In Peru, the qualification of a country as non-cooperating or with low or no taxation is according to the criteria determined by internal laws, with the SUNAT (Superintendencia Nacional de Aduanas y Administración Tributaria – National Superintendence of Customs and Tax Administration) as responsible for evaluating and determining, which must communicate to the MEF (Ministro de Economía y Finanzas – Ministry of Economy and Finance) annually the list of countries that qualify as such.
Exclusion from Qualification
Regarding qualification, Article 86 specifies that countries or territories belonging to the OECD or that have a Double Taxation Avoidance Agreement with Peru, which includes an information exchange clause and that fully comply with it, are excluded from qualifying as non-cooperating or low or no-taxation countries.
Criteria to Be Evaluated for Qualification
According to numeral 1 of Article 86 of the Income Tax Law regulations, a country or territory will qualify as non-cooperating or low or no-taxation when:
- Concerning Tax Information Exchange Agreements or Double Taxation Avoidance Agreements (DTA) with Peru, which agree to an information exchange:
- The country or territory does not have a DTA agreement.
- The country or territory has an agreement or DTA but does not comply.
- The country or territory has an agreement or DTA but complies with it limitedly due to its legal norms or administrative practices.
- The country or territory is not transparent at the legal, regulatory, or administrative operational level.
- The country or territory applies a corporate income tax rate of 0% or less than 60% of the rates in Peru.
In this regard, the classification of a country or territory as non-cooperating or with low or no taxation means that the SUNAT must communicate to the MEF the list of countries that have complied and failed with the information exchange or have complied limitedly.
In this regard, Report No. 000026-2024-SUNAT/7T0000 develops the implications of the SUNAT’s obligation.
Report No. 000026-2024-SUNAT/7T0000
On May 30, 2024, the SUNAT published the referred report, which developed the application of the criteria described in point 1 by the SUNAT. Among the main points reflected therein are the following:
- According to Article 102-A of the Tax Code, the exchange of information must be upon request, automatic and spontaneous.
In this regard, mutual administrative assistance implies cooperation between countries where both comply with the information exchange.
Both the Tax Code (TC) and the CAMMF (Convención sobre Asistencia Administrativa Mutua en Materia Fiscal – Convention on Mutual Tax Administrative Assistance) have specified definitions of each modality of information exchange:
- Upon request:
- The SUNAT provides the information to the requesting country, considering the international conventions (Article 102-C TC).
- First, a requesting State must request information related to specific persons or transactions to which the former must comply with providing what is requested (Article 5 of the CAAMMF).
- Spontaneous:
- The SUNAT spontaneously exchanges information that the competent authority considers relevant (Article 102-E CT).
- It implies no prior request so that a Party transmits the known information to the other one (Article 7 of the CAAMMF).
- Automatic:
- The SUNAT communicates the information and data agreed upon in the international agreements entered into to the competent authority periodically and automatically, which includes the automatic financial information exchange (Article 102-D CT).
- According to the procedure determined by mutual agreement, the parties will exchange information automatically (Article 6 of the CAAMMF).
- The lack of transparency at the legal, regulatory, or administrative functioning level of a country or territory implies that this has reservations regarding:
- The tax applicable system in its jurisdiction.
- The information of the parties operating in its jurisdiction.
- The transactions of the parties operating in its jurisdiction.
According to the criteria described above and determined by domestic legislation, the SUNAT evaluates the compliance status of countries as non-cooperating or low or no-taxation countries annually. It will directly affect the transactions of businessmen operating in a country that qualifies as such since they have specific regulations for taxation, such as a special applicable rate and the non-allowability of expenses when they come from such countries, among others.
For further information, do not hesitate to contact VAG Global, where we have professionals specialized in financial auditing, accounting, and tax and legal advice that will allow your business to clarify all your doubts in this regard.
Source: SUNAT