Peru

Ease of Doing Business Rank: 76

Overview

 

Geographic location

The Republic of Peru is a country in South America.

Ecuador and Columbia lie to north, the Pacific Ocean lies to the west, Chile to the south and Brazil and Bolivia to the east.

Spoken language

The official language of Peru is Spanish, spoken by 82.6% of the population. The country also has two significant indigenous languages, Quechua (13.9%) and Aymara (1.7%).

Foreign languages such as English only account for .14% of speakers in the country.

Population

The 2020 population estimate is 32.97 million.

According to 2917 data, Lima is the largest city (9.56 million), followed by Arequipa (1 million) and Trujillo (919,899).

Popular industries

The top industries in Peru are mining and metal refining, steel, metal fabrication, petroleum extraction and refining, natural gas, fishing and fish processing, textiles, clothing and food processing.

Education

The Times World University Rankings includes two universities in Peru in the top 1,000 in the world.

The Legatum Prosperity Index ranks Peru’s educational system 63rd out of 167 countries.

Popular entity types

The most common type of business entities in Peru are Joint Stock Company, Private Closed Corporation, Public Corporation and Limited Liability Company.

The majority of businesses are in the form of a Private Closed Corporation.

Peru incentives for business

Peru offers a foreign tax credit to offset taxes paid abroad up to the amount due in the country, depending on the income source.

The country also offers deductions for qualifying companies operating in scientific research, technological development and technological innovation. Deduction amounts on expenses depend on net income and range between 215% and 150%.

Pre-approved, large projects in the preoperative stage may also apply for early recovery of VAT before commencing operations.

Peru also offers incentives to investors that enter into stability agreements with the government. The general regime includes guaranteed income tax rates, foreign currency exchange freedom and equal treatment with local investors for ten years.

Companies operating in specific sectors such as mining may qualify for stable tax rates and administration, free disposition and equitable exchange rates on foreign currency arising from exports and free trade of products for 10, 12, or 15 years. Oil and gas companies may enjoy the same benefits, plus promotion in the Amazon.

Certain businesses operating in a designated Amazon area may also enjoy income tax and VAT benefits. Business types include agricultural, livestock, fishing and tourism enterprises. In some cases, manufacturing activities may also qualify.

Peru also has Centers of Export, Transformation, Industry, Commercialization and Services (CETICOS) in Paita, Ilo, and Matarani cities. These regions are exempt from income tax, VAT, excise tax, municipal promotion tax and any contributions levied by the Central Administration.

History & Features

 

Main cities for business

Lima is the capital and financial center of the country.

Popular historical & tourist attractions

Peru has a long, rich history and was home to the oldest civilization in the Americas. The country has 12 UNESCO World Heritage Sites, including ancient ruins, mysterious desert lines and the historic cities of Lima and Cuzco.

The best-known site is Machu Picchu, the ancient Incan city perched high upon a ridge of an Andean mountain. Visitors can take the traditional four-day hike to see over 30 Inca ruins or ride a train through the stunning landscape.

The Imperial city of the Incas is Cuzco. Many of the original buildings remain, despite the Spanish occupation of the 16th century. This complex urban center includes well-defined religious and governmental zones and royal residences.

Amidst the Nazca Desert lie a series of lines scratched on the surface of the ground between 500 B.C. and 500 A.D. which still baffle archeologists today. They depict over 70 different plants and animals and many geometric shapes and span hundreds of square miles. These lines are best seen from above, which sparked countless theories regarding their purpose including astronomical calendar, ritual sites and even alien landing zones.

Peru includes many areas of outstanding natural beauty. Lake Titicaca is the highest navigable lake in the world at 12,532 feet above sea level. Cañón Del Colca is the second-deepest canyon in the world and measures 11,001 feet at its lowest point.

The Amazon rainforest, the largest tropical rainforest in the world, covers 60% of Peru’s territory. Visitors may see sloth bears, tapirs, Choro monkeys, anacondas, piranha and more.

The oasis resort of Huacachina has a lagoon surrounded by sand dunes of up to 3,500 feet in height. It is a center for sandboarding. Peru’s also has a 1,500-mile stretch of coastline ideal for surfing.

The city of Lima was the most important city of the Spanish dominions in South America. As a result, it includes many outstanding colonial buildings such as Plaza de Armas, the Casa del Oidor and the Palacio del Gobierno. The city is also the cultural center of the country with many museums.

History

Early civilizations lived in Peru as far back as 2,500 BC. However, the most notable is the Inca Empire and what remains in Peru represents the height of their civilization.

The Inca Empire peacefully assimilated or conquered the territory of modern-day Peru and a large portion of western South America starting in 1438. Their demise occurred shortly after the Inca Civil War between 1529 and 1532 as two brothers fought over the succession to the throne.

The Spanish arrived in 1532 and brought smallpox which decimated the Inca population. They also captured and killed the last Sapa Inca, or emperor. Spain established the Viceroyalty of Peru in 1543. Some Inca established a small state in the remote jungles, but the Spanish conquered it in 1572.

After the fall of the Inca Empire, the new Spanish rulers repressed the people, systematically destroyed their culture, enforced mandatory public service for work in mines and plantations and introduced Catholicism to the region.

By 1581, the Spanish controlled all of South America except Venezuela and Portuguese Brazil. Precious metals, particularly silver, made Peru the most important colony in the Spanish Empire.

During the 16th and 17th centuries, a series of viceroys ruled over most of Spanish South America with forced Indian labor. Lima became the religious, cultural and commercial center of the colony.

Peru struggled in the late 17th century due to piracy, non-Spanish merchants in the region and bribery amongst government officials. A series of governmental reforms by the Bourbon dynasty led to the loss of the silver mines of Upper Peru and direct trade with Spain, which weakened the Viceroyalty of Peru. Indians revolted in 1780 after years of forced labor and heavy taxation.

Thoughts of independence emerged in Peru when Napoleon invaded Spain in 1808. Natives also heard British colonies in North America had successfully broken away. However, Peru’s aristocracy remained loyal to Spain.

Peru’s independence was primarily achieved by outsiders when Argentina and Chilean soldiers landed on the coast of Peru in 1820. After occupying Lima in 1821, they declared Peru independent. The last royalists were defeated in 1824.

The country underwent political, social, and economic problems until 1884, including a losing battle with Chile over nitrate deposits between 1879 and 1883. War expenditures and the subsequent loss of nitrate fields led to enormous debt. Eventually, bonds were sold to keep the country afloat.

Peru was under a dictatorship from 1885 to 1895. Democracy returned, which led to increased agricultural and mineral production and infrastructure. However, unrest grew among the working class and strikes occurred.

During the 1930s, Peru suffered greatly due to slumps in exports. A military coup and countless battles ensued. Democracy was restored and Peru co-operated with the U.S. during World War II and declared war on the Axis powers in 1845. They sold petroleum, cotton, and minerals to the Allies and prospered.

From this time, Peru bounced between dictatorship and democracy many times. High inflation, unemployment, crippling strikes, drug trafficking, growing public debt and the Shining Path members’ guerrilla tactics and violent terrorism plagued the country.

Today, Peru is in a state of ongoing democratization and attempting to reform the judicial branch to provide transparency and accountability.

Other relevant facts

According to the 2017 census, most Peruvians identify as Catholic (76.03%), followed by Protestant (18.48%), no religion (5.09%) or other religion (.41%).

Most Peruvians identify as Mestizo (60.2%), followed by Amerindian (25.7%), White (5.9%), Black (3.6%), Nikkei (.1%) and Tusan (.1%).

Additional Information for Business

According to Forbes’ 2019 Best Countries for Business, Peru is the 64th best country in the world for conducting business.

The 2019 Index of Economic Freedom rates Peru 45th globally and states, “The Vizcarra government’s policy priorities include anti-graft reform, pro-competition policy reform, infrastructure development, modernization of the state, and fiscal consolidation.”

World Bank’s “Doing Business” rankings rate Peru 76th for ease of doing business in the world.

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