In effect since May 07, 2019, Peru’s Supreme Decree No. 145-2019-EF established certain parameters in an effort to identify and sanction tax avoidance mechanisms.
The Peruvian general anti-avoidance rule (GAAR) was enacted in 2012; however, through Legislative Decree No. 1121, it was suspended until the issuance of regulations to allow its application.
Accordingly, the aforementioned Supreme Decree established the scenarios that may be considered for the application of the GAAR:
- Acts, situations or business relationships in which there is no correspondence between the benefits and the associated risks; or there is low or no profitability; or they do not adjust to the market value or lack economic rationality
- Acts, situations or business relationships that do not relate to the type of ordinary operations carried out to achieve the desired legal, economic or financial effects
- Similar or equivalent activities to those carried out through business structures, using non-business structures instead
- Corporate reorganizations with the appearance of little economic substance
- Acts or operations with subjects residing in non-cooperating countries or in territories with low or no taxation
- Low-cost transactions or acts that end up minimizing or canceling costs and non-taxable profits for the parties involved
- Unusual acts or schemes that contribute to the deferral of income or the anticipation of expenses, costs or losses.
In the same sense, the Supreme Decree considers the following aspects for the analysis of acts, situations or economic relations:
- The manner in which the act or acts were celebrated and executed
- The form and substance of the act(s), situations or economic relationships
- The time or period in which the act(s) were carried out and the extension of the period during which the act or acts were executed
- The result achieved under the rules of the specific tax under analysis, if the general anti-avoidance rule did not apply
- Any resulting change in the legal, economic or financial position of the taxpayer that would be reasonably expected to arise from the execution of the act(s) or the configuration of the situations or business relationships
- Any resulting change in the legal, economic or financial position of any person who has or has had a connection (business, family, or other nature) between the taxpayer and any person affected by the act
- Any other consequence for the taxpayer or for any person who has or has had a connection (business, family or otherwise) with that, derived from the celebration or execution of the act(s)
- The nature of the connection (business, family or other) between the taxpayer and any person affected by the act(s) or the configuration of economic situations or relationships.
With the anti-avoidance rule, companies will be discouraged from arranging tax-avoidance plans; and the jurisprudence and the cases that are published by the Review Committee, as the regulation indicates, will give taxpayers more clarity and security in the future.
For more information, please contact the author:
Luis Miguel Sambuceti