PERU

On October 27, the President of Peru, Pedro Castillo, presented to Congress a bill that proposes to delegate to the Executive Branch the power to legislate on tax, fiscal and economic reactivation matters, for a term of 120 days. With this proposal, the Executive Branch seeks to make a series of modifications in tax and fiscal matters. Among the main measures, the Executive Branch plans to tax digital platforms, as well as to extend the exemption of the General Sales Tax (IGV in Spanish) to the issuance of electronic money. The regulation is expected to be sent to committee in the next few days. It is expected that the bill will be sent to committee in the coming days.

Further information on the measures proposed by the Executive Branch is provided below:

• Establish a mechanism to collect the General Sales Tax for those operations carried out with non-domiciled taxpayers within the framework of the digital economy and adapt the tax regulation, as appropriate, which includes modifying the rules of habituality and the criteria of employment or consumption in the country. 
• Modify the quantitative aspect, the determination of the Income Tax of domiciled taxpayers regarding labor income and foreign source income, which includes the inclusion of a higher marginal rate and the modification of the limit of twenty-four Tax Units (UIT in Spaanish) and of the 20% deduction. 
• To extend the validity of the exemption from the General Sales Tax applicable to the issuance of electronic money, as well as to rationalize the scope of the exemption from the General Sales Tax on the importation of fast delivery or equivalent shipments, made under normal conditions. 
• Modify the law for the fight against evasion and for the formalization of the economy.
• Establish measures to strengthen the Banco de la Nación so that it may grant direct and indirect financing to small and medium-sized companies and beneficiaries of social programs. In addition, the financial entity will be able to carry out any banking operation, as well as offer all types of financial services.
• Adapt the regulations applicable to companies in the financial system related to the composition of effective equity to the Basel III standard, in order to improve the quality of effective equity and strengthen the solvency and stability of the Peruvian financial system, in order to protect savers.
• Increase the maximum ceiling of fines that can be imposed by the Superintendency of Banks in order to ensure that the application of sanctions is dissuasive and sufficient to prevent the commission of infringing behaviors by supervised entities. 
• Improve and consolidate the rules, criteria, scope, sources and mechanisms of financing, functions, competencies and processes applicable to the modalities of Public Private Partnerships and Assets in order to promote and protect projects and investments developed within the framework of the National System for the Promotion of Private Investment.

On the other hand, the Central Reserve Bank of Peru (BCRP in Spanish), through Circular No. 0031-2021-BCRP, raised the reserve requirements in local currency in order to complement the recent increases in the reference rate and reinforce monetary control. The BCRP increased the minimum legal reserve requirement to 4.5% in November 2021, to 4.75% in December 2021 and to 5.0% as of January 2022. The circular will be in force from the November 2021 reserve requirement period.