On 2 August 2018, Peru's Ministry of Finance published Legislative Decree No. 1369, which includes amendments in relation to deductions for royalties and service fees paid to non-residents. Under current rules, such payments may be deducted in the year they are accrued, whether they were actually paid or not. The amendment provides that royalties and service fees paid to non-residents may still be deducted in the year they are accrued, provided that they are actually paid by the deadline for the return corresponding to that year. If not deducted in the year they are accrued as above, such payments may be deducted in the year they are actually paid.
The Legislative Decree also amends the wording of the provisions regarding low value adding services between related parties, which were introduced by Legislative Decree No. 1312 (previous coverage). The amendment clarifies that the deduction of the cost or expense for such services received is determined on the basis of the sum of the costs and expenses incurred by the service provider as well as its profit margin, which cannot exceed 5% of such costs and expenses.
The provisions of the Legislative Decree are effective from 1 January 2019.
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