Peru: VAT on cross-border provision of digital services

Legislative Decree Nº 1623/2024 implementing value added tax (VAT) on the cross-border provision of digital services and the import of intangible goods was published on August 4, 2024. The decree provides that covered nonresidents are required to comply with the rules starting October 1, 2024. However, implementation of the rules was delayed to December 1, 2024, by Legislative Decree Nº 1644/2024.

It is expected that the tax authorities will publish implementing regulations further defining the regime soon. To that end, the tax authority issued Resolution No. 173-2024/SUNAT providing rules—effective September 1, 2024—for registration in the single taxpayer registry (Registro Único de Contribuyente, or RUC) of nonresidents designated as withholding or collection agents of VAT on the cross-border provision of digital services and the import of intangible goods. Read TaxNewsFlash

Scope

The regime imposes VAT (currently at 18%) on the provision of “digital services,” which are defined as services provided over the internet or any other network. These services are primarily automatic and rely on technology to function.

In addition, commissions received by nonresident intermediaries involved in the sale of services and goods in Peru also qualify as digital services.

The decree provides the following non-exhaustive list of transactions qualifying as digital services:

• Online access and/or transmission of images, series, movies, documentaries, short films, videos, music, and any other digital content via streaming technology or other technology
• Information storage
• Access to social networks and/or the provision of additional content or functions on these
• Services provided by online magazines or newspapers
• Remote conferencing services
• Services that help facilitate the sale of goods or services

Moreover, VAT applies on the import of intangible goods acquired for definitive download through the internet or any other network.

The decree clarifies that the rules do not apply to tangible property imported into Peru as the Peruvian customs authority will assess VAT during the customs clearing process. 

B2B v. B2C

The regime applies to covered services made to final consumers (“B2C sales”) located in Peru.

Customer location

The customer location may be determined by any of the following:

• The Internet Protocol (IP) address of the device used by the customer
• The country code of the SIM card of the mobile device being used
• The billing address of the customer
• Bank details, such as the location of the bank account used for payment, or the billing address of the customer held by that bank

Marketplace rules

The decree does not include any specific provisions shifting the VAT obligation from the digital services provider to nonresident digital intermediaries facilitating such sale. Therefore, any VAT due on a transaction made through a third-party digital intermediary remains the responsibility of the original seller.

Registration

The decree does not include a VAT registration threshold for nonresident digital services providers and does not provide details on the registration process.

Once registered, nonresidents are assigned a tax identification number.

The decree explicitly clarifies that the registration of a nonresident digital services provider does not create a permanent establishment for income tax purposes.

VAT invoicing

The decree does not address the invoicing requirements for nonresident digital services providers. 

VAT withholding made by financial intermediaries

The decree provides the tax authorities the power to require financial intermediaries to withhold VAT in the following situations:

• Nonresident provider fails to register
• Nonresident provider fails to file VAT returns and/or pay the total VAT charged for two consecutive or non-consecutive months
• Nonresident provider fails to submit the annual informative declaration within the specified deadlines, if such an obligation is established

The application of VAT by the financial intermediary will not exempt the nonresident provider from any VAT obligations (and any associated penalties or interest).

Penalties

Penalty provisions in the general VAT law will apply. 

For more information, contact a KPMG tax professional:

Rocio Zegarra | rzegarra@kpmg.com

Philippe Stephanny | philippestephanny@kpmg.com

Chinedu Nwachukwu | chinedunwachukwu@kpmg.com

Carlos Rodriguez | carlosjrodriguez@kpmg.com

Roberto Casanova-Regis | rcasanovaregis@kpmg.com