Merchandise Trade

• Peru has been a World Trade Organization (WTO) member since January 1, 1995. Prior to its membership to the WTO, Peru has been a member of the General Agreement on Tariffs and Trade since October 7, 1951.


• Peru has adopted an export-oriented trade policy. Peru is highly reliant on the export of mineral products, with an estimated 49% of all exports falling into the category of chemical, industrial and fuel products. Metals and articles thereof account for the second-most exported goods (in terms of value); within this category, copper ore comprises the largest share and represents the biggest export commodity in Peru. This exposes Peru to volatility in the demand of copper and any resulting price fluctuations.


• Despite the country’s status as an oil-producing state, it still lacks the refining capacity to meet domestic demand. Its biggest import category is refined oil products which comprises 7.4% of all imports entering Peru. Machinery and complex manufactured goods is the largest import category in Peru, representing 33% of all imports.


• The Peruvian currency, the sol, is one of the least volatile in the region and supports the economy's trade ambitions by incentivising exports. Monetary policy is partially aligned to promoting Peru's competitiveness in terms of international trade.


• Peru is a member of the Andean Community (CAN) and the Latin American Integration Association.


• Peru has implemented anti-dumping measures on the following products:
  • Biodiesel from the United States
  • Biodiesel B100 from Argentina
  • Certain types of poplin fabrics of polyester-cotton blend from Pakistan and India
  • Stainless steel cutlery from Mainland China
  • Certain footwear from Mainland China
  • Zip fasteners and parts thereof from Mainland China

• Fundamental to Peru's international trade success are its strategic free trade agreements (FTA) with several key Latin America economies including Mexico and Chile.


• Imports are subject to the general sales tax of 16%, the municipal promotion tax of 2% and a tariff of either 0%, 6% or 11% (according to the tariff subheading of the merchandise imported). Traders are advised to seek additional information from the Superintendencia Nacional de Aduanas y de Administración Tributaria (SUNAT), the Peruvian tax authority, for specifics concerning the exact nature of tariffs on products. That said, import tariffs are the lowest in the region, at 1.4% on average, largely due to the wide range of FTAs in force which cover the vast majority of international trade. Consequently, most imported goods are subject to 0% tariffs rather than most favoured nation (MFN) bound tariffs.


• The average MFN applied rate is low, at 2.4%, indicating that even goods not covered by FTAs are not generally subject to significant tariffs. The highest duties are imposed on clothing and textiles.


• Peru will impose surcharges on certain agricultural products from time to time in order to protect local Peruvian farmers. These surcharges do not apply in most cases where a country has an FTA with Peru.


• Most exporting companies in Peru are small- or medium-sized entities, accounting for around 82% of all exporting companies.

Sources: WTO – Trade Policy Review, Fitch Solutions

Major Multinational Trade Agreements

Active

1. CAN Customs Union and Free Trade Area (Bolivia, Ecuador, Peru and Colombia): Trade between the Andean nations is substantial and has been increasing under the customs union, which allows businesses access to a larger market in the region and lowers tariff and non-tariff barriers to trade.


2. Pacific Alliance (PA) (FTA and economic integration agreement): The PA trade bloc, consisting of Chile, Colombia, Mexico and Peru, further assists with promoting regional growth. The PA focuses on boosting external trade with strategic partners, including those in Asia as well as adopting a business-friendly agenda aimed at incentivising investment into the region to enable companies to better access Latin American markets and create intra-regional supply chains. PA members represent nearly 36% of Latin American GDP and exported approximately USD1 trillion in 2015.


3. Peru-United States: The US is an important trade partner for Peru. This agreement lowers costs for importers sourcing goods from the US and opens up a large market for Peruvian exporters. This agreement is particularly important since the US pulled out of the Trans-Pacific Partnership (TPP), giving Peru an advantage over other Pacific Rim countries which do not have a prior agreement with the US.


4. Peru-Mainland China: Mainland China is Peru's largest trade partner, making this agreement extremely important for Peru. The agreement allows access for Peruvian goods, primarily metals such as copper, to the largest market in the world. This considerably boosts the country's appeal to mining and metalworking companies, while also reducing the costs of imported machinery, textiles, and consumer goods for Peruvian companies and consumers.


5. European Union-Andean Community (EU-CAN): In January 2017, the Andean Community ratified a FTA and economic integration agreement with the EU. The agreement eliminates tariffs for all industrial and fisheries products, increases market access for agricultural products, improves access to public procurement and services, and further reduces technical barriers to trade. The FTA also includes commitments to effectively implement international conventions on labour rights and environmental protection, which are monitored with the systematic involvement of civil society.


6. Southern Common Market-Andean Community (Mercosur-CAN): As a member of the Andean Community, Peru is party to commercial agreements with Mercosur (Brazil, Argentina, Paraguay and Uruguay). Mercosur member states present greater economic opportunities for firms in Peru, and the agreement brings about greater economic integration. This supports the Free Trade Area of the Americas – an agreement that reduces the trade barriers among all countries in Latin America.


7. Peru-South Korea: South Korea is a key trade partner and is not yet included in the TPP, meaning Peru will stand to benefit from this bilateral FTA.


8. The Comprehensive and Progressive Agreement for TPP (CPTPP): The agreement – comprising Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam – is in effect. The agreement was ratified in Q418, with the deal representing 13.4% of global GDP, making it the third-largest trade agreement after the United States-Mexico-Canada Agreement and the EU. The agreement aims to cut tariffs, improve access to markets and set common ground on labour and environmental standards and intellectual property protections.


9. Peru also has active FTAs with Honduras, Japan, Costa Rica, Panama, Mexico, Canada, Singapore, Chile and Thailand.

Sources: WTO Regional Trade Agreements Database, Fitch Solutions

• Value Added Tax: 18%
• Corporate Income Tax: 29.5%

Source: SUNAT

Business Taxes

Source: SUNAT
Date last reviewed: May 10, 2020

Localisation Requirements

The employment of foreign workers in Peru is regulated under the aegis of the Ministry of Labour. The 'Foreigners Contract Law' allows businesses to hire foreign workers, with certified work visas, up to a maximum of 20% of the company's total workforce, provided that the salaries of the foreigners do not exceed 30% of the entity's total payroll. Moreover, contracts must be completed (in writing) for a maximum three-year period. These can be extended for similar periods if approved by the Ministry of Labour.

Sovereign Credit Ratings

Sources: Moody's, Standard & Poor's, Fitch Ratings