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Doing business in Peru

How quickly can I set up a business?

15-30 calendar days.

What is the minimum investment needed?

There is no minimum investment to establish a business except for the constitution of legal entities for financial activities (banks, financiers, savings banks, insurers, etc.).

How can I raise finance?

You can finance activity with your own capital or financed capital.

What are the legal requirements for setting up my business?

There is a General Law on Companies which includes public limited companies (closed – open listed on the stock exchange); of limited liability, associative contracts such as consortia, partnership in participation etc., each with its own characteristics. From the point of view of the formation of a legal person, there is no minimum capital investment. However, it should be taken into account that to do so there must be two partners and we recommend that the capital (species or monetary) must be at least US $100.

What structure should I consider?

The most common legal figures for setting up a company established in the Companies Act are:

OPEN PUBLIC LIMITED COMPANY
• Publicly traded company.
• Minimum 750 shareholders, does not have a maximum of Shareholders.
• The initial contribution of the capital can be in money or in kind and must be paid at least 25%.
• The bodies are: The General Meeting of Shareholders, Board of Directors and General Management.
• The share capital is represented by Shares and may have differentiated rights. The transfer of shares should only be noted in the Company’s Stock Registration Book.
• The duration is determined or indeterminate.
• The liability of the legal person is given up to the limit of its assets.

CLOSED ANONYMOUS SOCIETY
• From 2 to 20 members.
• The bodies are the General Shareholders’ Meeting, Board of Directors (optional) and General Management.
• The initial contribution of the capital can be in money or in kind and must be paid at least 25%.
• The share capital is represented by Shares and may have differentiated rights. The transfer of shares should only be noted in the Company’s Stock Registration Book.
• The duration is determined or indeterminate.
• The liability of the legal person is given up to the limit of its assets.

LIMITED LIABILITY COMPANY
• From 2 to 20 members.
• The bodies are the General Meeting of Partners and the General Management.
• The initial contribution of the capital can be in money or in kind and must be paid at least 25%.
• The share capital is represented by shares and cannot have differentiated rights. The transfer of shares is formalized by public deed and must be registered in the Public Registry of Legal Entities
• The duration is determined or indeterminate.
• The liability of the legal person is given up to the limit of its assets.

BRANCH OFFICE
• Secondary establishment through which a company carries out, in a place other than its domicile, certain activities included within its corporate purpose. It lacks legal personality independent of the principal. The branch must be provided with permanent legal representation and enjoys management autonomy in the field of the activities assigned to it by the principal, in accordance with the powers conferred on its representatives.

ASSOCIATIVE CONTRACTS
• Associative contracts create and regulate participation and integration in specific businesses or companies, in the common interest of the participants. This type of contract does not generate a legal person, must be in writing and is not subject to registration in the Register.
• There are 3 forms of associative contracts: the Partnership in Participation contract and the Consortium.
• The resources earmarked for the contracts, mentioned above, shall be considered as foreign direct investment when the foreign investor is granted a form of participation in the production capacity, without this implying a capital contribution and corresponding to commercial operations of a contractual nature through which the foreign investor provides goods or services to the receiving company in exchange for a share in the volume of physical production. , in the total amount of sales or net profits of the aforementioned receiving company.

What advice can you give me in regards to payroll and taxation requirements?

RECRUITMENT OF STAFF

Employment Contract: It has a probationary period of 3 months, at the end of which the worker is entitled to protection against arbitrary dismissal.

Working day: 8 hours a day or 48 hours a week, at most.

Holidays: 30 calendar days for each full year of services.

Gratuities: 02 salaries per year (National Holidays and Christmas).

Social Security: Equivalent to 9% of the remuneration or monthly income. The employer shall be the one who must declare them and pay them monthly.

National Pension System (SNP) / Private Pension System (SPP): The SNP rate is 13%. The SPP rate fluctuates between 13% and 15%, depending on AFP chosen.

Family Allowance: 10% of the Minimum Living Wage in force at the time when the benefit is due.

Time of Service Compensation (CTS): Equivale 1/12 of the remuneration for each full calendar month of services. The fraction is offset by 1/30.

Worker Share in Profits: The percentages vary between 10%, 8% and 5%, depending on economic activity. Except for companies not exceeding 20 employees.

Maternity: 49 days of prenatal leave and 49 days of postnatal rest.

Paternity: 10 consecutive calendar days.

Night Hours: A surcharge of 35% of the minimum monthly remuneration in force on the date of payment will be charged, at least. The night is between 10:00 p.m. and 6:00 a.m.

Arbitrary Dismissal: Compensation is equivalent to 1 1/2 monthly remuneration for each full year of service with a maximum of 12 remunerations. The year fractions are paid for 1/12 and 1/30, as applicable.

Retirement: The minimum age is 65 years and retirement is mandatory and automatic at age 70. Insured persons can also access an early retirement pension (SNP) and ordinary early retirement (SPP).

RECRUITMENT OF FOREIGN WORKERS

Applicable Regime: The regime of the private activity.

Rights and Benefits: Not less than those granted to national workers.

Remuneration: May not exceed 30% of the total payroll.

Limiting Percentages: 20% of the total number of workers.

Foreigners excluded from the limiting percentage: The spouse, ascendant or descendant or Peruvian siblings, whoever has an immigrant visa, when there is an agreement of reciprocity or dual nationality with the country of origin. Likewise, the personnel of foreign companies engaged in the international transport, land and water service with foreign flag and registration, foreign personnel working in multinational service companies or multinational banks, with special rules for this regard, foreign personnel who, under bilateral or multilateral agreements, provide their services in the country, and the foreign investor, provided that they maintain an investment amount of not less than 5 UIT (*) during the term of their contract, are excluded.

Term of Employment Contract: The term is determined, for a maximum of 3 years extendable for terms not greater than 3 years.

Approval of the Contract: The contract once signed must be approved by the Ministry of Labor and Employment Promotion.

Immigration Quality: the National Superintendency of Migration will grant immigration status and visas, as appropriate.

(*) ITU current for 2021 is S/. 4400

TREATIES FOR THE AVOIDANCE OF INTERNATIONAL DOUBLE TAXATION
• Chile
Effective Date: 01/01/2004
• Canada
Effective Date: 01/01/2004
• Andean Community
Effective Date: 01/01/2005
• Brazil
Effective Date: 01/01/2010
• Mexico
Effective Date: 02/19/2014
• Korea
Takes effect: 03/03/2014
• Switzerland
Effective Date: 03/10/2014
• Portugal
Effective Date: 04/12/2014
• Japan
Effective Date: 01/29/2021

TAX REGIME

General – Income Tax:

Business Income: 29.5%; for agriculture and agribusiness 15%.

Dividends: 5%

Royalties: 30%

Interest on loans granted from abroad: 4.9%

To value added (VAT): 18%

To financial transactions: 0.005%

Temporary to net assets due to excess of S/1,000,000: 0.4%

Is there anything else that I should know?

TRADE INTEGRATION OF PERU
Peru is a founding member of the World Trade Organization (WTO) and a full member of the Asia-Pacific Economic Cooperation (APEC), the latter made up of 21 economies. At the Latin American level, Peru is a member of the Andean Community of Nations (Bolivia, Colombia, Ecuador, Peru) and, within the framework of the Latin American Integration Association (LAIA), Peru has signed an Economic Complementarity Agreement with MERCOSUR.

With regard to international investment agreements, Peru has signed agreements on the promotion and reciprocal protection of investments (APPRI), as well as more far-reaching trade agreements (such as free trade agreements) that include a chapter on investment.

INTERNATIONAL AGREEMENTS
• Since March 1, 2013, the Trade Agreement between the European Union and the Republic of Peru has entered into force.
• Free Trade Agreement signed between Peru and Canada. It should be noted that Canada and Peru signed an APPRI.
• Free Trade Agreement between Peru and Chile. It should be noted that Chile and Peru signed an APPRI on 2 February 2000.
• APRI between Colombia and Peru; entry into force on 12.31.2010.
• Trade Promotion Agreement signed between Peru and the United States of America; entry into force 012.01.2009.
• Free Trade Agreement between Peru and the EFTA States (Switzerland, Norway, Liechtenstein, and Iceland); entry into force on 10.01.2011.
• Economic Partnership Agreement between Peru and Japan has been in force since March 1, 2012.
• Trade Integration Agreement between Peru and Mexico; entry into force from 02.01.12.
• APRI between Norway and Peru; in force since 5 May 1995.
• Free Trade Agreement signed between Peru and Panama.
• Free Trade Agreement between Peru and Korea. It should be noted that Korea and Peru signed an APPRI on 3 June 1993.
• Free Trade Agreement between Peru and China. It should be noted that China and Peru signed an APPRI on 9 June 1994.
• Free Trade Agreement between Peru and Singapore. It should be noted that Singapore and Peru signed an APPRI on 27 February 2003.
• Free Trade Agreement between Peru and Costa Rica.
• Trade Agreement between Peru and Honduras.

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