According to ICEX data , in 2017 non-conventional renewable energies constituted 2.7% of Peru’s energy matrix. Although there is still a long way to go and many possibilities for the future, the Andean country’s efforts in this field are long-standing. In order to diversify the country’s energy matrix, the government stated in 2008 that NCRE generation for the National Interconnected Electric System (SEIN) should represent a target percentage of 5% of total electricity generated annually.
Peru as a country encourages private investment and is very open to foreign capital. There is no discriminatory treatment towards non-nationals and the nation’s legal system guarantees privacy of property, free competition and free repatriation of profits. Likewise, Peru has adhered to the OECD Declaration on International Investment and Multinational Enterprises and also has a close bilateral relationship with the US, having adopted a Trade Promotion Agreement in 2006.
Renewable energy is explicitly supported by the Peruvian government under DL 1002. The national renewable energy objective is to reach 5% of energy provided by non- conventional renewable sources. In addition, fiscal stability agreements are available to companies that invest at least $5 million over two years, (except in mining and hydrocarbons, where the required amount is at least $10 million).
The tax benefits to which NCRE investment companies are entitled include:
Accelerated depreciation: Investments may be depreciated up to 5 years (renewable energy resources) Legislative Decree No. 1002 and No. 1058. The activity of electricity generation based on water resources or other renewable resources, such as wind, solar, geothermal, biomass or tidal energy, will enjoy the regime of accelerated depreciation for income tax purposes.
This regime shall be applicable to the plants that enter into commercial operation as of the effective date of this Legislative Decree. The accelerated depreciation shall be applicable to the machinery, equipment and civil works necessary for the installation and operation of the plant, which are acquired and/or built as of the effective date of this Legislative Decree.
For such purposes, the annual depreciation rate shall not exceed 20% as a global annual rate. The rate may be varied annually by the holder of the generation, prior notice to the National Superintendence of Tax Administration (SUNAT) without exceeding the limit indicated above, except in cases where the Income Tax Law itself authorizes higher global percentages.
VAT recovery: The recovery of the IGV which allows the refund of the tax imposed on imports and/or local acquisitions of new capital goods, new intermediate goods and services and construction contracts, carried out in the pre-production stage. However, this regime presupposes the existence and execution of an investment project whose object will consist of carrying out operations taxed with the IGV. “Previous analysis of the operation and fulfilling the requirements of the standard”. Additionally, Law No. 30296 “Special Regime for Early Recovery of the IGV” consists on the refund of the tax credit generated in imports and/or local acquisitions of new capital goods, made by taxpayers whose annual sales levels are up to 300 UIT and who carry out productive activities of goods and services taxed with the General Sales Tax or exports. These also must be registered as a micro or small business in the REMYPE, referred to in the Single Ordered Text of the Law for the Promotion of Productive Development and Business Growth, approved by Supreme Decree No. 013-2013-PRODUCE and Supreme Decree No. 276-2018-EF.
The tax credit subject to the law referred to in the preceding paragraph shall be that which has not been exhausted in a period of at least three (3) consecutive months following the date of entry in the purchase register.
To take full advantage of this regime, taxpayers must fulfill the requirements established by the regulations, including a minimum period of permanence in the Single Taxpayers’ Registry, as well as compliance with tax obligations.
Provisions for tax reduction: Companies can take advantage of the regime of suspension or modification of monthly rent payments, which will allow them to reduce the rate payable for monthly rent payments, subject to approval by SUNAT.
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All information contained in this publication is up to date on 2021. This content has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this chart without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this content, and, to the extent permitted by law, AUXADI does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this chart or for any decision based on it.