Peru enacts new rules taxing non-resident digital service providers

Under the Decree, such business-to-customer digital services transactions will be taxed at this new 18 percent VAT rate. Digital services are defined as any service that is made available to the user through the internet, platforms or technology used by the internet, that are automatic and not viable without internet access.

Such services include: streaming services, such as Netflix; information storage, such as Google Drive; access to social networks or the provision of extra paywalled features, e.g., LinkedIn Premium; online magazines or newspapers that are subscription-based; remote conferencing services; and intermediation in the supply and demand of goods or services, e.g., AirBnB.

It also applies to intangible goods imported via the internet; in other words, those downloaded permanently by the purchaser, such as software.

Non-resident digital service providers will be required to withhold the VAT on the purchase of any of these goods or services by individuals. The VAT return must be filed and paid directly to the Peruvian tax authority on a monthly basis, either in PEN or USD.

The Decree sets out that non-resident providers are not required to establish a domicile in Peru, nor will registration with the Single Taxpayers Registry trigger the creation of a permanent establishment in the country.

The Decree will officially come into force when the regulations are issued, with VAT collections to be effective from October 1, 2024.

Sources

• Baker McKenzie
• EY
• Garrigues (Spanish)
• STEP Latin America News May 15, 2024: Bill presented to allow Peru’s executive branch power to legislate on tax and reporting matters