Peru Persists with Structural Reforms to Boost the Economy in 2016
For over a decade, Peru has been one of the fastest growing economies of South America. Some key factors including better economic policies, plenty of natural resources, improved technology, and political stability have worked in its favor.
Here’s an overview of some of the changes that may impact Peru’s economy in 2016:
Peru reduced its corporate income tax rate from 30% to 26%. This would boost the flow of Foreign Direct Investment (FDI) into the country.
Over the years, metal mining has been driving Peru’s growth. In 2015, it grew at 16% in the third quarter, the best since mid-2002 (Source: INEI, MINEM, BCRP, and BBVA Research). This surge last year was due to a 23% increase in copper production. According to Reuters, copper production will continue to grow this year as well, and at a much faster rate. Reuters predicts the growth rate could reach to a staggering 66%. And, if that happens Peru will overtake China to become the world’s second largest copper producer.
Peru strives to be a liberal economy because investors look out for countries that have friendly policies. Keeping that in mind, it has improved its credit information system and introduced a new personal data protection law that will support companies to protect their business interest.
In addition, the Peruvian government has taken steps to simplify tax rules for companies and built an online portal to file taxes. Peru’s new legislation from August 2015 makes electronic invoicing mandatory for companies in 2016.
Some of the key takeaways of 2016 legislation are:
- Libros Reporting (PLE): From January 2016, companies having more than 3,696,000 USD of revenue in 2015 need to add six extra electronic reports.
- E-voicing (CPE): SUNAT (Peru’s tax Authority) listed over 12,000 companies that need to adopt electronic invoicing in July 2016.
- Certification: SUNAT’s certification is a must for all companies. The certification process must complete within 25 days of the request.
- Account Receivable: All invoices (both B2B & B2C invoices) will need SUNAT’s approval, and all approval codes must be added in the report.
Peru has committed itself to be an active member of the Pacific Alliance that includes: Peru, Chile, Colombia, and Mexico. This alliance accounts for more than 40% of FDI in Latin America. Peru’s active participation, indeed, will have a positive influence in the region.
On the political front, Peru’s Presidential election is due in the first half of the year. Investors will be closely keeping an eye on this election. No one expects any major deviations in the stated economic policies no matter who comes to power. But the fear of political uncertainty is, perhaps, what is making the investors nervous. And it will be interesting to see how the new dispensation addresses the investors concerns, and adjusts to the challenges for the next five years.
Peru’s economy seems to be on strong footing and it appears that it will continue to remain steady despite the economic slowdown, particularly in China, which is one of Peru’s leading trading partners.
The information shared in this article provides general information only, and not advice. Should you need help or specific details about doing business in Peru, please contact us below or call +1-408-913-9130 to speak to our experts.