Income Tax Exemption Provided in the BID-PERU Agreement

October 24, 2022

SUNAT (Superintendencia Nacional de Aduanas y de Administración Tributaria – National Superintendency of Customs and Tax Administration) issued an opinion on the application of the Income Tax exemption regarding the BID-PERU agreement.

Relation Between the IDB and the Peruvian State

The BID (Banco Interamericano de Desarrollo – Inter-American Development Bank) is an international body providing multilateral financing for development projects in Latin America to reduce poverty and social inequalities.

In addition, this body has signed a Headquarters Agreement with the Peruvian State, which is a ratified international agreement.

Income Tax Exemption and Its Application to BID Personnel

An exempt income consists of tax incomes not subject to taxes. It is the practice of the international body to enter into agreements with governments to establish favorable conditions to perform the activities of its personnel for the benefit of the member countries themselves.

Privilege and Immunity Regulations Applicable to BID Personnel

The first Article of the Headquarters Agreement states that the regime of privileges and immunities for personnel related to the BID operations in Peru will be the one outlined in the Constitutive and the Headquarters Agreement.

Is the Exemption Provided in Subparagraph b. of Article III of the Headquarters Agreement Applicable to the Incomes Received by Peruvian Nationals in Their Status as BID Personnel and/or Technicians for Services Provided in the Country?

Through Report No. 77-2022-SUNAT, the Tax Administration concluded that the exemption applies to the incomes received by Peruvian nationals in their status as BID personnel and/or technicians for services provided to the BID in the country.

What Does Subparagraph b. of Article III of the Headquarters Agreement Regulate?

Subparagraph b. of Article III of the Headquarters Agreement states that the III personnel and the contracted technicians referred to in Article II will enjoy, within the territory of the country, the exemption from all taxes, applying to BID personnel and dependent family members, as well as to technicians who, unrelated to the BID personnel, are contracted by it or by another entity with funds from BID operations.