International Background and Local Relevance
In a world marked by neo-mercantilist policies and the implementation of the OECD’s BEPS 2.0 project, tax authorities are intensifying their scrutiny of intragroup transactions, including loans, royalties, and interest. In this regard, multinational groups must demonstrate real economic substance, treasury functionality, and market-based rates.
Neo-mercantilism and Regulatory Pressure
Policies that favor the protection of domestic industries and aim to safeguard tax bases have shaped the landscape, leading countries to question corporate financing structures using low-tax jurisdictions. Consequently, the legitimacy of related-party loans is now being evaluated not only from a tax efficiency perspective but also from the real economic function behind each transaction.
BEPS 2.0 Redefines Financial Planning Standards
Pillar 1 relocates taxation rights according to the consumer market, whereas Pillar 2 imposes a global minimum tax of 15%, reducing the profitability of low-tax treasury centers. These amendments are forcing companies in Peru to review and update their policies on intragroup loans, cash pooling, intellectual property structures, and captive insurance.
Rigorous Documentation and Economic Justification
Companies could face tax adjustments, penalties, or double taxation without solid documentation. Therefore, the authorities require:
- Detailed functional analyses;
- Market comparables to determine interest rates;
- Records of capital allocation decisions;
- Evidence of risk management capacity by treasury entities.
Implications for Companies in Peru
- Review and support each function performed by their treasury structure.
- Update intra-group agreements, reflecting actual decisions and arranging them in line with market practices.
- Implement benchmarking to support interest rates and risk management.
- Simulate possible tax results, considering future effects of the global minimum tax.
Call to Action
At TPC Group, we have demonstrated experience in international tax advice. We can assist you in:
- Performing a comprehensive review of your intragroup structures.
- Reporting functions, risks, and assets with technical solvency.
- Adapting your practices to BEPS 2.0 and neo-mercantilist regulatory frameworks.
- Avoiding tax contingencies and strengthening your defense against audits.
Contact our specialized team for a confidential, no-obligation assessment.
Source: LSEG