Peru’s tax authorities issued a ruling on 14 June 2024 on the tax treatment of digital services, which states that services referenced in the Income Tax Law and regulations as digital services will always be deemed to be digital services regardless of whether the services meet all the requirements to qualify as such.
Under the Income Tax Law and the regulations thereunder, services provided by a nonresident supplier to a resident customer can qualify as digital services if all the following requirements are met:
Based on the tax authorities’ ruling, digital services that lack one or more of the recognised characteristics (e.g., they are not automatic) still will be considered digital services if they are listed in the regulations. Therefore, according to the tax administration, it is not necessary to meet all the characteristics of a digital service for a service t\to qualify as such.
Under Peruvian law, Peruvian-source income derived from digital services is subject to a 30% withholding tax if the services are used or consumed in Peru. The tax authorities’ ruling suggests an interpretation that does not align with a literal and strict reading of the regulations. In this situation, for companies to properly withhold the tax, they will need to decide whether to follow the criteria in the ruling or that in the Income Tax Law.
Marcela Priori
Gherard Garaycott Ortiz
BDO in Peru
Under the Income Tax Law and the regulations thereunder, services provided by a nonresident supplier to a resident customer can qualify as digital services if all the following requirements are met:
- The services are offered through the internet or similar technology
- The services are automatic and require minimal human intervention; and
- The services depend on information technology.
Based on the tax authorities’ ruling, digital services that lack one or more of the recognised characteristics (e.g., they are not automatic) still will be considered digital services if they are listed in the regulations. Therefore, according to the tax administration, it is not necessary to meet all the characteristics of a digital service for a service t\to qualify as such.
Under Peruvian law, Peruvian-source income derived from digital services is subject to a 30% withholding tax if the services are used or consumed in Peru. The tax authorities’ ruling suggests an interpretation that does not align with a literal and strict reading of the regulations. In this situation, for companies to properly withhold the tax, they will need to decide whether to follow the criteria in the ruling or that in the Income Tax Law.
Marcela Priori
Gherard Garaycott Ortiz
BDO in Peru