Peru: Implications of the new measures established during the covid-19 crisis

The crisis caused by the coronavirus pandemic (COVID-19) has put many governing bodies to the test by obliging them to make quick policy decisions on behalf of their populations. In this case, Peru has dictated a series of measures affecting politics, economy, national healthcare, and social aspects of life in an effort to safeguard the overall wellbeing of its denizens. In this article we will focus on detailing the principal measure that may have the most significant impact on companies daily operation.

Main tax measures adopted by the government

• Extension of the submission of the Annual Income Tax DJ 2019, applicable to taxpayers whose net income does not exceed 5000 UIT (S/. 21 million) in the fiscal year 2019 (R.S. 061-2020/SUNAT).

• Extensions to the date of submission deadline and the payment of monthly taxes expiration. (applicable to the months February, March and April 2020)

• Contributors whose net income does not exceeded 2,300 ITU (S/ 9.66 Million) in 2019, are eligible for the following additional extensions (R.S. 0552020/SUNAT):
  • Extension on the maximum deadlines for the presentation of tax books and records: Until May 4, 2020 for taxpayers who were due to present between March 16 and April 6, 2020. (R.S. 0582020/SUNAT).
  • Extension on the maximum deadlines for sending the information returns and Communications of the Electronic Issuance System to SUNAT (directly or through the service operator, as the case may be): Until April 15, 2020 for those taxpayers who were due to submit their obligation between March 16 and 31, 2020.
  • Extension of the deadline for filing the annual return for operations with third parties: Until 7 April 2020 for those taxpayers who were due to file from 16 to 31 March, 2020.
• Release of funds due to drawdowns deposited in the Banco de la Nación; the application may be filed only once between 23/03/2020 and 07/04/2020.
• Flexibility of Fractionation / Deferment / Refinancing of tax debts. (R.S. 055-2020SUNAT)
• The deadline and information requirement for audits by SUNAT has been suspended until May 6, 2020.
• At the discretion of SUNAT sanctions for non-compliance by tax debtors during the State of Emergency will be waived or forgiven.
• The special recovery regime of the IGV, regulated by Law No. 30296, is extended until December 31, 2023, applicable to imports and/or local acquisitions of new capital goods made during its effectiveness.

• With Emergency Decree No. 033-2020, the Government will provide companies with a subsidy equivalent of up to 35% of the payroll for each worker with a salary of up to S/1,500.
• Workers who have a balance of CTS may freely dispose of it up to the value of a monthly salary. If there is no balance, the worker may request an advance from his or her employer.
• Companies may postpone the deposit of the CTS May 2020 until November 2020, except when: a) the remuneration is below S/ 2,400 and b) the workers are suspended.
• Extraordinary withdrawal of the pension fund (AFP) from the private system up to the amount of S/2,000.
• Workers who belong to a microenterprise and whose salary is less than S/ 2,400 will receive an Emergency Social Protection Economic Benefit granted by the Social Security.

(*) Electronic payroll of workers and payment of associated labor deductions: income tax and social security contribution.

Main impacts on the financial accounting aspect

• For companies that are obliged to submit their financial statements to the Superintendence of Securities and Exchange, the date of presentation of individual EEFFs has been postponed to June 30, 2020 and consolidated EEFFs to July 31, 2020.
• In application of IAS 10, companies should consider including a disclosure in the financial statements, if events subsequent to the date of presentation affect the going concern assumption.
• According to Superintendency Resolution No. 033-2020-SMV-02, individual or separate interim financial information as of March 31, 2020, is extended until July 31, 2020. In these EEFF, the company must take into account the greater use of estimates and relief in notes, mainly in relation to employee benefits, provisions and insurance indemnity on fixed assets.
• With respect to fixed assets: the depreciation charge may be zero during the period of cessation of operations due to the pandemic.
• Take into account the activation of contractual clauses that could affect income recognition: penalties, discounts, product returns, etc.
• Companies should assess whether this event is an indication of impairment of long-term non-monetary assets. The COVID-19 crisis may impact cash flow projections, due to decreased demand, interruption of production, the supply chains, and more.

Impact on Cash Flows

Addressing the risk of lack of liquidity that companies are currently experiencing due to the pandemic, companies already having difficulties in paying their workers and input suppliers, the Peruvian government has issued Legislative Decree No. 1455, Reactive Peru Program, which ensures the continuity of the payment chain in the national economy and the company in operation.

With this program, the government will provide guarantees in the acquisition of bank loans for exclusive use of working capital. This program has a deadline of June 30, 2020.

The following are some of the limitations and conditions for joining the program:

• The guarantee provided by the Program covers at most the lesser of the two amounts: (a) the amount equivalent to three (3) times the company’s annual contribution to EsSalud (social security) in the year 2019; and (b) the amount equivalent to one (01) month of average monthly sales in the year 2019.
• In the case of microenterprises, only the criterion of the average monthly sales amount for the year 2019 is considered.
• Maximum amount per company: the total amount of loans guaranteed through the Program is S/. 10’000,000.00 (Ten Million and 00/100 Soles) per company.

In addition, the government has made the Business Support Fund for MSE available in order to ensure the productivity of enterprises.

This article collects, comments, and summarizes the main measures that the government and its institutions have taken to address the coronavirus crisis in Peru.

Olga Melissa Lévano
Intl Desk Manager – Peru

All information contained in this publication is up to date on 2020. This content has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this chart without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this content, and, to the extent permitted by law, AUXADI does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this chart or for any decision based on it.