On the past December 30th, 2018, Supreme Decree (SD) N° 337-2018-EF, SD N° 338-2018-EF, SD N° 339-2018-EF, and SD N° 340-2018-EF were issued. The Decrees mentioned before affect the Income Tax Law (“The Law”).
Supreme Decree N° 337-2018-EF
Article 2: Subparagraph b) of Article 52 of the Regulation is modified:
Article 52. Determination of Credits against Income Tax – Subparagraph b) of the Article informs that taxpayers may offset their payments on account in whole or in part, applying the balances in their favor referred to in subparagraph c) of the Article 88 of the Law, as well as the deductions for perceptions, withholdings and credits that proceed as provided for in subparagraphs a) and b) of the same Article, except in the case of the disposed in subparagraph d) of the Article 53-C.
Article 3: Incorporation of Articles 53-C and 118-A to the Regulation:
Article 53-C Payments on account for Second Category Income Obtained by the Disposal of Goods referred in the Subparagraph a) of Article 2 of the Law – The Article indicates that for the purpose of the payment on account of second category income provided for in Article 84- B of the Law, it should be taken into account the definitions of: second category income received by the sale of goods, definition of income received for each sale, how will the future deduction of losses not deducted in a month. It is also reported that the withholdings provided in the second paragraph of Article 72 and in the first paragraph of Article 73-C of the Law are not credits against payments on account.
Article 118-A. Deduction of Cost or Expenditure Regarding Services – The Article indicates that for effect of the provisions of subsection i) of Article 32-A of the Law, it must be taken into account: a) Benefit Test Concept; b) Costs and expenses incurred by the service provider; c) Profit margin; d) Documentation and information; e) Exceptions to be considered low value added services; and f) Definition of group and multinational group.
Supreme Decree Nº 338-2018-EF
Article 2: Subparagraph b.3) of subsection b) of the last paragraph of Article 4-A and subsection a) of Article 21 of the Regulation are modified:
Article 4-A. Income from Peruvian Source – In subsection b.3) of subsection b) the conditions for determining the percentage referred to in numeral 2 of the first paragraph of subsection e) of Article 10 of the Law are now reported, for example, it is explained that transfers of ownership of shares or participations made in any capacity will be considered.
Article 21. Third Category Net Income – In subparagraph a), it is reported that specific provisions will be applied to determine the net income of the third category, in such a way that the calculation reflects the variations of the total amount of indebtedness that occur during the taxable year. There will be another mechanism in the case of companies that are split during the year, and for the case of mergers carried out during the year. There are also specifications for banks and financial companies when establishing the proportion referred to in numeral 4 of the aforementioned section in the complete Article.
Article 3: Incorporation of subparagraphs b.4) and b.5) of subsection b) of the last paragraph of Article 4-A, and Article 39-G of the Law:
Article 4-A. Peruvian Source Income – Subparagraph b.4) informs about the determination of the total amount of the shares or participations of firms domiciled in the country referred to in the fourth paragraph of subsection e) of Article 10 of the Law. Subparagraph b.5) informs about the determination of the tax base once the conditions established in the first and fourth paragraph of subsection e) of Article 10 of the Law have been verified.
Article 39-G.- Joint Responsibility of the Permanent Establishment of the Non-domiciled Legal Entity that Indirectly Disposes Shares or Participations of Domiciled Legal Entities – The Article informs that patrimony assigned is to be understood as the capital that is assigned for the turn of the own activities in the country (if it is a branch); and, to the result of subtracting from the value of the assets, goods or rights that are affected to the functional development of the economic activities themselves, the liabilities generated by the performance of such activities (in the case of other permanent establishments). It is also reported that the person in charge is obliged to provide certain information and documentation at the request of SUNAT, such as books and accounting records; financial statements or other books and records; work papers and other documentation proving the market value of shares or shares representing capital.
Supreme Decree Nº 339-2018-EF
Article 2: Article 31 of the Regulation is amended:
Article 31.- Imputation of Income and Expenses – Aspects to be taken into account for the purposes of the provisions of Article 57 of the Law, regarding the accrual of first category income, as well as third-category income and expenses. In addition, it is informed that the consideration is based on a fact that will occur in the future when that is determined, among others, based on sales, units produced or profits obtained. In turn, Article 31 provides conditions for the case of sale of term assets referred to in the first paragraph of Article 58 of the Law.
Supreme Decree N° 340-2018-EF
Article 2: Modification of numeral 6 of subsection d) of Article 19-A; title of Chapter XVI; Articles 86 and 87; first paragraph of Article 108; Article 113- A; penultimate paragraph of subsection a) of Article 117; numerals 1 and 2 of subsection a), second paragraph of subsection b), second paragraph of numeral 1 and fourth paragraph of numeral 2 of subsection h), and, second paragraph of numeral 1 of subsection i) of Section I of Article 118; Article 119; and incorporation of a new Annex to the Regulation:
Article 19-A.- Market Value – Special Rules – Regarding the provisions of the last paragraph of Article 32 of the Law, of the price that is considered market value, this may also be taken as the consideration established in the respective contracts held between the parties, only if they meet all the requirements listed in subparagraph d) of Article 19-A. Numeral 6 of subsection d) informs about the necessary characteristics of the price agreed in the contract and the methodology for determining it.
Chapter XVI – Of the Non-Cooperating Countries or Territories of Low or No Imposition and of the Preferential Tax Regimes – New title of Chapter XVI
Article 86.- Definition of Non-Cooperating Country or Territory or of Low or No Taxation and Preferential Tax Regime – The Article informs of provisions for the purpose of qualifying countries or territories that are non-cooperative, or of low or no taxation, or with preferential tax regimes.
Article 87.- Definition of Applicable Rate – According to Article 87, in accordance with the general or common corporate income tax regime, the rate applicable will be understand as the tax rate applicable to the taxable income, whatever the denomination given to this tax is in the country or foreign territory. In the case of the fiscal regime indicated in paragraph c) of numeral 2 of Article 86, the following is taken into account: the rate applicable is understood as the tax rate that is applied to the income, income or profits obtained that are subject to the fiscal regime.
Article 108.- Scope of Application – The first paragraph of Article 108 informs of transactions for which the transfer pricing rules apply, which are 1) Those made by the taxpayers of the tax with their related parties; 2) Those that are made from, to or through countries or territories that are not cooperative or have low or no taxation; and it is added by the present Supreme Decree: 3) Those that are made with subjects whose income, income or earnings from such transactions are subject to a preferential tax regime.
Article 113-A. Rules applicable to the export or import operations of goods with a known price in the international market, local market or market of destination or that fix their prices taking as reference the prices of said markets, indicated in Annex 2 of the Regulation – Article 113 -A informs that, for the purposes of the provisions of the second, third, fourth, fifth, sixth and seventh paragraphs of numeral 1 of subsection e) and of the third and fourth paragraphs of subsection e) of Article 32-A of the Law , the following provisions are taken into account: a) International market, b) Termination of the shipment, c) Landing term, d) Start of the shipment, e) Launching of the unloading and f) Modality of the operation.
In addition, conditions for the own determination of the market value of the goods are specified. The taxpayer can make adjustments to determine the market value of the assets that reflect the modality and characteristics of the operation, provided that the adjustments are reliably accredited. Finally, conditions are reported at the time of filing with SUNAT for taxpayers who carry out export or import operations of the goods listed in Annex 2 of the Regulation. The Article also establishes the form and conditions for the presentation of the aforementioned communication with the Tax Authority.
Article 117.- Minimum information to be recorded in Informative Affidavit Local Report, Master Report and Country by Country Report – In the penultimate paragraph of subsection a) it is reported that the Informative Affidavit Local Report submitted by taxpayers who carried out transactions with related parties, must contain the minimum information indicated in previous paragraphs of the Article. For this purpose, when paragraph 2 of subsection a) of this Article refers to transactions between related parties, reference is also made to transactions made from, to or through non-cooperative countries or territories with low or no taxation, or those made with subjects whose income or earnings, from such transactions, are subject to a preferential tax regime.
Article 118.- Anticipated Agreements of Prices – Subparagraph a) informs of provisions that are subject to the celebration of anticipated agreements of price referred to in paragraph f) of Article 32-A of the Law. Subsection b) reports on the presentation of the valuation proposal; the taxpayers who decide to celebrate the mentioned agreement must present to the Tax Administration a proposal of valuation of the future transactions that they will make with their related parties; from, to or through non-cooperating countries or territories or low or no taxation; or with subjects whose income or earnings from such transactions are subject to a preferential tax regime.
Regarding subsection h) “Modification of the advance price agreement”, the second paragraph of numeral 1 mentions that once the modification proposal formulated by the taxpayer is examined, the Tax Administration can take different actions, such as approving or rejecting it. On the other hand, the fourth paragraph of numeral 2 informs that the operations that are carried out between the related parties; or from, to or through non-cooperating countries or territories of low or no taxation; or made with subjects whose income or earnings from such transactions are subject to a preferential tax regime, must be assessed subject to the general provisions provided in Article 32-A of the Law.
Regarding subsection i) “Inefficacy of the advance price agreement”, the second paragraph of numeral 1 informs that the provisions of the present numeral also apply with respect to the companies or the representatives of any of them acting in such capacity, for the case of legal persons, with which the taxpayer has carried out operations from, to or through non-cooperating countries or territories or with low or no taxation; or whose income or earnings from such transactions are subject to a preferential tax regime.
Article 119.- Expenses in Non-Cooperating Countries or Territories of Low or Null Imposition or in Preferential Tax Regimes – The deductible expenses referred to in subparagraph m) of Article 44 of the Law are subject to the provisions of market value foreseen in Article 32-A of the Income Tax Law.
Annex 1 is added: Non-Cooperating Countries or Territories or Low or No Taxation – A list of countries or territories of Low or No Taxation is shown in this annex.
Article 3: Incorporation of Annex 2 to the Regulation:
Annex 2 is added: List of goods with a known price in the international market, local market or destination market or that fix their prices taking as reference the prices of those markets identified by tariff items or those that substitute them.
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