section 64, Paragraph c should be given within the Peruvian law; in other words, by applying Section 51-A of said Regulations, and
(ii) It is not possible that the ECND can carry forward and clear loss of previous fiscal years at the moment of determining its passive net attributable income in each fiscal year.
Benefits in Agricultural Sector. By virtue of Report No. 015-2019-SUNAT/7T0000, it is established that taxpayers being eligible for these tax benefits and incentives in compliance with Agricultural Sector Promotion Act No. 27360 would be simultaneously eligible for the additional deduction by expenses in Scientific Research, and Technological Development and Innovation provided by Act No. 30309, to the extent that requirements pursuant to both regulations would be met.
Repatriation of Capitals Scheme. By virtue of Report No. 032-2019-SUNAT/7T0000, SUNAT states that the tax paid by the taxpayer not being eligible for the Repatriation of Capitals Scheme provided by Legislative Order No. 1264 may be subject to clearing upon the party’s request in compliance with Tax Code, Section 40.
Consideration paid to co-surety. By virtue of Report No. 025-2019-SUNAT/7T0000, SUNAT concludes that the compensation received by an individual not domiciled in Peru (not performing any business activity) acting as a co-surety in a financing operation at a banking entity: i) constitutes a taxable income subject to income tax; ii) qualifies as a Third Bracket income; and ii) is subject to the General Sales Tax (IGV).
Exchange rate for capital contribution expressed in foreign currency (Tax Court Order of Mandatory Compliance No. 01580-10-2019). The following discretion of mandatory compliance is established:
“To determine the tax basis of shares or interests acquired by non-domiciled taxpayers that are issued as a consequence of a capital contribution agreement by loan capitalization expressed in foreign currency granted to the corporation, the exchange rate effective on the date such agreement came into force by registering the notarially recorded instrument thereof in the Public Registry shall be applied.”
“When shares or interests issued as a consequence of a capital contribution agreement by new contributions that are expressed in Peruvian currency are paid up with an equivalent sum expressed in foreign currency by a non-domiciled taxpayer, said transaction does not qualified as one made in foreign currency. Therefore, no exchange rate to Peruvian Soles is applicable. Consequently, the tax basis of said shares or interests shall be such tax basis having been determined at issuance, i.e. in Peruvian currency.”
Discretion to sanction violation pursuant to Tax Code, Section 178, Item 1 (Cassation Case No. 15701-2015). By virtue of this Cassation Case, the Permanent Chamber of Constitutional and Social Law of the Supreme Court DISMISSED the Remedies of Cassation filed by the National Superintendency of Tax Administration (SUNAT) and the Tax Court alleging that the sole presentation of a rectifying statement proved violation having been committed pursuant to Tax Code, Section 178, Item 1 that provides for the declaration of false amounts or facts that impacts on determining the tax liability.
The Chamber states that even though the Tax Code, Section 165 provides for that violation must be determined in an objective basis, it does not mean that the mere default on a formal obligation causes automatically such violation to be committed as per Tax Code, Section 178, Item 1. Therefore, when determining the sanction, the tax authority and/or the Tax Court shall examine whether it exists or not an economic loss on the tax administration, or whether the taxpayer’s credit balance has a substantial impact on fixing the tax.
Expense reduction by breach of contract (Cassation Case No. 8327-2015). The Permanent Chamber of Constitutional and Social Law of the Supreme Court concluded that expenses due to penalties incurred by breach of contract is deductible provided that they are necessary expenses to generate taxable income; that is to say, to comply with the Principle of Causality. For this purpose, the taxpayer shall prove that such penalty was agreed and, in effect, the payment to the third party was made.
If you wish, you can contact members of the team of tax lawyers of Rodrigo, Elías & Medrano Abogados.
This newsletter contains the objective description of legal provisions, institutional reports of the National Superintendency of Tax Administration (SUNAT), jurisprudence of the Tax Court and tax-related news. It does not contain the opinion of Rodrigo, Elías & Medrano Abogados on the matter, thus it cannot be considered as a source of interpretation or response to consultations.
