Doing Business in Peru

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Doing Business in Peru

  • How to start a business and business license in Peru
  • Dealing with construction permits
  • Getting electricity
  • Registering property
  • Getting credit
  • Protecting minority investors
  • Paying taxes
  • Trading across borders
  • Enforcing contracts
  • Insolvency
  • Hiring personnel in Peru

About Peru Work and Business

Peru has become an attractive investment target. It has improved its economic and stability performance in the past years. It is considered the 7th largest economy in Latin America. In 2020 its GDP is forecast to expand by 3.2% and 3.6 percent in 2021.

Great business ideas in Peru are related to natural resources and real estate. It is the second-largest producer of copper, zinc and silver.

Peru has favorable legal framework. The is freedom transferring profits abroad after taxes, there are no restrictions of trading across board, legal stability and more. As a foreign investor you will get equal treatment and rights as a domestic company.

1. Starting a business in Peru

  The procedure to register your business in Peru  is quite simple; 8 steps completed within 26 days, on average.
 

The cost of starting a business in Peru: Registration fee is 9.4% of the estimated income of the business during its first year of operation. The fee is not paid in subsequent years.

These registration fee is below of the line with the OECD average

  There is no need for the new legal entity in Peru to prove that it has a bank account in the same country.

How to register a business in Peru?

At: Public Registry (Superintendencia Nacional de los Registros Públicos – SUNARP)
Establishment of the company name as a trademark in Peru
At: Online platform (Sistema de intermediación digital – SID-SUNARP)
Online request to start incorporation process
At: Notary and Public Registry
Sign and file the deed of inforporation
At: Tax Authority (Superintendencia Nacional de Administración Tributaria – SUNAT)
Obtain identification number (RUC)
At: PLE System (online platform from tax authority, SUNAT)
Registration of accounting records
At: Tax Authority (Superintendencia Nacional de Administración Tributaria – SUNAT)
Enroll employees to social security
At: N Civil Defense Division at the Municipality (Subgerencia de Defensa Civil)
Determinine the company risk level
At: Commercial Division at the Municipality (Subgerencia de Comercialización)
Receive inspection of building safety, then obtain business license in Peru

2. Construction permits in Peru

 

Once interest gathers all information needed, the procedure to legally build a commercial facility (warehouse, offices, etc.) is 19 steps. Average completion time is 137 days.

The procedure itself is similar to other countries, while completion time is relatively short.

  Money invested during the process is equivalent to 1.7% of the commercial real estate value. This is an low-cost process compared to other countries.
  Construction standards in Peru are higher than average. According to the Building Quality Control Index, or BQC, Peru enjoys a rating of 13 out of 15.

Procedure

At: District Municipality (Municipalidad Distrital)
Request building parameters certificate (Certificado de parámetros urbanísticos y edificatorios)
At: SUNARP (Public Registry)
Request property ownership certificate
At: Private licensed company
Make a geotechnical study or soil test
At: District Municipality (Municipalidad Distrital)
Present preliminary design for review
At: SEDAPAL
Request water and sewage supply
At: SEDAPAL
Receive inspection
At: SEDAPAL
Receive water and sewage supply
At: Luz del Sur
Get electricity power supply
At: District Municipality (Municipalidad Distrital)
Get construction license
At: Private insurance company
Get contractors all risk insurance
At: District Municipality (Municipalidad Distrital)
Notify the initiation of the construction
At: District Municipality (Municipalidad Distrital)
Receive 3 inspections during construction within 3 months
At: SEDAPAL
Request water and sewage installation
At: District Municipality (Municipalidad Distrital)
Obtain a construction work conformity certificate
At: SUNARP
Register the commercial facility

For detailed procedure visit: Requisitos para obtener las Licencias de Edificaciones

3. Getting electricity in Peru

  The process to get electricity connection is 6 steps and 67 days of time spent. In comparison to other countries is a time-consuming method.  This is about average in compare to other countries.
  In a monthly bill for commercial warehouse the tariff is 19.5 USD cents per kilowatt-hour. Which means the procedure is average cost but the tariff is expensive in comparison to other countries.
  The reliability between duration and frequency of power in relation to the tariff is measure from 0 to 8, being 8 the best one. In Peru electricity reliability is above the average with 6 points.

4. Registering Property in Peru

  In comparison to other countries Peru has one of the  lowest-step but and fastest procedure for property registration. They are 6 steps that can be done in 9.5 days.
  The invest needed in this procedure is 3.9% of the property value. Value added tax and capital gain tax are excluded. Peru is above the average cost for this operation.
  Quality of land administration in Peru is 18 out of 30. It indicates good reliability of infrastructure, transparency of information, geographic coverage, land dispute resolution and equal access to property rights.

5. Getting Credit in Peru

  Rights that manage lender-borrowers confidence and protection of secured creditors laws are good in Peru. This laws are in favor of borrowers.
 

Rules affecting the reach of accessible information and its quality are measured through the Depth Credit Information index, from 0 to 8; 8 being the best one.

Peru’s rate is 8, hence this information is highly reachable.

6. Protecting Minority Investors in Peru

In overall, minority investors are protected in Peru above the average rate compared to other countries.

7. Paying Taxes in Peru

  The new company in Peru must pay 8 contributions per year.
  Time invested in collecting information, computing tax payable, separating tax accounting books, completing tax return, filling with agencies, arranging payment or withholding throughout the year is 260 hours in average.
  Average time elapsed to comply VAT refund, to obtain VAT refund, to comply with corrections and to complete them is low compared to other countries.
Post filing in Peru is fast.
  Companies in Peru make contributions of total tax for about 36.8% of profit.

8. Trading across Borders in Peru

  Time and cost to obtain, prepare and submit documents compliance to export in Peru is 24 hours and $ 50 USD. These is above the line with the OECD average.
  Time and cost to obtain, prepare and submit documents to import in Peru is 48 hours and $80 USD.  This process is in the line with the OECD average.
  Time and cost to customs clearance and inspection for export products is 48 hours and $630 USD. This is a highly expensive process in compare to other countries.
  Time and cost to customs clearance and inspection for import products is 72 hours and $700 USD. Peru is in the average time with a really high cost compared to other countries.

9. Enforcing Contracts in Peru

Time and cost for resolving commercial disputes. This evaluates the legal dispute process and the quality of legal institutions.

  Typical time in Peru to file a lawsuit, go to court and receive a judgment is 478 days. This is a fast process  in compared to other countries.
  The cost to enforce the contract to courts including attorney fees, court costs and enforcement cost is 41.2% of the claim value. This is a high cost compared to other nations.
  Court structure, case management, court automation and alternative dispute resolution makes quality of judicial processes is really good in Peru compared to other countries.

10. Bankruptcy in Peru

Bankruptcy is the legal proceeding that involves businesses or persons that are unable to repay debts. It is the legal means to insulate itself from creditors.

  Time to recover debt in Peru 3.1 years, this includes appeals and requests for extension. Compared to other countries in Latin America & the Caribbean this is a time-consuming process.
  In Peru, compared to other countries the cost required to recover debt is low. This is measured as a percentage of estate value including court fees, insolvency administrators, lawyers’ fees, assessors and other related fees.
  In many situations a company bankruptcy will continue operating until unable to do so or business assets are sold. In Peru there is a tendency for companies to continue operating after filing for bankruptcy.
  The credit recovery rate is calculated by dividing the total payment amount by the amount of debt. It measures the cents on the dollar recovered by secured creditors. Companies in Peru have a recovery rate of 31.2 cents per dollar.

11. Hiring workers in Peru

For detailed information visit: What you need to know about labor laws in Peru

Hiring Employees in Peru There are three different types of employment agreement. Indefinite-term: general rule for labor relation
Fixed-term: must be signed in writing to specify labor reasons of hiring. Part-time: must be signed in writing to specify labor reasons of hiring. The minimum wage in Peru is $277.3 USD per month.
Working Hours in Peru A standard workday is 8 hours a day 5.5 days a week. Overtime is paid as +25% of hourly pay and there are no restrictions working at night or weekend. If the employee works on its  weekly rest day, this must be paid as +100% of hourly pay. Vacations are 15 paid leave days
Termination in Peru Employment may terminate with prior notice if: Mutual agreement Dismissal with justified cause Retirement Expiration of employment agreement
Workers death.

References:

Economy Profile

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