The current global health crisis has been a driving force in the development of technology to enhance connectivity between people and productive organizations in our society. Peru is no exception to this trend, which is now a key factor for both current and future business.
In this regard, technology transfers from non-resident companies to other companies has made it necessary to analyse the possible ways of doing so through an industrial rights agreement, while also imposing the applicable Peruvian taxes on these kinds of operations, essentially, income tax and IGV (General Sales Tax) for non-residents.
“Technology transfers can be made in three different ways: a technological equipment sales agreement, a know-how agreement, and a technical assistance agreement. All of these have different tax implications for a company”, explains Héctor Aldea, director of Englobally Perú.
Technological equipment sales agreements: imported technological equipment (tangible goods) will be handled by SUNAT-Customs for tax purposes, so the taxes applied will be for the import of goods. In general, this is defined by a tax basis, which is the specified customs CIF amount, following the W.T.O. Customs Valuation Agreement, plus a four-tiered tax rate by the national subheadings of 0%, 4%, 6%, and 11%.
Know-how agreements: when the knowledge owner transfers their knowledge to third-parties if said transferring party is a non-resident and the third-party acquiring the knowledge is a company located in Peru, a Peruvian Income Tax (royalties) will be incurred, the payment of these royalties will be subject to a 30% withholding from the income tax. In regard to the general sales tax, it will be a taxable service at a rate of 18%, with the service user having to bear the tax expenses.
Technical assistance agreements: this is the rendering of a service related to a previous technology transfer, usually a know-how or technological equipment sales agreement. It is a lateral service related to these two kinds of transactions and is essentially the application of technological knowledge to train and teach the acquiring party about the technology (how to use it). It will be subject to a 15% income tax withholding, and regarding the IGV, it will be a taxable service at a rate of 18%, with the service user having to bear the tax expenses.
Last year Cepal recommended that Latin American countries adopt OECD recommendations and amend their national legislation so that foreign digital service providers pay sales taxes in each country. As of the end of last year, Peru has imposed taxes on digital platforms. For tax purposes, the Peruvian regulations are still being implemented, and there is a recognition process being undertaken for each kind of service provided across digital platforms. However, in accordance with SUNAT reports and the existing regulations, these operations are considered as:
Digital service agreements: these are services provided over the internet and are usually automated, depending on the specific online technology. A digital service is characterised by its automation, and we must distinguish it from those presential services provided over the internet, and not automated services. If a service is provided by means of a real-time meeting, it is not a digital service even though online technology is being used, as the service is not automated. This will be subject to a 30% IR (Income Tax) withholding, and concerning the IGV, it will be a taxable service at a rate of 18%, with the service user having to bear the tax expenses.
Online platform training services: The person who uses the service accesses it via a user account and password to learn a skill or content. They gain access to uploaded content, and the service is not provided by anyone in particular, as it is mostly content loaded on to an internet server.
Social media advertising: Facebook, Google, and other platforms allow companies and individuals to offer their services via these means. If a Peruvian company pays for these services, it must take into consideration Peruvian income tax and withhold 30%. Television channel services offered via online technology or platforms offering uploaded films such as Netflix will also fall under this category.
Transport Apps and other services: Transport services such as Cabify and Uber, as well as letting platforms such as Airbnb are also classified. Some of these are classified as digital services provided to users, and others are deemed as third-party intermediates between the service consumers and providers.
Computer licensing or software agreements: When a non-resident company transfers software licenses, whether packaged or standard, meaning that they are made or adapted to the user’s needs and only intended for their use and not for any reproduction or financial gain this will be deemed as the acquisition of an intangible good. This means that the no capital gains tax in Peru will be acknowledged, so there will be no Income Tax withholdings. In the case of Peru, it has been made clear that whoever is acquiring the software is not paying royalties (report 62-2014/SUNAT and report 017-2011/SUNAT).
“On the other hand, if it is a software to be used for financial gain in Peru, namely the distribution of the software for the financial gain of the license holder in Peru, the payment made from Peru to the foreign license holder will be classified as a royalty payment, meaning that it is a taxable payment in Peru at a rate of 30% of the IR. It would also be a taxable service at a rate of 18% with the service user having to bear said tax expenses”, concluded Héctor Aldea, director of Englobally Perú.