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  • Service: Tax
  • Type: Regulatory update
  • Date: 9/24/2014

Peru 

Taxes and Incentives
Peru Taxes and incentives for renewable energy KPMG Global Energy & Natural Resources.

Support schemes

Investment and other subsidies


Peru has not implemented subsidies, but it has implemented certain tax incentives for energy producers producing energy on renewable resources.


However, Peru has not implemented feed-in tariff schemes, premiums to renewable energy producers or renewable energy quota obligation to energy producers.

Additional information

Peru is a country with abundant natural resources. However, which resources are considered renewable is determined only by a general consensus rather than legal definitions. This consensus appears to be changing, and some resources like water, which was once considered renewable, are no longer considered as such.


Apart from issues related to water, no clear tax policy exists that might promote investment into renewable energy. However, a number of benefits can be identified in the Peruvian taxation system.


Geothermic resources law: The Peruvian government grants 30-year concessions to explore and/or exploit aboveground and underground geothermic resources that are not hydrocarbon-based.


Income tax stability: Geothermic concessionaires will be subject to the 30 percent income tax regime in force at the time of signing the concession agreement during the term of the concession.


Income tax assessment: Geothermic concessionaires having more than one geothermic resource concession agreement that may also perform activities related to geothermic resources and connected activities shall individually and annually assess their income tax liability by each contract and activity.


If one of the contracts generates tax losses that carry forward, such losses could be offset against the profits derived from another contract or geothermic related activities.


Investments applied to a geothermic resource concession agreement that may not have reached the exploitation stage can be accumulated with the same kind of investment made with another contract that may have reached the exploitation stage. These accumulated investments can be amortized either on a production basis or proportionally over a five-year period on a straight line method.


Import of goods: Import of goods and inputs required to exploit geothermic resources under concession are exempt from all existing or to be existed taxes provided such goods or inputs were included in the specific list approved by the Energy and Mining Ministry.


Investment in generating electricity through hydro-power and other Renewable Energetic Resources (RER): Electricity generation through hydro, wind, solar, geothermic, biomass, wave or tidal powers or other RERs is subject to an annual maximum 20 percent accelerated depreciation regime for Income Tax purposes.


Accelerated depreciation is applicable to electricity plants entering into operation as of 29 June 2008. Accelerated depreciation is applicable to machinery, equipment and building infrastructures required for the installation and operation of electricity plants generating power through renewable resources.


Electricity generated with RERs is considered when it is first delivered into the electricity distribution network.


Early recovery of the Input VAT derived by electricity generating corporations: Concessionaires of electricity-generating activities through RERs are entitled to the early recovery of the Input VAT paid for capital expenditures, services and building contracts directly related to the electricity generating activities, provided they do not enter into the productive stage.


Selective Consumption Tax (Impuesto Selectivo al Consumo or ISC): The ISC excise tax is applicable to the consumption of fuels. Beginning 1 January 2008 and extending until 1 January 2016, the Peruvian government has established a schedule for applying a specific amount of Peruvian nuevo sols (PEN) as an ISC on certain fuels such as diesel 2, kerosene and others that contain harmful contaminants like sulfur.

 

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