Peru: About Peru
From ExecutivePlanet.com
About Peru
Government
Peru is a democratic republic. The president and members of Congress are elected every five years by universal sufferage. The current constitutional president of Peru is Alan Garcia Pérez (2006-2011).
Surface Area
With an area of 1,285,215 square kilometers, Peru is the third-largest country in South America after Brazil and Argentina, ranking it amongst the world's 20 largest nations. Peru also holds sway over the sea up to 200 miles from the Peruvian coast and has territorial rights to an area of 60 million hectares in the Antarctic. Peru is divided into 24 departments. Lima is the capital of Peru. Peru is a nation of mixed ethnic origins. Throughout its history, Peru has been the meeting ground for different nations and cultures. The indigenous population was joined 500 years ago by the Spaniards. As a result of this encounter, and later enriched by the migration of African blacks, Asians and Europeans, Peruvian man emerged as the representative of a nation whose rich ethnic mix is one of its leading characteristics.
Currency
The official currency in Peru is the Nuevo Sol (S/.), which is divided into 100 centimos. The currency includes coins for 5, 10, 20 and 50 centimos and 1, 2 and 5 sol coins. There are bills in the denomination of 10, 20, 50, 100 and 200 Nuevos Soles.
Geography
Peru is divided into three regions. Although this simple division is a fair portrait of Peru's geography, the reality is much richer and far more complex: in Peru, nature appears to have taken on particular characteristics which have turned its mountains, plains, jungles and valleys into unique habitats. An extraordinary variety of eco-systems shelters a wide diversity of animals and plants. Coast: Which features deserts, beautiful beaches and fertile valleys...
The Peruvian coastline is formed by a long snaking desert hemmed in between the sea and the mountains. The Andes to the east and the cold Humboldt sea current that runs along the coast are what make this area so arid. From the Sechura desert to the Nazca plains and the Atacama desert, the dry coastal terrain is occasionally split by valleys covered by a thick layer of cloud and drizzle in the winter.
Humidity in these areas produces a sensation of cold, although temperatures rarely dip below 12°C. During the summer, meanwhile, the sun beats down and temperatures often top 30°C. The central and southern sections of the coast feature two well-defined seasons: winter from April to October, and summer from November to March. The north coast, meanwhile, is not touched by the effects of the cold current, which means it enjoys 300 days of sunshine a year and warm temperatures all year-long (as much as 35°C in the summer). The rain season runs from November to March Sierra: A mountainous area dominated by the Andes, where Mount Huascaran soars to 6,768 meters. In the Peruvian highlands, there are two well-defined seasons: the dry season (from April to October), marked by sunny days, cold nights and the lack of rain (the ideal time for visiting); and the rainy season (November to March), when there are frequent rain showers (generally more than 1000 mm). A characteristic of the mountain region is the drop in temperature during the day: temperatures commonly range around 24°C at midday before plunging to -3°C at night.
The steep slopes of the Andes mean temperatures gradually drop in the highest region, known as the puna, the highland plain. The dry and pleasant climate in the highlands makes it possible to grow a wide variety of crops there. Jungle: A vast region of tropical vegetation in the Amazon River Basin, home to Peru's largest natural reserves. The vast Peruvian jungle, which surrounds the wide and winding Amazon river, is divided into two differentiated areas: the cloud forest (above 700 masl), which features a subtropical, balmy climate, with heavy rain showers (around 3000 mm a year) between November and March, and sunny days from April to October; and the lowland jungle (below 700 masl), where the dry season runs from April to October and is ideal for tourism, with sunshine and high temperatures often topping 35°C.
During this season, the river levels dip and roads are easy to drive. The rainy season, meanwhile, which runs from November to March, features frequent rain showers (at least once a day) which can damage roads in the area. The jungle features high humidity all year long. In the southern jungle, there are sometimes cold spells known locally as friajes or surazos, cold fronts which drift up from the far south of the continent between May and August, where temperatures can drop to 8-12°C
Transportation
Airports: 14 airports equipped to receive commercial flights and 10 ready for international flights: Lima, Arequipa, Chiclayo, Pisco, Pucallpa, Iquitos, Cusco, Trujillo, Tacna and Juliaca. 17 airlines operating international flights and 7 airline companies offering domestic flights Ports: Peru's largest port is Callao, outside Lima. Other major ports include Paita, Salaverry, Chimbote, Callao, Pisco, Ilo and Matarani. Roads: Peru is criss-crossed by more than 78,000 km of roads, of which 16,705,79 km are national highways. Of these roads, 8,711.02 km. run from north to south and 7,994.77 km from east to west. The main roads running down the length of the country are the Pan-American Highway (North and South), which links up the towns along Peru's coast, and the Marginal Jungle Highway which links up the towns in the northern jungle with the south, near the Bolivian border. Cutting inland is the Central Highway, which starts out in Lima and runs up to the central highlands, climbing through the high mountain pass of Ticlio (Kilometer 132), which at 4,818 meters above sea level is also the world's highest railway pass. From here, the road descends to the towns of La Oroya and Tarma, continuing down to the Chanchamayo jungle valley in the department of Junín. The government plans to build another 1,819.2 km of roads in the next few years.
Religion
Roman Catholic: 89,03% Evangelical: 6,73% Other religions: 2,56% Any Religion: 1.65%
Language
- Spanish: 80,3% - Quechua: 16,2% - Other languages: 3,0% - Foreign languages: 0,2%
(Source: Promperu)
More about Peru and Tourist information
VISA Requirements for travelling to Peru
Embassy of Peru in Washington DC, USA
Passport required. Visa not required for tourist stay of up to 90 days, extendible after arrival. Tourists need onward /return ticket. Business visa requires 1 application form, 1 passport photo, company letter and fee of $30 payable by money order or cash only. For further information, contact the Consulate General of Peru in Washington DC, 1625 Massachusetts Ave. NW, suite 605, Washington DC 20036 (202-4621081/4/5) or nearest Consulate. Internet: www.consuladoperu.com
Tourist Visa
United States citizens do not need a visa to visit Peru if traveling as a tourist with a valid US passport. You must fill out the visa form; attach a copy of the passport and American visa or residence, along with a letter from the place of your work, study or other.
Once the authorization is granted, the visa will be fixed on the passport, showing the air ticket or booking and having a valid passport for the length of the trip.
The visa cost is US $ 30.00, paid in cash or money order on the name of Consulado General del Peru.
If the request is made by mail, a FedEx pre-paid envelope with name and address should be included.
US reentry permit is not accepted as a passport in Peru, therefore a valid passport must be presented in order to obtain a Peruvian visa.
You will be issued a tourist card upon entry, which is valid for up to 90 days. You may renew your tourist status at a Peruvian immigration office (Oficina de Migraciones) for 30 days. The revalidation will cost twenty (20) dollars. The main Oficina de Migraciones in Lima is located on Prolongacion España #734, in Breña (phone 330-4112).
Business Visa
Business travelers are issued three-month visas, which must be renewed quarterly at the Oficina de Migraciones. Passport must have a remaining validity of at least the length of the trip. Fill out the visa form. Include a letter from your company indicating the purpose and the length of your stay. Ensure that you have one passport picture, copy of the flight ticket, and a money order payable to Consulado General del Peru for US $ 30.00. If this procedure is done by mail, you must send a FedEx pre-paid envelope with your name and complete address to return the documents. Long-term residents should go to the Oficina de Migraciones to obtain a residency card.
Student Visa
Students are issued visas for three-month stays through a Peruvian Consulate in the U.S. Your passport must have a remaining validity of at least the length of the trip. Fill out the visa form. Include a letter from your university or educational institution in Peru, where the applicant has been accepted, indicating the purpose and the length of your stay. One passport picture, copy of the flight ticket, money order payable to Consulado General del Peru for US $ 15.00. If this procedure is done by mail, you must send a FedEx pre-paid envelope with your name and complete address to return the documents. Student visas may be renewed at the Oficina de Migraciones once the student has enrolled in a Peruvian school.
Press Visa
Peruvian consulates issue press visas to journalists traveling to Peru in official trip. The journalist must provide: A letter from the media company (print, radio, TV or Internet), explaining the purpose of the trip. A letter giving a detailed description of the equipment intended to be transported in a temporary basis to Peru. A valid passport with at least a year of duration. A copy of the Press ID, and two passport color pictures with white background. Notes A visa is an endorsement or stamp placed by officials of Peru on a U.S. passport that allows the bearer to visit the country of Peru. Note: Wherever you see the words "photo(s) required" in this publication, it generally means that you will need to submit passport-size (2"x2") photographs.
PASSPORTS
Please note that new US passports issued to US citizens in Lima need new entry stamps from the Oficina de Migraciones. To obtain a new entry stamp, travelers need to bring their plane ticket, the new passport, and a copy of the police report, if stolen, or old passport, if renewed. Travelers should be aware that they cannot leave Peru until all immigration matters, including fines and overstays, have been put in order.
VISAS
If a visa is required, obtain it from the appropriate Peruvian consular representative before proceeding abroad. Allow sufficient time for processing your visa application, especially if you are applying by mail. Most Peruvian consular representatives are located in principal cities, and in many instances, a traveler may be required to obtain visas from the consular office in the area of his/her residence. IT IS THE RESPONSIBILITY OF THE TRAVELER TO OBTAIN VISAS, WHERE REQUIRED, FROM THE NEAREST CONSULATE. As soon as you receive your visa, check it to make sure no mistakes were made. For specific details, consult www.consuladoperu.com or American Citizens Service (Embassy of United States in Peru)
ADDITIONAL FEES
All international flights are subject to U.S. Immigration and U.S. Customs fees paid in advance as part of your ticket. In addition, Peru has departure fees that are sometimes collected at the time of ticket purchase or upon exiting the country. Notes
1.- To issue a TEMPORARY BUSINESS VISA, the Consul of Peru will ask for a valid passport, a letter from the local Chambers of Commerce or private companies, explaining his/her status of entrepreneur or type of business. The Consul will issue a visa for a maximum period of 90 days.
2 .- To issue a TEMPORARY STUDENT VISA, the Consul of Peru will ask for a valid passport, a certificate from the Peruvian university or educational institution where the applicant intends to study. The Consul will issue a visa for a maximum period of 90 days.
PERUVIAN LEGAL FRAMEWORK
LEGAL FRAMEWORK FOR FOREIGN INVESTMENTS
A. Introduction PROINVERSIÓN, the Peruvian Investment Promotion Agency, has been created as strategic ally for the promotion of investments in Peru in order to boost Peru’s development.
As part of its duties, PROINVERSION is in charged of elaborating, proposing and executing the national policy on the treatment to private investment, according to the economic plans and the integration policy. Besides, PROINVERSION registers foreign investment; handles and subscribes legal stability agreements that are established under the L.D. Nº 662 y Nº 757; and investment contracts in the frame of the Regime of Anticipated Recovery of the Value Added Tax. It also promotes private investment in utilities and public infrastructure; as well as in State assets, projects and companies. In the same way, PROINVERSION presides over the commission for the negotiations of international investment agreements.
Within the scope of information and guidance duties, PROINVERSIÓN hereby presents a summary of the principal aspects of the legal framework to carry out investments in Peru. B. Legal Framework Peru has established a stable an attractive legal framework for private national and foreign investment with the purpose of attracting financial and technological resources required to develop vast natural resources and opportunities in the country. C. Constitutional Provisions The Constitution of 1993 includes provisions on essential principles to guarantee a favorable juridical framework for the development of private sector investment, and foreign investment in particular. Some of them are: Free private initiative exercised in a market-based social economy. Freedom of work and to engage in business, trade and industry. Definition of the subsidiary role for the State in economic activity. Free competition and prohibition of restrictive practices and the abuse of dominant or monopolistic positions. Freedom to engage workers. Powers of the State to establish guarantees and grant securities by means of contract law. National treatment. Right to submit controversies arising from contractual relationship with the State to national or international arbitration Freedom to hold and dispose of foreign currency. Inviolability of property and establishment of conditions for exceptional causes that empower expropriation, specifically, in-advance cash payment of a fair-value; equal treatment on taxation matters; and the express acknowledgement that no tax may have confiscating effects. D. Framework Legislation The Foreign Investment Promotion Law, approved in August 1991 Legislative Decree Nº 662, is the cornerstone of a sound legal framework that establishes clear rules and security for the development of foreign investments in the country. The general legal framework for the treatment of foreign investments is complemented by the Framework Law for Private Investment Growth, approved by Legislative Decree Nº 757 and the Regulations of the Private Investment Guarantee Systems, approved by Supreme Decree Nº 162-92-EF; as well as modifying regulations.
The legal framework governing foreign investments in Peru is based on national treatment. Foreign investments are allowed, without restrictions, in most economic activities. No prior authorization is required for foreign investments; acquisition of national investors shares is fully allowed through stock exchange or other mechanism.
As to ownership, foreign individuals or corporate bodies are in the same conditions as Peruvians. However, foreigners may not acquire mines, lands, woods, water, fuels, energy sources, within fifty kilometers from the borders, except in case of public necessity, expressly declared by Supreme Decree and approved by the Cabinet.
WTO commitments are fully abided by. No selection mechanisms or performance requirements are applied or demanded of foreign investors. In cases where investments enjoy benefits derived from the subscription of legal stability agreements with the State, requirements are the same as those established for national investors.
Every enterprise has the right to organize and develop its activities under the form it deems appropriate. All legal provisions establishing production methods or production indexes have been repealed. No prohibition or requirement to use certain inputs or technological processes, and in general, no intervention in production processes of companies over the type of economic activity, installed capacity, or any other similar economic factor is allowed. Exceptions are made for legal provisions over hygiene and industrial security, environment and health.
Foreign investment may be made in any income-generating activity, under any of the following forms established by Law : Foreign Direct Investment, as contribution to stock equity. Contributions to the development of contractual joint ventures. Investment in goods and properties located within national land. Portfolio investments In intangible technological contributions Any other investment modality contributing to the development of the country. E. BASIC RIGHTS OF FOREIGN INVESTORS Right to receive non-discriminatory treatment versus national investor. Freedom to conduct commercial and industrial activities and to perform import and export operations. Right to remit abroad profits or dividends, after payment of the corresponding taxes. Right to use the most favorable exchange rate existing in the market for any exchange operation. Right to free re-exportation of invested capital, whether from a sale of shares, reduction of capital or total or partial liquidation of investments. Unrestricted access to domestic loans, under the same conditions than national investors. Free acquisition of technology and free remittance of royalties. Freedom to acquire shares of national investors. Right to acquire insurances for investments. Right to subscribe Legal Stability Agreements with the State over investment in the country. F. LEGAL STABILITY AGREEMENTS Empowered by the Political Constitution, and under the Foreign Investment Promotion Law and the Framework Law for the Growth of the Private Investment, the State guarantees the legal stability to foreign investors and to the enterprises where they invest, through the subscription of agreements with law-contract status, and abide by the general provisions on contracts established in the Civil Code. 1. Guarantees granted by the State to Foreign Investors Stability of the right to non discrimination. Stability of the Income Tax System, applicable to investors, in force when the agreement is concluded. Stability of the system of free availability of foreign currency and remittance of profits, dividends and royalties. 2. Guarantees granted by the State the Enterprise receiving the investment Stability of the systems of labor engagement in force when the agreement is concluded. Stability of the system of export promotion applicable when the agreement is concluded. Stability of the Income Tax System. 3. Who may subscribe Legal Stability Agreements? Investors and enterprises receiving the investment, in the case of new enterprises or in the case of capital increases of the enterprises already established. Also in the case of investors participating in the privatization process and the enterprises involved in such process, whenever they fulfill the following requirements: : a. Investment commitment by Foreign Investors The investor shall fulfill one of the following investment commitments: To make, in a two-year term, capital contributions for an amount not under US$ 5 million in any economic activity, except mining and hydrocarbon sectors. To make, in a two-year term, capital contributions not under US$ 10 million in mining and hydrocarbon sectors To acquire more than 50% of shares of an enterprise participating in the privatization process. To make capital contributions in a concession contract, fulfilling the investment requirements established in the pertaining contract. b. Requirements for Receiving Enterprises One of its shareholders shall have concluded the corresponding Legal Stability Agreement. In case tax stability is requested, contributions shall account for 50% increase in relation with the total amount of capital and reserves, and shall be destined to the expansion of the production capacity or to the technological development of the enterprise. The case of transfer of more than 50% of shares of an enterprise participating in the privatization process. The case of an enterprise involved in a concession contract, fulfilling the investment requirements established in the pertaining contract. c. Term The term of Legal Stability Agreements is 10 years. In case of concessions, the term of the legal stability agreement shall extend to the term of the concession. d. Settlement of Disputes Legal stability agreements derive settlement of disputes to arbitral tribunals. G. Investment Agreements in the International Scope Peru has had a very active participation in the negotiation of instruments of bilateral, regional and multilateral nature, in order to consolidate the juridical framework that guarantee and protect investments and aid the creation of an adequate climate to encourage bigger foreign investment flows. Those instruments have the purpose of setting forth guarantees for the treatment, protection and access to mechanisms of settlement of controversies applicable to investments.
Up to date, 31 bilateral treaties on the promotion and reciprocal protection of investments have been signed with countries of the Pacific Basin, Europe and Latin America, as well as the FTA with the United States of America (already approved by both Congress), includes an Investment Chapter. Likewise, Peru has subscribed the OPIC agreement that facilitates operations granting coverage to investments from USA carried out in Peru. Peru is also member to MIGA and a signatory to the ICSID Convention, as well as to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. H. Investment Incentives 1. Special Regime of VAT Anticipated Recovery 1/ This regime allows the refund of VAT paid for imports and/or domestic acquisitions of new capital goods, new intermediate goods, services and construction contracts, made in the pre-operation stage to be used by the beneficiary of this Regime directly for the execution of projects foreseen in Investment Contracts and that has been used for operations burden with the VAT or exports. 1.2. To enjoy the Regime Natural or corporate bodies investing in any sectors of the economic activity that generate third class income (corporate bodies) and fulfill the following requirements: Subscription of Investment Contract with ProInversión and the pertaining sector, on behalf of the State, with investment commitment, during the pre-operation stage, for no less than US$ 5 0000 0000.00 (Five million dollars). Said amount does not include the VAT. Minimum amount mentioned will not applied to agriculture projects. The project requires a pre-operation stage equal or larger than two years, counted as from the starting date of the investment schedule included in the Investment Contract. To have the Supreme Resolution signed by the Minister of Economy and the minister of the pertaining sector, approving the persons entitled to enjoy this regime, as well as goods, services and construction contracts that will grant the VAT Anticipated Recovery, for each contract. 2. Tax Refund of Value Added Tax 2/ This regime allows the refund of tax paid or transferred on imports and/or domestic acquisitions of capital assets, intermediate goods, services and construction contracts during the pre-operation stage of infrastructure and public utilities, provided that they have been destined to operations not burdened with such tax and are used directly in the execution of investment projects in infrastructure works and public utilities. This regime will apply upon the subscription of the Investment Contract. 2.1. To enjoy the Regime Corporate bodies who have subscribed a Concession Contract under the Supreme Decree Nº 059-96-PCM and modifying regulations, and fulfill the following requirements are entitled to enjoy this regime. Subscription of Investment Contract with ProInversión and the pertaining sector, on behalf of the State, to invest in infrastructure and public utilities a minimum amount of US$ 5 0000 0000.00 (Five million dollars) as total investment amount included the pre-operation stage than. Said amount does not include the VAT. To have the Supreme Decree that qualifies to enjoy the regime, issued by the Ministry of Economy and Finance, with the approving vote of the Cabinet. To be in the pre-operation stage of the infrastructure or public utilities project matter of the Investment Contract. 3. Agriculture Sector Incentives The State has declared that investment and development of the agriculture sector has the highest priority. Thus, it has devised incentives applicable to individuals or corporate bodies that develop cultivations and/or breeding, excepted by the forestry industry. Likewise, individuals or corporate bodies carrying out agribusiness activities may also enjoy those incentives, provided they mainly use agrofarming goods directly produced or acquired by people developing and/or breeding activities in zones where such goods are produced, outside Lima Province and Constitutional Province of Callao. Agribusiness activities related to wheat, tobacco, oleaginous seeds, oils and beer are herein excluded. a. Tax Benefits Income tax shall be determined by applying 15% rate over the net income Corporate bodies may depreciate 20% per year, the amount invested in hydraulic infrastructure and irrigation works. During pre-production stage and in a maximum term of 5 years, individuals or corporate bodies may request the refund of the Value Added Tax paid for the acquisition of capital goods, inputs, services and construction contracts. Tax benefits apply up to December 31, 2021. b. Labour and Social Security Regime Employers of the agriculture sector are entitled to hire personnel for indefinite or definite terms. If the latter, the contract’s term shall depend on the agriculture activity to be developed. Accumulative working hours may be established due to the special nature of work, provided the number of working hours during the term of the contract does not exceed in average maximum limits set forth by Law. Overtime payment shall be granted only when such an average is surpassed.
A special labour and social security regime, with the following characteristics, has been created: A four-hour working day, vacations of 15 calendar days, compensation equivalent to 15 daily salary per worked year (180 salaries maximum). Monthly contribution to Health Insurance system for workers engaged in agricultural activity, borne by the employer, shall be 4% of each worker’s monthly wage. 4. Aquaculture Sector Incentives The State promotes aquaculture activity, which includes organized and technical cultivation of hydrobiological species in selected, controlled, natural, conditioned or artificial environment; in partial or complete biological cycle; in sea, continental or salty waters. Aquaculture activity also includes research and primary processing of products resulting of such activity. a. Tax Benefits Individuals and corporate bodies engaged in aquaculture activities shall pay a 15% rate over the net income for purposes of Income Tax. Tax benefits shall be in force up to December 31, 2010, and shall be applied without prejudice on any other tax benefit granted to promote economic activities in specific zones of the country. These specific benefits shall be in force according to the relevant legislation. b. Labour and Social Security Regime Employers of the aquaculture sector are entitled to hire personnel for indefinite or definite terms. If the latter, the contract’s term shall depend on the aquaculture activity to be developed. Accumulative working hours may be established due to the special nature of work, provided the number of working hours during the term of the contract does not exceed in average maximum limits set forth by Law. Overtime payment shall be granted only when such average is surpassed.
A special labour and social security regime, with the following characteristics, has been created: A four-hour working day, vacations of 15 calendar days, compensation equivalent to 15 daily salary per worked year (180 salaries maximum). There is a monthly contribution to the Health Insurance system for workers engaged in agriculture activity, borne by the employer, which shall be 4% of each worker’s monthly wage. 5. Amazon Region Law With the aim of encouraging sustained and integral development of the Amazon Region, special tax conditions have been established in order to favor private investment: Taxpayers located in the Amazon Region, mainly engaged in the following activities: agro-farming, aquaculture, fishing, tourism; manufacturing activities related to the processing, transformation and commercialization of primary products derived from the before mentioned activities and forestry transformation, provided those products are produced in that zone; and, activities of forestry extraction, shall apply, for purposes of Third Category Income Tax, a 10% or 5% rate, according to their geographic location. Taxpayers of Amazon Region who are mainly engaged in agriculture activities and/or transformation or processing of products considered as native and/alternate culture in such zone, shall be exempt from the Income Tax. In the case of oil palm, coffee and cacao, the exemption shall be applicable only to the agrarian production. Transformation or processing companies of those products shall apply a 10% or 5% rate, according to their geographic location. Companies engaged in commerce activities in the Amazon Region that reinvest a minimum of 30% of their net income in the Investments Projects may apply, for purposes of the Third Category Income Tax, a 10% or 5% rate, according to their geographic location. Companies located in Loreto, Ucayali or Madre de Dios Departments are exempt from VAT and Excise Tax for sales made in those Departments for internal consumption. 6. Special Zones a. Centers of Export, Transformation, Industry, Commercialization and Services– CETICOS. CETICOS are geographical areas duly delimited with custom primary zone status and special treatment, destined to generate development poles through industrial, maquila, assembling or storage activities. CETICOS are located in Paita, Ilo and Matarani cities.
Agribusiness and agro-exporting activities could be developed at CETICOS. Agribusiness activity is primary transformation of agrofarming products produced in the country. Said transformation must be carried out at CETICOS. Tax Benefits Companies engaged in industrial, maquila or assembling activities, established or set up in the CETICOS, until December 31, 2012, are exempt from Income Tax, VAT, Excise Tax, Municipal Promotion Tax, as well as from any other tax, fee, contribution levied by the Central Administration, even those tributes that require express exempt regulation. Companies established at CETICOS Tacna that carry out repairing and reconditioning activities of used vehicles may continue carrying out their activities within ZOFRATACNA up to December 18, 2008. Entry to CETICOS of goods unloaded in Ilo, Matarani and Paita ports are not levied by Custom Duties, VAT, Municipal Promotion Tax, Excise Tax or any other tribute levied on importation. Entry of national goods and rendering of services coming from national territory to Ilo, Matarani and Paita CETICOS shall be considered to be exportation. In the case of definite exportation, regulations on simplified refund of Custom Duties and VAT, as well as any other tax regulation related on exportation, shall apply. Entry of goods from abroad, through any Customs of the Republic, destined to CETICOS, provided those goods are to be destined to the re-shipment to abroad or foreign goods that once transformed at the Centers are to be exported abroad. The entry of goods through Customs under a jurisdiction different to any CETICOS, shall be made under the Transit Customs Regime. Goods produced by users of CETICOS may enter the rest of the national territory under the Regimes of Temporary Admission, Temporary Importation and Replacement of Raw Materials and Input. Income derived from the re-sending abroad of foreign goods are exempt from Income tax. Entry of goods to the rest of the national territory coming from CETICOS are subject to custom duties, Value Added Tax, Excise Tax, Municipal Promotion Tax, and other pertaining import tributes. b. Tacna Duty-Free Zone (ZOFRATACNA) The Tacna Duty-Free Zone –ZOFRATACNA- was created to contribute to the sustainable socio-economic development of the Tacna Department. There, industrial, agribusiness, assembly /3 and service activities can be carried out. Also included are storage, distribution, disassembly, packaging, packing, marking, labeling, division, exhibition and sorting of merchandises, among others. Additionally there can be activities such as mining machinery, motor and equipment repair, reconditioning and/or maintenance, among others, according to a list approved by a Ministerial Resolution from the Ministry of Production in coordination with the Ministry of Economy and Finance /4. Tacna Industrial Zone Tacna Free Zone is a closed space with a total area of 390 hectares. 120 hectares have services such as optical fiber, electric power, water, sewage, roads, sidewalks, parking, green areas, etc. Tax Benefits Users that set up or establish at ZOFRATACNA to carry out activities above mentioned, are exempt from the Income Tax, Value Added Tax, Excise Tax, Municipal Promotion Tax, Solidarity Tax, as we all from every tribute from the national, regional and municipal administrations, created or to be created , even those requiring express exemption rule, exemption is made to ESSALUD contribution and fees. Operations arranged between Duty Free, users are exonerated from the Value Added Tax and from the Municipal Promotion Tax, previous authorization from the ZOFRATACNA Adminsitration. Goods coming from outside that enter ZOFRATACNA through Ilo and Matarani ports, Tacna airport and Peruvian port in Arica, may enter ther Tacna Trade Zone, provided they com from Free Warehouses located in ZOFRATACNA, paying a Special Tariff. Final entry of goods produced in the country and supply of services coming from the rest of the national territory to ZOFRATACNA will be considered as export. It will apply the regulations regarding simplified restitution of customs duties and Value Added Tax, as well as any other concerning taxing issues in connection with exports. Goods entering with temporary status, qualify as temporary exports. At re-entry of goods resulting from passive perfecting to the rest of the national territory, import taxes will be calculated on the added value. Import of residuals, wastes and/ or sub-products with commercial value resulting from goods exported temporarily for passive improvement is not burden with any tribute. Users of ZOFRATACNA may enter machinery and equipment, tools and spare parts imported to ZOFRATACNA and will benefit from a special regime of suspension of tariff, duties and other taxes on imports . Tacna Trade Zone It is a commercial area that includes Tacna district and part of the district of Alto de la Alianza in Tacna Department, in the south of Peru. Goods coming from Free Warehouses of the Free Zone may enter this area only paying 8% CIF value. Many malls sell tax-free goods at low prices. To enjoy those prices, the visitor of Tacna must have the status of a tourist. In such a case, the tourist must present a "Declaración Jurada de Equipaje" (Affidavit of Bagagge) at the land terminal or at the airport, in order to guarantee that his/her products arrive to their destination without any problem. 7. Exchange Regime As to the exchange regime, the State guarantees free availability, use and disposal of foreign currency by individuals and corporate bodies residents of Peru. Likewise, the State guarantees free convertibility of foreign currency at a unique exchange rate. 8. Free competition and protection to intellectual property The State regulates the exercise of dominant position in the market and protects intellectual property. The National Institute of Protection of Intellectual Property – INDECOPI, is the agency in charge of applying legal provisions on the Defense of Competition and protecting market from monopolistic practices, which may control and restrict competition in the production and commercialization of goods and rendering services, as well as practices that may generate unfair competition and those affecting market agents and consumers.
INDECOPI, as well, controls and punishes application of dumping and subsidies practices; defends consumers’ right; and, looks after the fulfillment of regulations that punish practices against commercial good faith; defends regulations on free trade; controls provisions establishing non-tariff restrictions. It also revises actions and provisions of Public Administration entities, included within municipal or regional scope, which may impose bureaucratic obstacles impeding or hindering, unlawfully or irrationally, the access or permanence of economic market agents. Besides, INDECOPI shall protect intellectual property rights, under any expression, and shall act as registration office of intellectual property. I. PROMOTION OF PRIVATE INVESTMENT ON PUBLIC INFRASTRUCTURE WORKS AND UTILITIES The Single Arranged Text approved by Supreme Decree Nº 059-96-PCM establishes that promotion of private investment on public infrastructure works and utilities is to be carried out through concessions.
PROINVERSION, is the competent national agency in charge of promoting investment projects under concession modality. At the regional or local level, the regional or municipal governments themselves are competent for promoting investment projects within their jurisdictions. The Special Committee on Assets and State Projects and Companies and the Special Committee on Infrastructure and Utilities Projects at PROINVERSION awards concession for public infrastructure works and utilities. The concessions are awarded through national or international Special Public Call for Tenders or Integral Projects Competitive Bids and are formalized with the subscription an administrative agreement. The concession of agreements awards the concessionaire the execution and exploitation of certain public infrastructure works or the delivery of utility services for a certain term.
The concession agreement shall establish in its case the mechanisms that will assure the concessionaire the receipt of revenues for toll, prices, user fees or any other systems to recover investments, according to the nature of the concession. The concessionaire may not exempt any one user. Concessions may be awarded under any of the following modalities: By payment (the concessionaire is required to make a cash payment or grant a percentage of revenues to the Peruvian State). For free Co-funded by the State (with gradual payments during the construction or exploitation stages, refundable or not). Mixed, when more than one of the above modalities concur. As compensation for the works and services it exploits, the concessionaire shall receive: The fare, price, toll or any other investment recovery system established. Additional benefits expressly agreed in the agreement, such as concessions for tourist services, self-service stores, advertising, and others. The concession term is that stated in the agreement, which in no case shall exceed sixty (60) years. The term shall be computed as from the date the respective agreement was entered into.
The State may submit equity controversies derive from concessions to national or international arbitration, as provided in the Political Constitution of Peru, even if the agreement is not entered into.
Likewise, concessionaires may hire insurances, in the country or abroad, to cover their investments against commercial and non-commercial risks. Concessionaires may include the following benefits in the agreements: Regime of the Anticipated Recovery of the Value Added Tax. Annual depreciation of goods under concession, or, total depreciation of such goods during the remaining period until the concession term is due. When the concessionaire requires it or by default, the State may enforce the regulations and sanctions corresponding to users of the service under concession, as foreseen in the corresponding legal regulations and concession agreement provisions. J. Promotion of private investment in the field of enterprises included in the State Entrepreneurial Activity and State Entities (Legislative Decree Nº 674, Law for Promoting Private Investment in State Companies and Law Nº 26440) The Private Investment Promotion Agency –PROINVERSIÓN- centralizes decision making as the highest ruling body in charge of designing and leading investment promotion in the field of companies included in the State’s Corporate Activities and other State entities. Therefore: It establishes in which companies included in the State’s Corporate Activity any of the promotion modalities shall be applied. It defines the modality to be employed. It approves, prior to its execution, the Private Investment Promotion Plan regarding each one of the respective companies. It publishes the agreement draft and the definitive agreement on the transfer of State’s shares and assets in the official gazette “El Peruano”. The modalities through which private investment promotion is conducted are the following: 1. Transfer of shares and/or assets a. Sale of State owned shares and/or assets must be made by public offer, by: a.1. Sale through Stock Exchange, over the Counter or Floor Transactions. Shares not listed in the Stock Exchange may be listed in it. Transactions with stock shall be conducted as per regulations concerning this subject. Likewise, shares not listed in the Stock Exchange may be assigned through the Floor Transactions. a.2. Sale in public bidding The following shall be applied for sales of State-owned shares and/or assets in public biddings: The bidding procedure shall be approved, as well as the payment procedure and the system to evaluate and score proposals. Calls for tenders shall be made through Peru’s official gazette “El Peruano” and two newspapers sold nationwide. Shareholders shall have full access to all the information concerning the company’s situation.
A Notary Public shall participate in the reception of proposals and contract award. The contract shall be awarded to the best proposal submitted. In addition, the sale may be subject to the commitment of making new investments in the way and conditions defined.
2. Capital increase Selection of new shareholders shall be carried out through calls for public tenders approved by PROINVERSIÓN.
3. Joint ventures, partnerships, service delivery, leasing, management, concession or other similar.
The Special Committees, established by Supreme Resolution and approved by PROINVERSIÓN, shall select among several candidates, considering that their service quality and cost conditions proposed are among the most competitive in the market. 4. Disposal of or sale of company assets, when carried out, due to their dissolution and liquidation.
When applying this modality, the company shall be understood as legally dissolved and the respective liquidation procedure as started, as per the relevant legal provisions. PROINVERSIÓN is the competent agency to promote private investment in State owned companies and assets. Regional and Local government are authorized by law to promote their own private investment projects on companies and assets they own. The Special Committee on Assets, State Projects and Companies and the Special Committee on Infrastructure and Utilities Projects lead processes executed under Legislative Decree Nº 674. K. LEGAL FRAMEWORK TO PROMOTE DECENTRALIZED INVESTMENT By Law Nº 27783, Base Law for Decentralization, issued in 2002, the first stage of the country’s decentralization process starts and the chapter on decentralization of the Political Constitution –regulating the State organization in a democratic, decentralized and de-concentrated fashion- is developed in what corresponds to the national government and the regional and local governments.
Likewise, the regulations on administrative, economic, productive, financial, tax and fiscal decentralization are defined. On the other hand, the aforementioned law establishes the organization of regions (at this first stage the regional governments are established as constituted on the territorial jurisdiction of Peru’s departments) and municipalities. The law establishes exclusive, shared and delegated competencies at the three governmental levels and determines the local and regional governments’ assets and resources. It also regulates government relations in its different levels.
Law Nº 27867, the Organic Law on Regional Governments, establishes that regional governments exercise certain general duties subject to the juridical order established by the Constitution, the Base Law for Decentralization and other laws of the Republic. Also, these laws develop specific functions, based on regional policies, which are formulated as per national policies on that subject matter.
By virtue of this law, Regional Governments are authorized to promote private investment projects in their territorial jurisdictions and within the framework of their functions and operations. To that effect, they may grant concessions and enter into any kinds of agreements seeking to promote private investment on regional property. However, the law establishes that to do so regional governments may request technical assistance from specialized entities such as PROINVERSIÓN.
Law N° 27972, which approves the new Organic Law of Municipalities, lays the foundations, among other aspects, for local governments to be able to undertake their own private investment promotion processes both in what refers to the sale, leasing of assets or similar modalities and to granting concessions for public infrastructure works and utilities. This means that each municipality is legally authorized to promote the execution of private investment projects as per its jurisdiction and functions, be it directly or with the technical support of PROINVERSIÓN. Decentralized Investment Promotion Law Nº 28059, Framework Law for the Promotion of Decentralized Investment and its regulations approved through Supreme Decree N° 015-2004-PCM, sets forth the regulatory framework so that the State, at its three government levels (national, regional and local), may promote decentralized investment as a tool to achieve integral, harmonic and sustainable development in each region, through strategic alliances among regional and local governments, private investment and civil society. 1. Private Initiatives on State Resources Treatment of private investment promotion involving State resources –assets, companies, projects, services, public infrastructure works and utilities- and resulting from private initiatives has been regulated. In this regard, there are certain requirements and a procedure by virtue of which, once a private initiative is approved and published, and interested third parties do not come forth, the initiative author shall be favored with direct adjudication or concession.
It must be noted that the document through which the private initiative is approved will acknowledge duly substantiated expenses, which shall be assumed by the grantee. 2. Relationship between Regional Governments and National Government The following minimum criteria shall be observed in the relationship between regional governments and the national government in connection with investment projects: a. Investment projects developed after initiative of two or more regional governments shall have the participation of PROINVERSIÓN. b. National projects developed in the regions shall foster participation of the regional government(s) of said jurisdictions. c. Projects developed with the participation of the national government shall benefit from the relevant national and regional regulations concerning investment existing at the time of execution at any government level. d. National projects shall foster the constitution of Interregional Coordination Councils, thus promoting development of the necessary capacities for the decentralized administration of assets, companies and projects. 3. Technical Assistance from PROINVERSION PROINVERSION is empowered to provide regional or local governments with whatever they may need, such as technical assistance for the design and management of private investment promotion processes. This assistance is subject to PROINVERSION budget and the qualification of investment projects, and previous approval from the Directive Council. 1/ By Legislative Decree Nº 973, published in the Officcial Gazette El Peruano on Saturday, 8th March, 2007, the Special Regime on Anticipated Recover of the Value Added Tax was established. This regulation refers to the execution of investments in any sector of the economic activity that generate third category income, involving an investment commitment over US$ 5 million (this minimum amount does not apply to the agriculture sector), in a project which pre-production stage is equal or over two years. 2/ By Law Nº 28754, published on June 6th, 2007, overcharges on the supply of infrastructure public works and utilities made with private or public investment were removed. 3/ According to Supreme Decree countersigned by the Ministers of Foreign Trade and Tourism, Production, and Economy and Finance, other activities may be included. 4/ Execution is understood as the construction, repair and/or enlargement of the works. Exploitation refers to the operation of said works or service delivery.
