In a continuing effort to align with international standards, Peru has introduced a significant amendment to its Income Tax Law that directly affects Advance Pricing Agreements (APAs). This reform arises as part of the national commitment to the BEPS (Base Erosion and Profit Shifting) Project promoted by the OECD, reinforcing transparency and consistency in international taxation.
Advance Pricing Agreement (APA) Amendments
The main amendment affects paragraph f) of Article 32-A of the Income Tax Law, which now allows the retroactive application (roll-back) of APAs in specific cases. This mechanism will enable companies subject to Transfer Pricing to apply the agreements from previous years if they meet precise requirements. The rule enacts that this retroactivity will be feasible if the facts and circumstances of the previous years are identical to those covered by the agreement.
SUNAT and Retroactive Application
The SUNAT (Superintendencia Nacional de Aduanas y Administración Tributaria – National Superintendence of Customs and Tax Administration) will be essential in the implementation of these agreements, both individually with national taxpayers and bilaterally with other countries with which Peru had agreed to avoid double taxation. This flexibility intends to ensure that the APAs correctly reflect the valuation of intercompany transactions, strengthening legal certainty for taxpayers.
Effects on Companies and Tax Practices
This reform positively affects companies performing related party transactions, as the retroactive APA will provide greater predictability to determine their tax obligations. Simultaneously, the SUNAT is expected to increase efficiency in resolving Transfer Pricing disputes, reducing the administrative burden for the State and companies.
Effectiveness and Next Steps
The rule establishes that these amendments will come into force on January 1, 2025, giving companies time to adapt to the new procedures and ensure proper compliance with the regulations. Companies must review their Transfer Pricing policies and prepare to take advantage of the benefits of these amendments.
Call to Action
This amendment to the Income Tax Law opens a new opportunity to optimize their tax structures for companies operating in Peru.
At TPC Group, we have a specialized Transfer Pricing team to advise your company in implementing these new mechanisms.
Contact us to ensure your company complies with the regulations and maximizes your tax benefits!
Source: Legislative Decree N° 1662, published on September 24, 2024, El Peruano.
