Investing in Peru: A Tool to Protect Your Investment

Peru-Currency

The Peruvian government is focused on delivering stable growth by encouraging investment in the various sectors of the economy. It is executing this strategy by simplifying procedural steps and making investments a national priority.

Similar to Chile´s foreign investment law known as DL 600, Peru also has legal stability agreements that can protect investors and companies who are investing in Peru.

Under Chile´s DL 600, investors bringing capital, physical goods and other forms of investment into the country may ask to sign a foreign investment contract with the Chilean state, which includes a non-discrimination guarantee and a complaint mechanism to ensure its effectiveness.

In the case of the mining industry, DL 600 has a clause that guarantees the stability of the tax regime on mining activities. The clause is applicable to mining projects worth at least US$50mn and grants the investor a fixed corporate income tax rate for 10 years.

In Peru, PROINVERSION enters into legal stability agreements with investors on behalf of the state. The legal stability agreements have the rank and force of law and stabilise the granted rights for 10 years from their subscription dates.

Among the rights that are stabilised are the following:

  1. Income tax
  2. The right to remit abroad the total capital and dividends of the company
  3. Most favorable exchange rateEmployment regime
  4. Export-oriented regimes, such as temporary admission, duty-free zones, etc.

Peru´s legal stability agreements differ slightly from Chile´s DL 600 in that companies are eligible for a legal stability contract with a minimum investment of US$ 5 million in all sectors except mining and hydrocarbons. In these sectors, a minimum investment of US $10 million is required to be eligible.

Legal stability can expire in two ways: if the investment is not made within the prescribed period and if the investment is not registered on time or the agreement is transferred without the consent of PROINVERSION.

Generally, the term is 2 years from the signing of the agreement. In the case of state concessions to develop public infrastructure and public services, the respected concession contract is relied upon and not the general 2- year term.

What guarantees does the legal framework recognise for investors, whether domestic or foreign?

  1. The right to have contractual terms that cannot be modified by laws or other provisions of any kind
  2. Free access to all productive sectors
  3. Right to non-discrimination between Peruvians and foreigners, or between private and public companies
  4. The right to receive all the profits or dividends, which they are entitled to
  5. Right to use a more favourable exchange rate available in the exchange market
  6. Subscribe legal stability agreements with the state

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