Peru is the latest South American tax jurisdiction seeking to add VAT collection and remittance obligations to the sales of digital services by foreign suppliers. A Bill was introduced to Peru’s Congress on September 10.
Peru is following the legislative path already taken by neighbours Ecuador as well as Paraguay, Argentina, and Chile. As is common in South America (Chile apart) the obligation for the collection of the VAT – to be applied at a rate of 18% – on these online sales will lie with domestic financial intermediaries, e.g. local bank card issuers. The aim is that these financial intermediaries to such transactions will act as withholding agents for the VAT due.
A Bill proposing the introduction of such a tax regime was presented to the Peruvian Congress on September 10. There is currently no implementation date for these proposed new rules.
It should be noted that the ‘intangible’ supplies targeted here (e.g. ebooks, software, digital audio subscriptions to name but a few) are already taxed in Peru when sold to local businesses via reverse charge. The Bill presented to Congress attempts to address the issue of VAT as applied to the B2C supplies of foreign sellers. The proposed legislative change is intended to be applicable to “subscriptions to audio, video or similar digital platforms provided by foreign suppliers”.
It remains to be seen if, like other South American jurisdictions, Peru intends to publish a list of foreign suppliers. In neighbouring Ecuador, for example, its published list has two aims: 1. It is a list of foreign suppliers so withholding agents (local bank card issuers) know what transactions to withhold tax on, and 2. It shows what foreign suppliers have the option to voluntarily register themselves to collect and remit the VAT due on their sales to customers in Ecuador.
Acknowledgements: Thanks to Luciana Yanez, of Zuzunaga, Assereto & Zegarra Abogados, and to Rafael Martinelli, of Garrigues, for their help with this article.
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