Peru Country Report
Business OpportunitiesNovember 3, 2021 - TPA Advisors
This article is a contribution to the International Accounting Bulletin (IAB) Peru survey by PrimeGlobal member firm, TPA Advisors, and it was published in IAB's October 2021 newsletter. Please read the full article below and reach out to Patricia Rocha, Administration Manager, regarding any questions in relation to the article and doing business in Peru.
Have there been any significant regulatory developments in Peru over the last 12 months?
The effects of COVID-19 have generated a significant drop in family income and in companies' cash flows, thus limiting the ability to meet various obligations.
Due to the confinement, there have been several significant regulatory developments regarding taxes established by the Peruvian government and the National Superintendency of Customs and Tax Administration (SUNAT), such as extensions in monthly declarations and facilities for compliance with tax obligations in favor of individuals and companies that are located in cities with an extreme and very high level of alert (qualification established by the government in power according to the levels of COVID-19 infection), the application of discretionary power to not apply fines for infractions committed during the state of national emergency, and accelerated depreciation of fixed assets, among others.
The Deferral and/or Fractionation Regime was established for the tourism sector (Res. 066-2021-SUNAT), in favor of natural and legal persons that provide tourist services and artisanal services, offering them opportunities to postpone and divide tax debts up to 36 months but only if they meet the requirements established by the law. Another development has been the Refund of the Temporary Tax on Net Assets (ITAN) for the 2020 period to taxpayers who request the refund of said tax, among others.
The government created the Reactiva Peru program so that financial entities can grant credits guaranteed by the government in favor of natural and legal persons with business activity, who comply with the requirements established by the program, in order to be able to grant liquidity according to the needs of working capital. In addition to this, other business support programs were created such as: The Business Support Fund for MYPE (FAE-MYPE), Business Support Fund for Tourism (FAE-Tourism), the FAE-AGRO program, PAE-MYPE, among others. All of support programs were developed to reactivate the economy of the productive sectors most affected by the pandemic.
The government published Law 31171, which authorizes workers to dispose of their savings for Compensation for Time of Service (CTS) in its entirety until December 31 2021. It also disposed that affiliates to the Private Pension System could request retirement of their fund up to an amount of four tax units.
How would you describe the health of the accounting industry in Peru in terms of customer demand, fee pressure, and staff recruitment and retention?
The spread of Covid-19 has affected various economic sectors. Regarding the accounting industry during the pandemic, services have been maintained but, due to the economic situation of some companies, the cost of the service has been lowered in some cases, resulting in unemployment and / or reduction of salaries of some professionals. It should be noted that the accounting process underwent changes due to the implementation of home-office.
In order to avoid unemployment, the government adopted some measures aimed at mitigating the economic effects caused to workers and employers. Thus, on April 13 2020, it promulgated Emergency Decree No. 038-2020, in which it authorizes employers the exceptional use of the perfect suspension of work, which implies “the temporary cessation of the worker's obligation to provide the service and that of the employer to pay the respective remuneration, without termination of the employment relationship; being able to include one or more workers”. However, through DU No. 087-2021 (dated 09/16/2021), the validity of the perfect suspension of work has been modified, being valid only until October 2 2021.
Are there any services areas where demand has grown over the last 12 months?
Has there been any significant consolidation or merger activity in the accounting profession?
There were no significant activities in M&A in the accounting sector.
What are your expectations for the next 12 months - are there any potentially significant developments in the pipeline?
For the next 12 months, our expectation regarding the Peruvian economy is that it will continue to grow with business reactivation, the recovery of employment will be promoted by the growth of production generated by companies and public investment, and a climate of confidence is created by part of the government in order to also influence the growth of private investment.
On the other hand, the expectations of the Central Reserve Bank of Peru (BCRP) regarding the main economic variables of the country, show a somewhat complicated scenario for the remainder of this year, but with a strong recovery component by the end of 2022. In this sense, the forecast of inflation for 2021 is outside the target range of 1% - 3%, however, a fall is expected for mid-2022, with a return to the target range for December that same year.
For the remainder of 2021 and 2022, a recovery in economic activity is projected, given the recovery of our main trading partners and the rise in terms of trade favorable to our country.
On the part of the public administration, the investment is expected to be carried out at the appropriate speed, so that it contributes to the recovery of economic activity, domestic demand and inflation.
Regarding the financial sector, an abrupt outflow of foreign capital would generate upward pressure on the exchange rate and, consequently, higher expected inflation. For this reason, it is necessary for the country's political authorities to normalize their actions and provide calm to economic agents, to promote trust, with the legal, political, and economic stability necessary for investments.
We are a Peruvian firm with headquarters located in Lima - Peru. We have more than 13 years' experience providing transfer pricing solutions, corporate finance and international taxation, with a multidisciplinary and comprehensive approach. TPA Advisors provides, as a guarantee to its clients, professionalism and international experience in 16 LATAM countries. Moreover, the firm has databases recognized worldwide that provide the technical support required by both local tax administrations and international organizations, and covering all types of consultation; the main ones are: TP catalyst, veritrade business and royalystat. In TPA Advisors, we act as partners providing concise and intelligent planning with efficient strategies to better protect the corporate interest, advising on each operation you carry out and complying with the fiscal and financial guidelines is our objective. The fundamental basis in the provision of our services is the firm growth of our staff through a healthy, cordial and constant training environment. Our mission is to provide high quality services, through the development of trust relationships and constant updating and innovation in all areas that promote the success of our customers.Learn more