5 Taxes 1 Peru's Business and Investment Guide 2021 No part of this publication may be reproduced, distributed or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the publisher. © All rights reserved © EY © Ernst & Young Author(s): Collective work Edited by: Ernst & Young Consultores S. Civil de R.L Av. Víctor Andrés Belaunde 171 Urb. El Rosario - San Isidro Lima – Perú Design and layout: Carlos Aspiros Photos: PromPerú This digital publication is possible due to the collaboration of data and information from ProInversión and the Ministry of Foreign Affairs. Legal Deposit made at the National Library N° 202009862 ISBN: 978-612-48422-2-1 First digital edition: February 2021 Available at www.ey.com 5 Taxes 3 Paulo Pantigoso Lima Country Managing Partner Headquarters [email protected] Av. Víctor Andrés Belaúnde 171, San Isidro - Lima 27 Secondary headquarters Av. Jorge Basadre 330, San Isidro - Lima 27 Assurance Consulting Tax Tel: +51 1 411 4444 www.ey.com/pe Rafael Huamán Jorge Acosta David de la Torre Assurance and Corporate Consulting Leader Tax Leader Integrity Leader [email protected] [email protected] CONArequipa [email protected] Av. Bolognesi 407, Yanahuara - Arequipa 040, Juan Paredes Arequipa Lead Auditor Tel:+51 54 484 470 [email protected] Chiclayo Av. Federico Villareal 115 - Salón Cinto, Lambayeque Tel: +51 74 227 424 Strategy and Financial Transactions Services Trujillo Office (FSO) Sede Miguel Ángel Enrique Oliveros Quijano Doig Strategy and José Carlos Bellina Av. El Glof 591, Urb. Las Transactions Leader Financial Services Office Flores del Golf III, Víctor [email protected] Larco Herrera 13009 - (FSO) Leader Trujillo, La Libertad [email protected] Tel: +51 44 608 830 Find us in: TAC• Facebook • LinkedIn • Twitter • YouTube • Instagram TS 5 Taxes 4 Peru is one of the most important countries in Latin America. Its diverse characteristics include a variety of climates, a vast territorial expanse, significant natural resources, people with great skills and high academic standards, and a solid economic and industrial background. Today, Peru is considered one of the world's leading emerging markets, with a solid recent history of economic FORstability based on an uninterrupted average annual growth over this millennium until December 2019 of 4.6% of its Gross Domestic Product (GDP). In response to the impact of the COVID-19 pandemic, Peru was one of the countries in the region, and indeed, in the world, to implement such a forceful response through economic stimulus packages equivalent to 20% of the GDP. The predicted growth in 2021 will exceed 10%, according to numbers from the country's most EWOimportant institutions. This Business and Investment Guide is a tool for foreign and national investors, providing key information on the country's current economic situation and the principal tax, legal, and labor issues, as well as on how to incorporate businesses in Peru, and general information on how to invest and do business in the country. It also contains a complete directory of Peruvian embassies and consulates abroad, as well as contacts of interest RDto investors. EY Peru: Challenges to achieve sustained growth Peru is one of the countries in Latin America that region (3.6%), for emerging countries (6.0%) and stands out for its macroeconomic stability, which advanced economies (3.9%). As a result, Peru will is one of the nation's most important pillars of be one of the countries in the region, together competitiveness. Uninterrupted economic growth with Chile and Colombia, that will see its GDP over the past 20 years until 2019 has consistently return to pre COVID-19 levels in 2022. contributed to the improvement of infrastructure, development of human capital, the adoption of We firmly believe that Peru offers great Paulo Pantigoso new technologies and the standard of living of all opportunities for favorable investment, as well Velloso da Silveira Peruvians. Additionally, a policy of being open as an ideal business climate for investment. Country Managing to the international market through multiple Peru's economy is showing indicators of evident Partner EY Peru commercial agreements complements recovery in a number of sectors as a result Editor legislation that is favorable to private domestic of the accurate measures being executed and foreign investment. within a challenging and constantly changing environment. The recognition of Peru's solid economy is based on low inflation (at the close of 2020, it This new edition of the Peru´s Business and is 23 consecutive years of single digit inflation), Investment Guide provides the investor with international reserves equivalent to 38% of GDP, a current key information on Peru's economic, controlled fiscal deficit (an average of 2.5% of GDP legal, tax, labor and financial issues, as well over the past five years, and an estimated 8.9% at as other information that can be used as a the close of 2020), and public debt that is estimated consultation tool for developing activities and to not exceed 36% of GDP at the close of 2020, well making business decisions. below the average of the rest of emerging countries in the world (63.1%) and in the region (81.5%). If you are a foreign investor interested in Additionally, 2020 closes with an estimated trade investing in Peru, you are also welcome to surplus of more than USD7.7 billion. approach the Peruvian diplomatic or consular mission nearest you, listed at the end of This situation permitted one of the region's major this Guide. responses to the effects of COVID-19, with fiscal measures equivalent to 20% of GDP that will bolster At EY we reaffirm our commitment to the a rapid recovery of economic growth estimated to development of Peru, as well as to the building be more than 10% of the GDP for 2021, according of a better world for business. We invite you to to forecasts by the Central Reserve Bank of Peru read this Guide in the hope that it will be of use (BCRP) and the Ministry of Economy and Finance. to discover new initiatives, and we are at your These forecasts are way above the average for the disposal for any assistance you may require. Words from the Minister of Foreign Affairs of Peru Peruvian Ministry of Foreign Affairs In recent months, Peru has taken significant steps Analysts have noted that Peru’s reputation has to alleviate the public health and economic impacts grown even stronger in international markets thanks caused by the COVID-19 pandemic. Together, the to these historic issues, a scenario that is sure to government’s public policies, the country’s solid attract even more foreign capital for investment in macroeconomic fundamentals, the private sector’s the Peruvian economy and higher levels of activity, adaptability and creativity, and the hard work of the growth, and employment. general public have made sure that Peru continues Elizabeth to be an attractive destination for investors. In 2021, The Ministry of Foreign Affairs plays a strategic role in Astete Rodríguez our economy is expected to grow by more than 10%, all of this, helping to promote a portfolio of prioritized Minister of with an outlook that remains highly encouraging in national projects and attract foreign investment with Foreign Affairs the coming years. a view to leveraging our economic recovery. In spite of the current situation, investors continue In its efforts to achieve this, the Ministry of Foreign to trust in Peru’s macroeconomic strengths, thanks Affairs has a significant competitive advantage: to its proven fiscal solvency, its vast international its diplomatic missions across the globe are active reserves that guarantee liquidity in the foreign agents in identifying markets and investment flows, exchange market, the country’s integration with world and in promoting our country’s economic interests, markets, and its excellent economic and regulatory with an expert knowledge of their local areas management. As a result, J.P. Morgan calculated and public and private sector contacts at the Peru’s country risk, according to the EMBIG index, at highest levels. 143 basis points as of the close of 2020, the lowest in the region. Additionally, the Ministry strives to develop and bolster strategic alliances with leading public and Despite the economic impact of the COVID-19 private entities as part of its efforts to reactivate our pandemic and the political instability experienced economy. The Peru's Business and Investment Guide toward the end of last year, Peru joined the select 2021 is, in fact, the product of one such partnership: group of economies that have issued hundred-year the bond between the Ministry of Foreign Affairs and bonds in dollars with low interest rates, offering EY Peru, to whom we are once again grateful for a clear sign of the global financial community’s their valuable collaboration in helping to share and confidence. promote our country’s strengths and opportunities. Words from the Director General of Economic Promotion Peruvian Ministry of Foreign Affairs The public health and economic crises we are The Ministry of Foreign Affairs also has a network now facing present new opportunities and new of decentralized offices across Peru, providing it challenges for Peru and international investors with another excellent advantage. These offices seeking to maximize returns on their available work closely with regional governments and public financial resources. With this in mind, the Peruvian and private institutions in their respective localities, government -acting through the Ministry of thus acting as “feelers” to identify investment Foreign Affairs- has been working closely with the opportunities in regional projects, in coordination Eduardo relevant domestic public and private sectors to with our foreign missions.