New Peru Mandates Expand Beyond VAT to Withholding and Perception Taxes

May 19, 2016

Steve Sprague

Author

Sovos

This blog was last updated on May 19, 2016

Two new mandates announced by the SUNAT, the Peruvian tax authority, are set to take effect starting July 1, 2016. The companies mandated to comply with these measures – Comprobantes de Retencion (CRE) and Comprobantes de Perceptcion (CPE) – can expect cash flow repercussions as the SUNAT seeks to keep tax payments from foreign invoices within Peru.

The first new mandate – CRE – will have the biggest impact on multinationals operating in Peru, as it eliminates certain buyer/seller tax transactions. Instead, select buyers pay tax straight to the SUNAT, thus eliminating the flow of tax payments to and from foreign suppliers. Specifically, the CRE is an electronic withholding tax document. Designated buyers can withhold 3% of IGV (Impuesto General a las Ventas, sales tax) of the sale from their suppliers. These companies are named by the SUNAT, and pay the taxes withheld directly to the SUNAT at the end of each month. At the same time, the buyer must provide the supplier with a proof of tax retention, which will allow the supplier to calculate its tax declarations – sales tax owed minus these credits.

The second mandate – CPE – applies to perception tax (i.e., VAT pre-payments). Depending on the company, select suppliers can add 2%-10% perception tax to sales, which they will send to the SUNAT. Buyers then apply an IGV credit based on the perception taxes paid when they declare taxes owed each month.

The biggest implication to both buyers and suppliers under the CRE and CPE mandates is to cash flow, requiring new processes for tax calculations and payments. Plus, as has come to be expected with the rapid pace of change in Latin American business-to-government compliance initiatives, these mandates are already being replicated, with similar legistlation underway in Ecuador and Uruguay.

These changes underscore the importance of staying ahead of regulations in this region – as mandates often require both technical and process changes. Subscribe to our blog to stay up to date on new legislation in this region, and click here to learn more about the compliance landscape in Peru.

Steve Sprague

Como director comercial, Steve Sprague dirige la estrategia corporativa, las iniciativas de penetración de mercado y de field enablement para el negocio del impuesto sobre el valor añadido global (GVAT) de la empresa. El estilo de liderazgo de Steve se basa en su convicción de que, para que las organizaciones tengan éxito, deben comprometerse e invertir en los tres pilares estratégicos de la empresa: las personas, las prácticas y los productos.

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