Written by José Alonso Aquino, Lawyer
During the first half of this year, Peru took a decisive step to modernise its tax system and align it with international standards, implementing the Multilateral Convention on Tax Treaty Measures to Prevent Base Erosion and Profit Shifting. While the government has applied this framework only to a select group of tax treaties (including Brazil, Canada, Chile, South Korea, Mexico, Portugal, and Switzerland) and has made specific reservations to certain provisions, the move signals a clear commitment to fairness, transparency, and international credibility.
Set to take effect on October 1, 2025, these measures are more than just technical adjustments. They represent Peru’s effort to protect its tax base, provide clarity for foreign investors, and ensure that the country remains a competitive and trustworthy destination for cross-border trade and investment. Understanding the adoption process and the legal implications of these changes is essential for businesses and advisors navigating the evolving Peruvian tax landscape.
BEPS Project & MLI
OECD G20 Base Erosion and Profit Shifting Project (BEPS Project), was launched in 2013 and promoted by the G20 seeking to combat aggressive tax planning strategies that exploit gaps and mismatches in international tax rules, eroding the tax bases of jurisdictions and shifting profits to low or no-tax locations. One of its measures was the negotiation and approval of the MLI aiming on how it would need to modify the provisions of bilateral or regional tax agreements to implement BEPS measures. These include:
- Transparent Entities (3rd clause): Ensures that the benefits of DTA are only granted when income is effectively subject to taxation in the beneficiary’s jurisdiction. Prevents the use of fiscally transparent entities to subject to jurisdictions with lower tax rates.
- Dual Resident Entities (4th clause): In the event of entities with residence in 2 or more jurisdictions and only for DTA purposes, residence is not automatically defined, but rather by mutual agreement between the competent authorities, considering the place of effective management, place of incorporation, and other factors.
- Purpose of DTA (6th clause): clarifies that DTAs are not intended to create situations of non-taxation or tax reduction through evasion or avoidance, but rather to promote legitimate trade and investment.
- Prevention of Treaty Abuse (7th clause): prevent grant of DTA’s benefits where obtaining such benefit was one of the main purposes of a transaction or arrangement, unless it is proven to be in accordance with the object and purpose of the treaty.
- Dividend Transfer Transactions (8th clause): strengthens rules against abusive tax planning in dividend payments (i.e. minimum shareholding period (generally 365 days) to qualify).
- Artificial Avoidance of Permanent Establishment Status through the Specific Activity Exemptions (13th clause): prevent the qualification as a Permanent Establishment under a DTA aiming for double non-taxation.
- Splitting-up of Contracts (14th clause): broadens the concept of Permanent Establishment in a DTA to include situations where dependent agents play an essential role in concluding agreements on behalf of a foreign entity, even if they do not formally sign them. It also addresses the artificial fragmentation of activities to avoid qualifying as a Permanent Establishment.
Reservations made to the MLI by the Peruvian government
Through the Legislative Resolution N° 32285 and Supreme Decree N° 013-2025-RE, the Peruvian government has compliance with its internal procedures to adhere to the MLI. Nevertheless, its application will be made observing the following reserves on the DTAs with the following countries:
| Clause | Reserve | Applicable DTA |
| Transparent Entities
(3rd clause) |
Terms do not apply | Brazil, Canada, Chile, Corea, Mexico, Portugal and Suiza |
| Dual Resident Entities
(4th clause) |
Terms do not apply | Brazil, Canada, Chile, Corea, Mexico, Portugal and Suiza |
| Purpose of DTA
(6th clause) |
Paragraph 3 text applies:
“Desiring to further develop their economic relationship and to enhance their co-operation in tax matters” |
Brazil, Canada, Chile, Corea, Mexico, Portugal and Suiza |
| Prevention of Treaty Abuse
(7th clause) |
Apply terms only as a provisional measure. Intend to adopt, to the extent possible, the Benefit Limitation Clause, in addition to or in place of this clause through bilateral negotiation | Brazil, Canada, Chile, Corea, Mexico, Portugal and Suiza |
| Dividend Transfer Transactions
(8th clause) |
Terms apply | Brazil, Canada, Chile and Portugal |
| Artificial Avoidance of Permanent Establishment Status through the Specific Activity Exemptions
(13th clause) |
Option A applies | Brazil, Canada, Chile, Corea, Mexico, Portugal and Suiza |
| Splitting-up of Contracts
(14th clause) |
Terms do not apply | Brazil, Canada, Chile, Corea, Mexico, Portugal and Suiza |
Conclusion
By ratifying the MLI and operationalising BEPS Project measures domestically, Peru is not only protecting its tax base but also fostering transparency and fairness in cross-border taxation.
For foreign investors, this creates a clearer, more predictable environment. For the Peruvian government, it strengthens revenue mobilisation and demonstrates international credibility. Despite the reservations made to the MLI’s terms, it is a sign of commitment and seriousness that the Peruvian government has accepted the measures in accordance with its current management capacity, allowing it to verify its proper compliance.
Peru’s embrace of the BEPS agenda is both a safeguard against erosion of its fiscal sovereignty and a strategic step toward deeper integration into the global economy. These measures is a major step in the modernisation of Peru’s tax system, one that balances the imperatives of attracting investment with the need to adapt to the ongoing global developments in international taxation.
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Disclaimer: This article is for general informational purposes only and does not constitute legal advice. It does not create a solicitor-client relationship, and readers should seek independent legal advice for their specific circumstances. Harris Gomez Group accepts no liability for reliance on this content.