The 25 points you must know before investing in Peru

There are, at least, 25 keys that you should know before investing in Peru: Incorporation, Tax, Social Security, Expats…

The 25 points you must know before investing in Peru

1. In Peru, local investors and foreign investors are treated under the same regime of equality; without privileges
2. The incorporation of a company in Peru can be drafted for up to 24 hours before, generally for micro-enterprises according to SUNARP (Superintendencia Nacional de los Registros Públicos) format. The process usually takes a maximum of 7 calendar days and requires a plurality of partners (minimum two people). The strategy to quickly establish a company in Peru is to do it through local lawyers. They can register the company and set it up in your name under your instructions and then transfer the shares designated person. If you are a foreign entrepreneur and you want to start the company from the beginning, without support from a Peruvian citizen, you will have to consolidate all the limits and it will take more than a month to do so: since you would need documents from the country of origin of the foreign company, which must be apostilled and then physically sent to Peru in order to register with the SUNARP. Additionally, the foreign attorney representing the company must be physically in Peru to sign the Public Notary of incorporation of the new company.
3. The management of companies in Peru can be carried out by a General Manager (Sole Administrator) or a Board of Directors. In both cases, the General Manager must be part of the company’s payroll while members of the Board of Directors may be foreigners. The Board of Directors is common in public limited companies.
4. The General Manager is the Legal Representative of the Company and is considered a worker. If you are a foreigner, you must have a special visa or foreigner ID to perform your duties (which implies legal residence) and have a work contract approved by the labor authority.
5. In Peru, a 5% rate is applied for Dividends and other forms of distribution of profits.
6. Those companies that carry out projects of scientific research, technological development and tech innovation, may deduct 150% or 175% of their expenses incurred in it.
7. The minimum salary (2019) is 930.00 soles. In case of having minor children, an additional 10% of the minimum compensation is paid monthly, regardless of the amount of such minors. In May 2019, (1) Peruvian sol equals to (0.25 euros) (0.30 USD).
8. Workers of large companies have 30 days of vacation while the workers of the micro and small companies only have 15 days of vacations.
9. Union representation is NEVER mandatory. No company is required to have union representation
10. Employers pay the 9% corresponding to Health Insurance, in general and small business, in microenterprise can access the Semi-Tax Health System, SIS (Comprehensive Health Insurance).
11. Employers in a common labor regime are to deposit 8.33% of the profit in the months of May and November for service fees. In case of small company, they must pay half 4.17% in May and November. In case of Micro companies do not pay any of the profit.
12. Employers are to pay in the common labor regime in July and December an additional salary respectively plus 9% of bonuses and extraordinary bonus. In the case of small businesses, they must pay half a salary in July and in December plus 9% of the average salary for bonuses. The micro company does not pay.
13. Employees pay an amount (between 9% and 13% to contribute to pension, depending on whether they opt for the public system (ONP) or the private system (AFP) respectively.
14. The Companies pay 18% of the invoicing in concept of VAT or IGV (General Sales Tax).
15. In addition, the Companies pay 30% of the profits, for which the percentage of participation depends on the business activity be taken into account. It ranges between 8% and 10% of net income according to factors, where it is calculated with 50% for days worked and salaries.
16. Companies with less than 20 workers do not share a part of the profits with the workers.
17. Companies with more than 20 workers are to share a part of the profits with the workers.
18. For a foreign worker to work in a Peruvian company, he/she has to sign a special contract known as the Foreign Worker Contract.
19. A Peruvian company cannot have more than 20% of the staff composed of foreign workers, unless it has a waiver from the Ministry of Labor.
20. Peruvian companies (regardless of size) are not required to audit their financial statements.
21. Peruvian companies with more than 100 workers are required to have a social worker and a Head for Human Resources.
22. The Foreign Worker is required for a Work Visa in order to work. A Tourist Visa does not allow labor nor even sign contracts, for which you can obtain a business visa, valid for 90 days and, change it to a work visa with the work contract duly approved by the MTPE (Ministerio de Trabajo y Promoción del Empleo) And you can only join the payroll when you have obtained the “Calidad Migratoria Habilitante” granted by the General Directorate of Migration.
23. Peruvian lawyers are required to know their client (KYC) and verify that the origin of their money is not irregular. If raise suspicions, you are obliged to inform the authorities.
24. The Peruvian entrepreneurs usually show a high degree of commitment and creativity in their economic activities. They act with integrity and transparency.
25. Peruvian entrepreneurs are open to working with foreign investors, in order to generate synergies and obtain more knowledge. They tend to be proactive, respectful, open to innovation and changes.