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Peru introduces new VAT rules on digital services rendered by non-residents, import of intangible goods
August 2024
What happened?
In early August, Legislative Decree 1623 (the Decree) was published introducing new VAT provisions on digital services rendered by foreign entities and the import of intangible goods within Peruvian territory. These provisions cover a wide range of intangible goods and digital services.
Why is it relevant?
These provisions impose significant local compliance requirements on non-resident service providers, such as acting as VAT perception agents, registering before the Peruvian tax authority (SUNAT), and obtaining a local tax ID (RUC), as well as adhering to other local tax regulations. The change is intended to increase tax collection on the provision of digital services and import of intangible goods.
Actions to consider
Foreign digital service providers should understand these new regulations in order to comply with the new requirements, if applicable.
On August 4, 2024, the Peruvian Executive Branch published the Decree, which introduces changes to the local VAT law. Regulations are expected to be published within the next few months.
Main changes introduced to the VAT law
Local end-user individuals who use digital services or end-user individuals who import intangible goods within the Peruvian territory are subject to VAT to the extent the end user resides in Peru. This is deemed to happen when (1) the device used for consuming digital services has a Peruvian IP or SIM card, (2) the payment for such services is made using a Peruvian debit or credit card (or any other product provided by the Peruvian financial sector), or (3) the end user adds a Peruvian address as billing address.
Digital services
Digital services generally are defined as services that are mainly automatic, would not be viable without the applicable technology, and that are provided to users through the internet, platforms or technology used by the internet.
The Decree provides the following examples of digital services:
- Access and/or transmission of images, series, movies, documentaries, videos, music, and any other digital content through streaming or other technology;
- Cloud storage services;
- Access to social networks and additional content or features;
- Online newspapers and magazines;
- Remote conferencing services; and
- Online marketplaces of goods or services.
Digital import of intangible goods
The Decree generally defines the digital import of intangibles goods as the acquisition of intangible goods that are downloaded in a definite way by the acquirer through the internet, platforms, or any other red through which intangible goods may be similarly downloaded.
Collection
When the end user is a Peruvian individual who does not perform business activities, the non-resident provider is required to act as perception agent for the applicable VAT as of the first calendar day of the following month to the month when the non-resident started operations. In certain cases of intermediation, a withholding obligation could apply.
For such purposes, non-resident providers must register with SUNAT and obtain a local tax ID number (RUC).
The Decree describes how the non-residents must apply and collect the applicable VAT. Different methodologies apply to providers of digital services/intangible goods and marketplace providers.
For the collection to apply, the non-resident providers will need to assert (1) that the services/goods will be used/consumed in Peru and (2) in the case of end-user individuals, that they do not perform any business activity.
Compliance
Non-resident providers must file a VAT tax return with SUNAT informing the service provided or intangible goods imported, and the corresponding VAT collected and paid to SUNAT. The VAT tax return and remittance of the VAT collected must be performed within the first 10 business days of the following month the service was provided. This tax return and the remittance of the VAT paid can be performed in PEN or USD. SUNAT may require that the non-residents file an annual return by issuing regulations on the matter.
Non-resident providers who fail to act as perception agents and/or to register will be included on a list of non-compliant foreign suppliers. This list will be published and updated by SUNAT on an annual basis. With respect to non-compliant providers, Peruvian banks, telecommunication companies, and other financial institutions are designated as responsible for collecting the omitted VAT via credit or debit card charges or digital wallets.
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