Peru’s Minister of Economics Issues Regulations on Ultimate Beneficial Ownership of Entities: A New Era for Transparency and Compliance
Enhancing Transparency and Combating Tax Evasion
In a significant move aimed at promoting transparency and combating tax evasion, Peru’s Minister of Economics has issued Supreme Decree 003-2019-EF, which sets out regulations on the disclosure of ultimate beneficial ownership by entities operating within the country. The decree took effect on January 9, 2019, as a direct implementation of Legislative Decree 1372, enacted in August 2018.
Who Must Comply?
The new regulations require a wide range of entities to report and identify their ultimate beneficial owners. These include:
- Funds
- Investment funds
- Trusts
- Foreign trusts with a Peruvian administrator
- Joint ventures
- Other entities
An individual is deemed a beneficial owner if they hold at least 10% of an entity’s capital.
Entities Required to Comply
The decree specifies that the following types of entities must comply with the regulations:
- Peruvian entities duly incorporated in Peru
- Non-Peruvian entities with:
- A branch or permanent establishment in Peru
- A Peruvian administrator
- A Peruvian resident as one of their parties
Compliance Mechanisms
To facilitate compliance, the decree establishes a special form that must be completed by ultimate beneficial owners and filed with the Peruvian Tax Administration. Entities are also required to implement specific mechanisms to obtain and keep updated information on their ultimate beneficial owners.
Determining Ultimate Beneficial Ownership
In cases where it is not possible to determine the ultimate beneficial ownership, either directly or indirectly, the individual holding the highest administrative position (such as a general manager or member of the board of directors) will be deemed the ultimate beneficial owner.
Deadlines and Consequences
The Peruvian Tax Authority will set the deadline for filing the required information. Taxpayers are advised to ensure they comply with the regulations to avoid any potential consequences.
Marking an Important Step Towards Transparency
The introduction of these regulations marks an important step towards increasing transparency in Peru’s business sector and combating tax evasion. The regulations aim to create a more transparent and compliant environment, benefiting both local businesses and international investors.