Peru’s favorable tax policies and strategic trade agreements are increasingly positioning the country as a top destination for Brazilian investment in Peru by companies seeking to expand their reach in Latin America. Boasting trade agreements with over 50 countries—including the United States, China, and members of the Asia-Pacific Economic Cooperation (APEC)—Peru provides a streamlined route for Brazilian businesses aiming to tap into major global markets. This extensive network and targeted tax incentives foster a robust investment climate that continues to draw Brazilian investment.
The Brazil-Peru Chamber of Commerce (CAMBRAPER) facilitates business ventures between the two nations. A recent Business Breakfast titled “Taxation in Brazil and Peru: Key Considerations for Business Ventures,” organized in a hybrid format spanning São Paulo and Peru, is a testament to this. Experts at this event explored various available tax advantages, highlighting these incentives’ critical role in attracting cross-border capital and facilitating economic collaboration.
A Competitive Tax Environment in Peru
Peru’s tax framework offers a relatively competitive and predictable environment compared to its regional counterparts. With structured corporate taxation around a 29.5% Corporate Income Tax rate and an 18% General Sales Tax (IGV), Peru’s tax structure enhances its attractiveness. It provides a predictable tax structure for Brazilian investment in Peru by companies weighing the cost benefits of expanding their operations.
One of the most influential tax incentives driving this investment flow is the Agreement to Avoid Double Taxation between Peru and Brazil. This agreement significantly reduces the impact of double taxation on cross-border business activities, ensuring that income earned through services provided by Brazilian companies from abroad is taxed at a reduced rate in Peru. Typically, such foreign services might incur a 30% withholding tax; however, this treaty capped withholding at 15%. This adjustment substantially lowers the tax burden on Brazilian investments, providing businesses with greater legal certainty and stability.
According to Indira Navarro Palacios, Senior Partner at Torres y Torres Lara Abogados, this treaty represents a vital measure for Brazilian investors, granting them confidence in the fiscal environment and reducing potential tax-related risks. Navarro Palacios emphasized that this provision, combined with other regulatory frameworks, places Peru in a favorable light for companies looking to optimize their tax strategy while expanding their operational footprint in Latin America.
The Strategic Importance of Chancay Port
The ambitious development of Chancay Port, located approximately 80 kilometers north of Lima, adds to Peru’s appeal as an investment destination. This port will become a central commercial hub connecting Latin America and Asia. With an investment of over $3.6 billion, the port project is set to significantly enhance Peru’s trade capacity and regional competitiveness, offering Brazilian investment in Peru a vital logistics gateway to Asian markets.
As the construction of Chancay Port progresses, Brazilian firms are increasingly drawn to its possibilities. Antonio Castillo Garay, General Manager of the National Society of Industries (SNI) in Peru, highlighted the substantial benefits the port will bring to Brazilian exporters and manufacturers. “Chancay Port has the potential to become a crucial center for Latin American trade with Asia, allowing Brazilian investment in the country to access Asian markets with greater ease and cost efficiency,” he said.
The port project supports trade flows and aligns with Peru’s broader goals of enhancing its infrastructure and logistics capabilities. Brazilian companies stand to benefit from improved shipping routes, reduced transportation costs, and streamlined access to supply chains. These factors make Brazilian investment in Peru an attractive hub for companies looking to position themselves closer to key international markets while leveraging Peru’s logistical strengths.
Peru as a Growing Center for Nearshoring
Peru’s strategic location and evolving infrastructure make it a prime candidate for nearshoring, a trend in which companies relocate manufacturing closer to key consumer markets, such as North America and Asia. This shift has spurred Brazilian investment in Peru, as companies consider it a destination for optimizing their supply chains. Nearshoring offers numerous advantages, including shortened delivery times, reduced costs, and minimized geopolitical risks.
Antonio Castillo Garay of the SNI noted that Peru is solidifying its international outsourcing and assembly center role, drawing interest from Brazil, Asia, and North America businesses. Key sectors such as infrastructure, metallurgy, and agribusiness present particularly lucrative opportunities for investment by firms seeking to diversify their operations in Peru. “Peru’s economic landscape offers robust growth prospects for Brazilian companies looking to streamline operations and capitalize on favorable production conditions,” Castillo Garay explained.
Leveraging Trade Agreements for Competitive Advantage
Peru’s extensive network of trade agreements is another crucial factor propelling Brazilian investment in Peru. With trade pacts involving over 50 countries, Peru grants Brazilian companies direct access to markets with reduced tariffs and simplified customs procedures. Notable agreements with major economies like the United States, China, and various APEC members grant Brazilian businesses a competitive edge by facilitating access to high-demand markets and creating opportunities for export growth.
These agreements significantly lower trade barriers, making it easier for Brazilian companies to establish production facilities or distribution channels in Peru. For instance, Brazilian agro-industrial firms can export Peruvian-manufactured goods to the U.S. under favorable terms, leveraging Peru’s access to the North American market. Similarly, Brazilian firms engaged in technology or manufacturing can use Peru as a strategic base for expanding into Asia through streamlined trade routes and customs processing enabled by Peru’s APEC membership.
CAMBRAPER: Strengthening Bilateral Economic Ties
The Brazil-Peru Chamber of Commerce (CAMBRAPER) is pivotal in fostering economic relations between the two countries. CAMBRAPER actively connects Brazilian and Peruvian businesses, promoting trade opportunities, organizing events, and facilitating business discussions to nurture a stable environment for Brazilian investment in Peru. Through initiatives like the recent Business Breakfast event, CAMBRAPER provides valuable resources and networking channels for companies interested in exploring cross-border ventures.
The chamber’s work underscores the mutual benefits of investments in Peru, not only for the businesses themselves but also for broader regional development. By supporting such collaboration, CAMBRAPER aims to strengthen the commercial ties between Brazil and Peru, creating a lasting foundation for economic integration in Latin America.
Outlook for Brazilian Investment in Peru
With its competitive tax regime, robust trade network, and strategic infrastructure projects, Peru presents an increasingly compelling case for Brazilian investment in Peru. Key incentives, like the tax treaty and the Chancay Port project, create a favorable environment for businesses seeking to expand into new markets while enjoying tax efficiencies and logistical benefits. Moreover, Peru’s commitment to nearshoring and integration with global trade partners aligns well with the operational goals of Brazilian companies pursuing growth in a post-pandemic, supply chain-sensitive economy.
As CAMBRAPER and industry leaders like Torres and Torres Lara Abogados continue to underscore the opportunities for Brazilian investment in Peru, bilateral investment looks promising. Peru is poised to maintain its status as a strategic, tax-efficient destination for Brazilian businesses, drawing them closer to global markets and fostering a thriving environment for Latin American economic cooperation.