BUSINESS ORGANIZATIONS
The most common form of business in Peru among foreign-owned companies
is the corporation (sociedad anonima or SA). Several other business organizations
are permitted under Peruvian law including: private limited company (sociedad
comercial de responsabilidad limitada), limited partnerships with or without
shares (sociedad en comandita simple and sociedad en comandita por acciones),
unlimited partnership (sociedad colectiva) and the sole proprietorship (persona
natural). Branches and subsidiaries are also permitted.
EXPORTING
Agents and Distributors: All purchases by state-owned companies exceeding
approximately US$ 12,000 must be made through public tenders, foreign firms
who wish to bid must appoint a local firm with a representation agreement,
duly legalized by a Peruvian consulate and registered in the Peruvian Foreign
Affairs Ministry. Principal-agent relationships are governed by the Peruvian
Civil and Commercial code. Agents are given power-of-attorney to enter into
agreements that are considered to be legally binding. Agents are permitted
to act as brokers or establish permanent agent-principal sales relations
as commercial agents. Distributors typically act as wholesalers or retailers.
All importer agents and distributors doing business with the Peruvian government
must register with the Registry of Importers.
Documentation: Exports to Peru require copies of the commercial invoice,
and the bill of lading in triplicate. Special documentation is required
for products that affect health and sanitary conditions in Peru. Import
permits are required for farm and fish products, pharmaceutical and alcoholic
beverages must be registered with the Ministry of Public Health.
Import Restrictions and Duties: Peru has an open trade and investment
environment; trade restrictions are minimal and import licenses are no longer
required. Revised tariffs are 15 to 25 percent ad valorem. All Imports are
subject to a 18 percent value-added local sales tax and may be subject to
preshipment inspection. (Imports valued at US$ 2,000 or more are subject
to prior inspection services.)
COMMERCIAL POLICIES
Free-Trade Zones: Eight industrial and commercial free-trade zones currently
operate in Peru. They are located at Tacna, Ilo, Mollendo, Tumbes, Trujillo,
Paita, Chimbote and Pisco. Benefits of operating in these zones are discussed
under the Investment section.
Foreign Exchange Controls: Free redemption and possession of foreign
currency are guaranteed. Foreign investors may remit abroad, in hard currency,
the full amount of capital, profits and dividends after taxes. The Government
of Peru has no restrictions on the remittance of dividends and royalties,
provided the pertinent withholding taxes are paid.
FOREIGN INVESTMENT
Peru enacted broad investment legislation which accords national treatment,
opens almost all sectors to foreign investment, guarantees free currency
convertibility and eliminates monopolies. At the same time the general investment
laws were implemented, Peru also enacted a large number of sectorial specific
anti-monopoly decrees.
A framework agreement establishing the U.S.-Peru Trade and Investment
Council (TIC) was signed in May 1991 and the first meeting of the Council
was held in February 1992 in Washington, DC. Bilateral Investment Treaty
(BIT) negotiations commenced in February 1992. The U.S. government requested
clarification on exceptions to national treatment, current investment legislation,
ICSID ratification, and Peru's interest in Bilateral Intellectual Property
Rights (IPR) Agreement to be negotiated in parallel with BIT.
Incentives: Incentives are offered to companies that establish operations
in the following zones: export processing free zones, tourist free zones,
special commercial treatment zones, and special development free zones.
Export processing free zones offer investors exemptions from customs
duties for imports and exports, exemption from any Peruvian tax for 15 years,
temporary labor agreements, and accounting in foreign currency. Free zones
for tourists offer similar benefits.
Special commercial treatment zones are generally located on the jungle
frontier. They extend the following benefits to companies operating inside
their borders: exemption from value-added taxes; a reduced 10 percent customs
duty; and accounting is permitted in foreign currency.
INTELLECTUAL PROPERTY RIGHTS
Patent/Trademark Protection: Andean Pact Decision 311 governs patent
and trademark protection in Peru (published in El Peruano 2/92). Although
an improvement over the previous Decision 85, the new provisions do not
meet international standards. Peru was put on Special 301 "Watch List"
in April 1992. Deficiencies in Peru's patent/trademark regime include: a
short patent term (15 years from filing, plus five if locally worked); lack
of transitional (pipeline) protection; overly broad compulsory licensing
provisions; and exclusion from patent protection for certain inventions
and pharmaceutical goods.
Decision 313 permits member countries of the Andean Pact to strengthen
IPR protection through national legislation. It also lifts restrictions
on the patentability of most pharmaceuticals, but permits members a 10-year
period to phase in patent protection for pharmaceuticals. Peru is currently
studying the possibility of adopting Decision 313. Peru's new draft IPR
law, originally scheduled for passage in November 1991, has been recently
reviewed by a private sector group, thus enabling pro-patent forces to demonstrate
influence.
Corporate Protection: Deficiencies in Peru's copyright regime include:
no express protection for technologically advanced forms of authorship,
(e.g., computer programs, databases); motion pictures and videotapes are
protected for only 25 years from publication; imitations on author's exclusive
rights extremely broad; lack of enforcement; and penalties are generally
insufficient.
TAXATION
Corporate taxes: Taxation is based on financial statements adjusted for
inflation. A minimum tax on income has been established, which is equivalent
to two percent of net assets adjusted for inflation. Business equity tax
is considered a tax credit against this minimum tax on income. There is
a possible suspension, under certain circumstances, on account payments
of income tax from April of each year. Royalties, exchanges, losses and
interest paid to foreign affiliates are now fully deductible without restrictions.
The base to calculate business equity now does not include 50 percent of
debts to bank and creditors. Dividends are subject to a withholding tax
of 10 percent. Tax-loss carry forwards are subject to adjustment for inflation
as from January 1, 1992.
Personal Income Tax: Income tax for individuals is based on a sliding
scale ranging from six to 37 percent. Domiciled individuals those living
in Peru for more than two years regardless of nationality pay tax on worldwide
income. Non-domiciled individuals pay tax only on income generated in Peru.
Other Taxes: An 18 percent value-added tax (VAT) is levied on individuals
and businesses that sell taxable goods and imports. This tax also includes
services rendered by companies.
Tax Treaties: Peru and the United States have no treaty regarding double
taxation.
REGULATORY AGENCIES
* The National Commission for Foreign Investment and Technology or CONITE
(Comision Nacional de Inversiones y Tecnologias Extranjeras) regulates
the flow of imports and exports.
* The following agencies oversee the establishment of foreign entities
in Peru: The Bureau of Industry, the Institutefor Industries, and the Research
Institute for Industrial Technology and Technical Standards.
* The Banking Superintendency regulates financial investments.
* The Ministry of Energy and Mines approves mining, power and petroleum
projects.
USEFUL CONTACTS
Foreign Commercial Service U.S. Embassy-Lima Telephone: (5114) 33-0555
Facsimile: (5114) 33-4687
To mail from the United States: U.S. Embassy - Lima Unit 3780 APO AA
34031
Embassy of Peru in the United States 1700 Massachusetts Avenue, NW Washington,
DC 20036 Telephone: (202) 833-9860
