Legal system

Peru is a civil law country. It is a democratic unitary government with 24 decentralized   regions (states), the Provincia de Lima (metropolitan area) and the Provincia Constitucional del Callao . Each region has its own budget,  rules and a Governor. The Governor and its Council, elected by the local residents. constitutes the  executive body.  “Local” laws are those made by Regions that apply in those geographic regions.  Some areas of law, such as patent and copyright, foreign relations  are governed exclusively by central government.  

Foreign Investment

The Peruvian government is set on attracting foreign investors. Peruvian laws promote the basic principle that national and foreign capital are treated equally. Therefore, foreign capital can be invested in all sectors of economic activity  without prior authorization, with the exception of certain activities.

Entity Choice

A foreign company entering Peru  must decide on the form of business it will use to conduct its  operations. The two most popular types are the Sociedad Anonima, or S.A. (also the  Sociedad Anónima cerrada) (Corporation) and the Sociedad  Comercial de Responsabilidad Limitada, or S.C.R.L (Limited Liability Company).  Each business entity has its own regulations and the choice of form depends on case-specific legal and business factors.  A foreign company is not required to conduct business through an  entity and could instead open a branch office.  A branch office, unlike a subsidiary, is not a separate legal entity of the parent company. A branch office is considered to be the foreign company operating in Peru. Foreigners are allowed to be appointed as Directors or Managers. 

Obtaining a R.U.C (Registro Unico del Contribuyente)

A new company must obtain a Registro Unico del Contribuyente  Number (R.U.C.) from SUNAT (The Tax agency). The R.U.C. is required  to identify the company and to do business  or open a bank account. 

Taxes

Companies are subject to  income tax, capital gains tax, tax on dividends, interest, and other passive income, and employee payroll taxes. Goods and services tax in Peru is known as I.G.V. (Impuesto general a las ventas)  . It is a type  of tax that is assessed incrementally. It is levied on the price of a product or service at each stage of production, distribution, or sale to the end consumer. It is quite similar to the VAT (value added tax), used all over the world. I.G.V. tax rate: 18%.

Labor

Three ways to hire personnel: No fix-term, fix-term and part-time contracts. Independent contractors may be also hired for certain specific jobs. As part of the hiring process, no fix- term employees  undergo a trial period that generally lasts three months. During this period, workers can be dismissed without the right to indemnity. In some specific cases, it can be extended up to six months.