PROINVERSIÓN PROMOTES THREE INVESTMENT ATTRACTION MECHANISMS TO STRENGTHEN CONFIDENCE IN PERU
Lima, February 1, 2024.- Private investment plays a fundamental role in the sustainable economic growth and development of the country and its companies, favoring a substantial improvement in the quality of life of the population.
To attract private investment, PROINVERSIÓN promotes three investment attraction and facilitation tools that strengthen the confidence to invest in the country, contributing to make Peru a predictable, sustainable, profitable and safe place for investment.
These are the mechanisms: Legal Stability Agreements, Special Regime for Early Recovery of the IGV or VAT and Tax Refund Regime of the IGV or VAT, which are promoted by the agency in Roadshows, and participation in local and international events; currently, PROINVERSIÓN's project portfolio is made up of 55 PPP initiatives and Projects in Assets, which require an estimated investment of US$ 15 billion for the period 2024 - 2026.
LEGAL STABILITY AGREEMENT
The Legal Stability Agreement is an investment promotion instrument that is materialized through the execution of contracts signed with the Peruvian State, stabilizing the guarantees applicable to the investors or the receiving companies, as the case may be, for the term of such agreements. They have the quality of contracts with the force of law, of a civil and non-administrative nature, and may be terminated by agreement of the parties. This reduces the risk generated by the uncertainty of developing long-term projects in various sectors of the economy, as it improves financing conditions and provides greater predictability to investors.
The Legal Stability Agreements allow new investors to invest in Peru, boosting the economy in their areas of influence, and generating new jobs and higher tax revenues.
Since the implementation of this instrument (1993) until the end of 2023 -in 30 years- a total of 1068 Legal Stability Agreements have been signed, of which 719 were held with investors committing investments for an approximate amount of US$ 30'000 millions, and 349 with the companies receiving such investments.
RERAIGV
The Special Regime for Early Recovery of the IGV (RERAIGV) is a financial benefit that provides liquidity to the owner of an investment project, through the refund of VAT on acquisitions and/or imports of goods, services and construction contracts made during the pre-operational stage of the project and that are used directly in the execution of the project. PROINVERSIÓN intervenes in the evaluation for the investor to access this benefit.
Since the implementation of the RERAIGV (2007), to date, 243 projects, for US$ 50 billion, have had access to this financial benefit that allows companies to have liquidity to secure their investments in Peru.
TAX REFUND REGIME
Finally, the Tax Refund Regime of the General Sales Tax or VAT is a tax benefit granted to the owner of a public work of infrastructure and public services, through the reimbursement of the IGV or VAT for the acquisitions and/or imports of goods, services and construction contracts made during the pre-operational stage of the work, provided that they are destined to operations not taxed with such tax and are used directly in the execution of the investment commitment in the work.
These investment attraction mechanisms added to the favorable regulatory framework allow the country to be an attractive place for investment; the Political Constitution of Peru contains standards that enshrine essential principles to guarantee a favorable legal framework for private investment in general and foreign investment in particular, a fundamental principle being that of equal treatment for domestic and foreign investment.
Source: Press Release – PROINVERSIÓN