Peru and Japan: the road to a double tax treaty

By Franz Salazar Anccasi, Tax Advisory Manager, Edwards Peru, Lima, Peru

On 22 September, the Peruvian executive supplied to Congress a resolution (Supreme Resolution No. 091-2020-RE) in support of ratifying the Japan—Peru tax treaty.

The treaty, formally known as the Convention between Japan and the Republic of Peru for the Elimination of Double Taxation with respect to Taxes on Income and the Prevention of Tax Evasion and Avoidance, was signed by Peru on 18 November 2019 and by Japan on 19 November 2019.

The next step to ratify this international tax instrument, under the Peruvian Constitution and its related laws and regulations, is the approval by Congress through a legislative resolution.

It is likely to take 30 business days or more for analysis and study by the Congress´s foreign affairs commission. If a favorable opinion is delivered by the commission, the Peru-Japan tax treaty will be discussed in Congress´s plenary session and then approved by legislative resolution.

This approval is then communicated to the President, who will ratify the international tax instrument through Supreme Decree.

Generally, treaties are in force for the signed parties as of their ratification date; however, this international tax instrument is effective on 1 January of the calendar year following the year in which this tax treaty is ratified.

It is likely that the Peru-Japan tax treaty will be effective on 1 January 2021.

Franz Salazar Anccasi is Tax Advisory Manager at Edwards Peru, Lima, Peru.