How to Invest in Peru LEGAL FRAMEWORK FOR FOREIGN INVESTMENT
Copyrights protect among others, the following:As of the last decade, the Peruvian government adopted measures tending to encourage private investments, whether national or foreign, in a joint or separate manner. One such measure is the promulgation of the Law for the Promotion of Foreign Investment, which grants equal treatment to local and foreign investors, orchestrating foreign investments guarantee mechanisms.
A framework law for the Promotion of Private Investments was promulgated in the same line of thought, seeking to foster the growth of private investment in Peru.
The object of this Law is to guarantee free initiative and private investment in all economic activities and under any corporate or contractual form authorized by law. Likewise, it creates rights, guaranties and obligations applicable to all national or foreign individuals or enterprises investing in the country.
The Law for the Promotion of Foreign Investment guarantees:Free initiative and private investment in all economic activities and under any corporate or contract form as authorized by the Constitution and pursuant to law.
Equally applicable rights and obligations to both national and foreign investors and to the companies in which they invest. Foreign investment's automatic authorization. Property rights of foreign investors, subject to no further limits except those stipulated in the Political Constitution: "... Within fifty kilometers off the country's borders, foreign individuals and enterprises shall not be authorized to obtain concessions and rights in relation to energy sources, whether directly or indirectly, as individuals or as societies, under penalty of losing, in benefit of the State, the right granted, with no other exceptions than those established by law because of national security¡K"2 (Article 126 of the Political Constitution of Peru)
Equal applicable intellectual and industrial property rights to both national and foreign investors. Right of freedom for enterprise and industry and the right of freedom for foreign and for domestic trade to foreign investors. Right to remit abroad in freely convertible currency, without requiring beforehand, for this purpose, an authorization to foreign investors. Right to right to purchase shares, participations or rights owned by national or sub-regional investors to foreign investors. Right to converted foreign currency into national currency to foreign investors. Right to use the most favorable purchase rate of exchange to make such exchange operation to foreign investors. Right to carry insurance, inside and outside the country, to protect their investment against commercial and non-commercial risk. Law stability. The State guarantees law stability to foreign investors through the subscription of law stability agreements of a contract-law nature, ratifying the following rights:
1. Stability of the tax system regarding Income Tax;
2. Stability of the right to use the most favorable exchange rate existing at the exchange market
3. Stability of the non-discrimination right.
Investors and companies receiving foreign investment, now or hereafter organized, increasing their capital stock and investors participating in the privatization process committing themselves to fulfill any of the obligations indicated below within a two-year term: with cash contributions (US$ 500 000 to US$ 2 000000, provided they create more than twenty stable job positions or acquire more than half of the stock of the company being privatized.They shall remain in force for ten years (twenty years for investments in the mining sector) and become effective as of their subscription date.
These agreements are entered into with the Peruvian State through the National Commission on Foreign Investments and Technology - CONITE, the national competent agency through which foreign investors are entitled to register their foreign investments, foreign technology and conclude stability agreements.Allowed Forms of Investment
The following forms of investment are possible in Peru:
Direct Foreign Investments, as contributions to capital assets ¡PContributions for the development of contractual joint-ventures ¡P Investments in goods and properties located within the national territory Portfolio Investments The Peruvian government, in order to complement the promotion of foreign investments, has endeavored to establish bilateral and multilateral mechanisms granting guarantees and protection to foreign investments.
In the bilateral field, Peru has concluded agreements for mutual promotion and protection of investments. In said agreements, Peru pledges to respect and give national treatment to foreign investors.
In this sense, foreign investors may request the assistance of organizations granting guarantees and protection to their investments against noncommercial risks, such as the Multilateral Investment Guarantee Agency -MIGA and the Overseas Private Investment Corporation - OPIC, as well as the International Center of Settlement of Investment Disputes - ICSID, an international arbitration organization in charge of settling eventual disputes on investment matters.
For the past ten years, Peru has entered into bilateral investment agreements with the following countries: Germany, Argentina, Australia, Bolivia, Colombia, Cuba, China, Chile, Czech Republic Denmark, Ecuador, El Salvador, France, Finland, Italy, Malaysia, Norway, the Netherlands, Paraguay, Portugal, United Kingdom, Republic of Korea, Romania, Sweden, Spain, Switzerland, Thailand and Venezuela.
And agreements in the same field are currently being negotiated or pending signature with the following countries: Austria, Belgium, Luxembourg, Brazil, Canada, Costa Rica, the Philippines, Greece, Hungary, India, Indonesia, Israel, Japan, Mexico, Panama, Poland, Dominican Republic, Slovakian Republic, Russia, Singapore, Turkey and Uruguay.
FISCAL SYSTEM IN PERUEvery company in Peru must cover the following taxes:
Income Tax is annually applied to every income earned by individuals classified as domiciled or non-domiciled.
Domiciled taxpayers are individuals permanently residing in Peru, regardless of nationality, place of incorporation or location of income source. They are liable to Peruvian tax on worldwide income and subject to monthly advance payments on taxes. Non-domiciled taxpayers are individuals residing abroad, only liable in respect of Peruvian income. For income tax purposes, taxable income is classified under the following five separate categories:
First-category income-Rentals: Income arising from the rental or lease of real estate or movable goods. Second-category income-Interest and Royalty Income: Income arising from interest, royalties, etc. Third-category income-Business Profits: Income arising from commerce, industry and other activities, as provided by law. Fourth-category income-Professional Income: Income arising from individual and independent professional services. Fifth-category income-Income from Employment: Income arising from any employment earned by an employee or worker. Domiciled taxpayers are subject to the following income tax rates:
30% of net income. Tax payable by corporate bodies, partnerships and joint venture on third-category income. 15% to 30% on annual aggregate net income. Tax payable by individuals on first, second, fourth and fifth income categories. Non-Domiciled taxpayers are subject to the following income tax rates:
10% sole rate. Tax payable by individuals on second income category. 30%. Tax payable by individuals or companies earning income from Peruvian sources directly. General Sales Tax or Value Added Tax
The General Sales Tax (locally known as IGV, Peruvian value added tax) applies to the sale of goods and chattels, imports, services rendered or utilized in the country, as well as to construction contracts and to the first real estate sold by its constructor in the country.
Likewise, it applies to the added value of goods and services during each production and circulation stage and allows tax deductions on taxes paid in the previous stage as tax credit.
The applicable rate is 18%, which includes a (see subtitle below).
The General Sales Tax does not apply to the export of goods and services or to the transfer of goods part of a business transfer.
The Municipal Promotion Tax applies to the same cases and in the same manner as the General Sales Tax, which includes a 2% Municipal Promotion Tax.
The Excise Tax is levied upon the domestic sale and import, at producer level, of certain goods and upon the domestic sale made by the importer of goods, as well as upon gambling and bets, such as lotteries, bingos, raffles, slot machines and horse races.
The applicable rate runs between 2% and 118%, according to the type of good or service.
The rates applicable to gambling and bets are:
10% for lotteries, bingo and raffles 5% for casinos 2% for horse races 15% as a monthly fixed amount for each slot machine and other electronic devices TRADE POLICY IN PERU
Peruvian laws contemplate freedom in the sales of domestic products to foreign markets. Products that are part of Peru's cultural patrimony and those generating the extinction of Peru's flora and fauna are band from trading.
Treatment on ExportsIn contractual matters, in Peru there is freedom to celebrate and negotiate agreements or contracts related to the supply of products to other countries. Any currency may be used to effect payment, whether local or foreign.
There are no restrictions applicable to hiring means of transport from agent middleman or insurance.
The General Sales Tax does not burden the export of goods and services, which is only subject to Customs Clearance Fee.
There are customs procedures in Peru that contemplate the acquisition of input, raw materials intermediate parts and pieces and products that are going to be assembled or transformed into export products exempt from payment of import duties and taxes.
Arrangements for Inward Processing Traffic (TPA)
Temporary Admission Procedure
Grants total relief from payment of import duties and taxes to local producers requiring admission of foreign goods such raw materials, intermediate products and containers, provided said goods are exported within a maximum term of 24 months after undergoing transformation or manufacturing processes and are physically part of the product exported. Grants total relief from the payment of import duties and charges includes relief from fees, contributions, taxes and the Maquila as well. Duty-Free Replacement of Goods Procedure
Grants automatic relief from custom duties and taxes burdening the import of materials or goods that after being inward customs cleared, undergo a transformation process or are physically part of the product exported. Goods imported under this procedure are intended for the domestic market or for manufacturing export products. In case of the latter, again exporters benefit from the total exoneration of taxes. Other mechanisms used in Peru are:
Draw BackGrants total or partial refund of custom duties and taxes on imported goods to exporters who have imported or shall import, through a third party, goods, goods contained in them or used up in their production, or incorporated to products exported.
Temporary Admission Procedure
Through this procedure, the State authorizes entry into Peru of imported machinery and equipment directly or indirectly intended to produce re-exportable goods. Moreover, companies benefit from the suspension of custom duties and taxes applicable to imports for a period not greater than one year.
After being used and to fully enjoy the benefit, the machinery and equipment must be returned. Failure thereof will result in the payment of customs duties and taxes.
Import TaxImport tariffs consolidate in two levels: 15% and 25%. Peru imposes 15% duties on 97% of imported goods. Customs duties are assessed on the import's CIF value.
Prohibitions, previous licenses, controls, public or private registry requirements are eliminated.
In general terms and except for pyrotechnic products and devices, it is possible to import all types of articles, whether new or used, into Peru. However, a permit is required in order to import arms and ammunition, communications equipment, some chemical agents, pharmaceutical and farming products.
There is a surcharge on certain products such as powder milk, maize, rice and flour, to be determined by the Ministry of Agriculture.
Trade Agreements and TreatiesPeru relies on the following mechanisms to access the international market:
World Trade Organization (WTO) Andean Trade Preference Act (ATPA) Andean Generalized System of Preferences, European Union Generalized System of Preferences, Japan Andean Community Southern Common Market (MERCOSUR) Latin American Integration Association (LAIA) Free Trade Area of the Americas (FTAA) Asia-Pacific Economic Cooperation (APEC) Peru has signed bilateral trade agreements with the following countries:
Bolivia; Colombia; Ecuador; and Venezuela
Within the LAIA framework, Peru has subscribed the following agreements:
With Paraguay, Partial Scope Agreement to Renegotiate Preferences granted for the 1962 - 1980 Period With Chile, Partial Scope Agreement to Renegotiate Preferences granted for the 1962 - 1980 Period With Uruguay, Partial Scope Agreement to Renegotiate Preferences granted for the 1962 - 1980 Period With Cuba, Partial Scope Agreement Partial Scope Agreement to Renegotiate the Liberation and Expansion of Interregional Trade in Seeds, between the Governments of Argentina, Bolivia, Brazil, Colombia, Chile, Ecuador, Paraguay, Peru, Uruguay, Venezuela and Cuba With Mexico, Partial Scope Economic Complementation Agreement With Argentina, Partial Scope Economic Complementation Agreement With Chile, Commercial Agreement (currently being renegotiated) INVESTMENTS INCENTIVES IN THE FORM OF TAX CONCESSIONS AND EXEMPTIONS FOR EXPORTS
In its eagerness to promote private investment in various economic activities, the Peruvian government has implemented tax incentives in various sectors: Mining, Hydrocarbons, Electricity, Agricultural Activity, Lodging Service Enterprises, as well as in Free Trade Zones3, Industrial Free Zones, Tourist Free Zones, Special Commercial Treatment Zones and Special Development Zones.
Free Zones
1. Industrial or Tourist:
Companies established within these zones are exempt from national, regional or municipal taxes for a fifteen-year period as from the date they were establish Entry/exit of goods is exempt from all types of taxes and non-tariff barriers 2. Special Commercial Treatment:
Preferential treatment is granted to taxes burdening sales operations of goods and services Goods purchased from third countries or industrial free zones are exempt from taxes 3. Special Development:
To enjoy these benefits, investors must enter into a special agreement with the State In addition, export arrangements facilitate the supply of inputs and capital goods destined for export through exemptions from import duties.
Tax incentives are granted to companies established in the Centers of Export, Transformation, Industry, Commercialization and Services - CETICOS that:
Carrying out industrial activities in the CETICOS until December 31, 2004, whose annual operations are not less than 92% of their yearly output, are exempt from the following taxes up to December 31, 2012:
- Income Tax (IR)- General Sales Tax or Value Added Tax(IGV)
- Municipal Promotion Tax (IPM)- Additional Municipal Promotion Tax (IPMA)
- Excise Taxes (ISC)- FONAVI
- All taxes, fees and contributions, whether national or municipalFREE ZONES
According to Peruvian laws, Free Zones are: Industrial Free Zones, Tourist Free Zones, Special Commercial Treatment Zones and Special Development Zones.
Industrial and Tourist Free Zones contemplate special customs, tax and labor regimes aiming to promote the industrialization of export goods and services and the development of tourism.
Special Commercial Treatment Zones likewise contemplate special customs and tax regimes and are exclusively devoted to commercial activities.
Industrial Free Zones are the most important for foreign trade for, as their name indicates, they are devoted to the industrialization of export goods and services. They contemplate special customs, tax and labor regimes.
Specific laws, governing Free Zones in Peru, grant flexibility and low incidence in the cost of goods and services manufactured or commercialized within them.
The benefits granted to companies established or set up in the Free Zones may be summarized as follows:
Exemption from all taxes for renewable 15-year periods, including exemptions from taxes related to production and imports of capital goods, inputs and other production-related components Free remittance of profits and dividends abroad Inexistence of customs tariffs on the entry of export goods Exemption from non-tariff mechanisms regulating foreign trade Free handling of foreign currency and free convertibility of the national currency Freedom to access the national and international financial market Freedom to temporarily hire personnel by means of renewable contracts Freedom to fix wages and work conditions with employees and workers Currently in Peru, there are Centers of Export, Transformation, Industry, Commercialization and Services (CETICOS) located in Ilo (Moquegua), Matarani (Arequipa) and Paita (Piura).
CETICOS are delimited geographical areas, whose nature is a Primary Customs Zone of Special Treatment, created to:
Encourage investments and technological development, by creating a propitious environment to establish new industries and export services Generate foreign currency and create new jobs, whether directly or indirectly Favor the modernization of the ports in which they are established Promote the development and well being of the regions in which they are created, raise the quality of life of the population and decentralize investments Activities susceptible of being developed within the CETICOS:
Manufacturing Industries Maquila or Assembly Storage facilities for merchandise bound for:
- The Special Commercial Treatment Zone of Tacna (ZOTAC) - Used vehicles that need to be repaired or reconditioned-The rest of the country
-TransshipmentRepair and reconditioning of used vehicles, machinery and equipment Customs and Tax Advantages:
-Imported merchandise may enter the CETICOS free of any duty or tax-Storage of inputs and finished goods is indefinitePreferential Treatment to Exports:
-Local merchandise entering the CETICOS is considered an export. If these exports are of a definite nature, they are granted the benefits foreseen in the General Customs Law and its Regulation regarding the IGV, Drawback, Duty-Free Replacement of Goods and Culmination of Entry and Temporary Internment Procedures.The following import benefits are granted to companies engaged in commercial activities:
- Merchandise shall be stored in Public and Private warehouses set up in the CETICOS.Merchandise may remain in warehouses for:
- 12 months, if bound for the Commercial Zone- 06 months, if bound for the rest of the country
- Indefinite, if bound abroadLABOR REGIME
In order to promote investment and eliminate obsolete provisions and contradictory judicial resolutions discouraging the generation of business in the country, the present government has liberalized labor laws. The following concepts have been stipulated in order to establish new working conditions:
Individual Industrial Relations
The Employment Promotion Law governs worker-employer relations, who in turn is authorized to rule and regulate work, give orders for its correct execution, as well as sanction and discipline any breach thereof.
Peruvian laws provide that temporary contracts or subject to other modalities be done in writing and approved by the Ministry of Labor.
The Employment Promotion Law applies to workers who have worked at least three months for a minimum four-hour work days; the parties may extend this three month period, known as trial period, to workers under contracts as political appointees called "empleados de confianza" that have no long term security or fringe benefits for up to six months and for one year to executive personnel.
This law protects workers against unilateral or arbitrary dismissal by the employer; however, consideration must be given to the fact that some contracts, such as part-time contracts or specific service contracts, do not contemplate a worker under contract's possibility of being protected against arbitrary dismissal.
This law does not govern some hiring mechanisms such as a sort of temporary Special Service Agreement called "locacion de servicios " that allows hiring people under contracts that do not create any permanent employment relationship with a third party; directors of companies, military and police personnel, as well as the public employees.
Working Hours, Paid Holidays and Vacations
Normal work periods involve 8-hour workdays. Workers are entitled to an additional day's wage, known as rest-day pay, on completion of a normal week's work (48 hours or less if so established by the employer). Rest-days shall preferably fall on Sundays and be paid as a normal workday.
Likewise, holidays are remunerated as rest-days, except Labor Day
.Those working on their rest-day are entitled to an additional wage equal to 100 percent of the ordinary hourly rate. Workers are entitled to paid annual vacations of one month upon completion of each year of service. Vacations are remunerated at the beginning of the vacations with a one-month's salary in addition to the benefits provided by law.Wages and Salaries
Vacations are remunerated at the beginning of the vacations with a one-month's salary in addition to the benefits provided by law.
On 15 July and 15 December, workers are paid an Independence holiday (July 28) and a year-end bonus before Christmas equivalent to one month's salary.
Workers are entitled to cash participation, calculated as a percentage of the company's net income before taxes, based on the days actually worked during the year and their remuneration. The percentage varies according to the employer's business and to a scale established by law.
Profit Sharing by Industry:
Mining 8 percents Fishing10 percents Industry 10 percents Telecommunications10 percents Trade and Restaurants 8 percents Others 5 percents Law provides the following benefits:
Severance Indemnity (Compensacion por tiempo de servicios - CTS) Life Insurance Social Security and other contributions:
- Health Coverage System
- Private Pension SystemFONAVI Foreign workers have the same rights as national workers.
Contracting Foreigners
Legislative Decree 689 (Ley de Contratacion de Extranjeros) governs the contracting of foreign staff by local companies and is subject to the legal labor regime of the private activity and to the limitations established by said Legislative Decree.
Companies are entitled to contracting foreign personnel up to a maximum of 20 percent of the company's total work force, provided that their salaries do not exceed 30 percent of the company's payroll.
The local labor authorities must approve foreign personnel signing labor contracts. The initial contract must be done in writing for a maximum three-year period, extendable for similar periods upon the Ministry of Labor's approval.
Foreigners wanting to engage in various activities can enter Peru under the following migratory qualifications foreseen by Peruvian migration laws:
Businessman: Allows you to enter and stay for up to 90 days, extendable for 30 days. Visitors cannot perform any activity generating Peruvian source income, but they may sign business contracts and/or transactions. In this case, foreigners are granted a temporary visa. Worker: Allows you to stay in the country, while the contract lasts, in order to perform any job under a work contract approved by the labor authorities. In this case, foreigners are granted a resident visa. Independent: Allows you to stay indefinitely in the country in order to perform investments or practice an independent profession. In this case, foreigners are granted a resident visa. Tourist: Allows you to stay for up to 90 days, extendable twice for 30 days each time. It applies to foreigners entering the country who do not intend to reside or carry out any lucrative or remunerated activity. In this case, foreigners are granted a temporary visa. Work contracts involving foreigners can be entered into in Peru or abroad. In case of the latter, they must be approved by the Ministry of Labor and submitted to the Ministry of the Interior so that the foreigner's work visa can be send to his country of residence so that he may enter Peru under a work visa.
If a foreigner intends to enter into a work contract in Peru, he must previously enter the country under a business visa. Upon approval, the work contract must be submitted to the Ministry of the Interior to change the migratory qualification.
Holidays
New Year's Day (1 January)Holy Week (April - May)
Labor Day (1 May)St. Peter and St. Paul (29 June)
Independence Day (28 and 29 July)St. Rosa of Lima (30 August)
Battle of Angamos (8 October) All Saint's Day (1 November)
Immaculate Conception (8 December) Christmas (25 December)INTELLECTUAL PROPERTY, TRADEMARKS AND PATTENTS
Copyrights
In Peru, copyrights are governed by Legislative Decree 822 (Law on Copyrights) and Supreme Decree 061-62-DE. However, the Peruvian Constitution ranks higher international treaties4 than domestic laws.
According to Legislative Decree 822, copyrights include all works in the literary, artistic or scientific field, whatever their nature or form of expression and regardless of their literary or artistic merit or purpose.
Literary works: articles, books, pamphlets and any other writings; dictionaries encyclopedias, anthologies, guides and compilations of any nature, as well as lectures, addresses, sermons and other works of the same nature, whether oral, written or recorded. Likewise, speeches, whether in whole or in part, given during official or scientific celebrations, in addition to the publications such as magazines or newspapers, among others Artistic works: works of an artistic nature, whether with or without words, theater plays in general; choreographic and mimed works; musical compositions with or without words; radio and television produced works and adaptations of any literary work; cinematographic works and other audiovisual works expressed by any process; works of fine art, including drawings, paintings, sculptures, engravings and lithographs Scientific works: illustrations, maps, sketches, plans, diagrams and three-dimensional works relating to geography, topography, architecture or science Other works: without prejudice to the rights of the author of the preexisting work and subject to his prior authorization, translations, adaptations and any other work or creation not included above, as is the case of software
-------------------------------------------4 Universal Convention on Copyrights, reviewed in Paris; Berne Convention for the Protection of Literary and Artistic Works; Convention for the Protection of Producers of Phonograms Against Unauthorized Duplication of Their Phonograms; Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations (The "Rome Convention") 1961, among others.
Neither works part of the public domain; the informative content of news; reproductions of goods deemed part of the cultural patrimony; manifestations of nature or works located in public spaces are eligible for protection.
Copyrights are registered with the "National Institute for the Defense of Competition and Protection of Intellectual Property" (INDECOPI). However, in Peru copyrights are still protected even without being registered.
Copyrights are protected for a term not less than the life of the author and 70 years after his death. The term of protection for collective works, audio-visual works and computer programs shall not be less than 70 years as from the making or disclosure, as the case may be.
For income tax purposes, royalties obtained by authors, whether domiciled or not in Peru, fall under the Second-Category Income (See Chapter III).
Trademarks
Decision 344 (Common Regime on Industrial Property Agreement) of the Cartagena Agreement defines marks as signs that are perceptible, sufficiently distinctive and susceptible of graphic representation may be registered as marks.
Industrial Property Law deems the following signs as marks:
Words and combinations of words, including names and surnames Images, figures, symbols, graphics and logotypes Letters, numbers and combinations thereof Three-dimensional shape of products, its container or packaging, i.e. bottles or their packaging which do not consist of the everyday shape of the goods or their packaging Any combination of the above Industrial Property Law differentiates and establishes specific registration procedures for trademarks and service marks; trademarks and slogans and trade names and appellation of origin.
Application for the registration of a mark is filed with INDECOPI - Distinctive Signs Bureau and shall provide the following information: name of the applicant, name of the representative (power of attorney), if there is one, a clear and full description of the mark filed for registration, analysis of the production and marketing of the goods identified by the mark and the applicant's legal residence and signature.
Upon evaluating the documents submitted, INDECOPI publishes the application in the official gazette "El Peruano" in order to notify the public in general and if there are no complaints or objections opposing the registration it shall approve the application and issue a certificate of registration. The registry of a mark shall have a term of 10 years, and may be renewed for successive 10-year periods.
The following cannot be register as a mark: signs lacking distinctiveness; signs that cannot be perceived or represented graphically; signs or statements that may be used in business exclusively to indicate their species, quantity, quality, purpose, value, place of origin or time of production; signs or consisting of everyday shapes of goods or their packaging, or of shapes or characteristics dictated by the individual function of the product or service concerned.
Foreign and nationals marks must fulfill the same formalities. Marks that are not registered in Peru but are known worldwide, i.e. "Well-Known Marks", enjoy special protection.
Trade Names
Trade names are signs used to identify a natural person or a legal entity's commercial product or service.
Unlike marks and other industrial property elements, the Industrial Property Law establishes that the right to the exclusive use of a trade name results from its first use in the country, therefore, they may or not be registered in order to enjoy protection.
Proof of use must be given in order to register a trade name. Upon registration, trade names are protected at national level.
Registration of a trade name shall have a term of 10 years, and may be renewed for successive 10-year periods.
In Peru, trademarks, trade names, and slogans are protected pursuant to:
Paris Convention of 1884 Bilateral Agreement signed with France 1896 Washington Convention of 1929 Agreements Establishing the World Trade Organization and Multilateral Trade Agreements included in the Uruguay Round Final Act Decision 344 (Common Regime on Industrial Property Agreement) of the Cartagena Agreement Patents
A patent is a grant of a property right by INDECOPI to the inventor, "to exclude others from making, using or selling the invention". Therefore, a patent is understood as the special right granted by the State with respect to the exploitation of an invention, as long as the inventor makes public his invention as a contribution towards the country's development. Patents grant the right to exclude others from making, using, offering for sale, or selling" the invention in Peruvian territory or importing the invention into Peruvian territory while the term of the patent lasts. Patents do not grant the right to make, use, offer for sale, sell or import, but the right to exclude others from making, using, offering for sale, selling or importing the invention. To receive a patent, your invention must meet at least the following three criteria:
Novelty: An invention must, of course, be novel. That is, that the inventor could not have known of or have access to the invention prior to his filing a patent application and therefore the invention is a result of his own creativity Inventive Level: An invention must, of course, be considered to have inventive level if it is not a very obvious or elementary invention capable of being invented by anyone. Susceptible of Industrial Application: An invention must, of course, be susceptible of industrial application when it can be produced or used in any kind of industry. The term of a new patent is 20 years as from the date on which the application for the patent was filed.
New and useful processes, machines, manufactures, compositions of matter, or any new and useful improvement of one of these can be object of a patent. Discoveries, scientific theories and mathematical methods; economic, financial and commercial systems and methods; computer programs; animal species and breeds; vegetal varieties and species; and inventions that are contrary to public order or morality. Literary, artistic and scientific works are protected by copyrights and cannot be patented. The request to register a patent must be published in the official gazette "El Peruano" so that anyone concerned by the registration may object to it by sending a duly substantiated statement to the competent authorities.
INDECOPI shall, 30-work days after the publication, examine if the invention is a novelty, has an inventive level and is susceptible of industrial application. An inventions is a universal novelty, therefore, a worldwide-search must be made in order to determine if the invention has not yet been patented in another country.
Patent protection granted to an inventor by the Peruvian government is only valid in Peru and the rights do not extend beyond Peru. If you wish to obtain patent protection for the same invention in other country, you must file an application in each country separately.
In Peru, industrial property rights are protected in accordance with international instruments such as the Paris Convention for the Protection of Industrial Property Rights and the Agreement on Trade-Related Aspects of Intellectual Property Rights.
PRACTICAL ASPECTS TO SET UP A COMPANY
In Peru, as previously indicated, there are no restrictions applicable to a foreign industrialist's participation in a company: they may own any percentage of stocks and shares.
Under the rules of the General Corporate Law (Law N¢X 26887), there are various types of legal entities that may be set up in Peru:
Entities most commonly used:
CorporationsThe capital stock of this type of company is made up of freely transferable registered stocks consisting of the contributions made by shareholders. Shareholders are only personally liable for their amount of stock participation.
There are no capital requirements for incorporation, however incorporation requires that the capital stock be fully subscribed and paid up at least in 25% to be registered in the Mercantile Register.
Contributions made by shareholders to the capital stock of the company may be in cash or in kind, i.e. in any type of good that can be appraised, but not in services.
The legislation establishes that shareholders must be at least two individuals, residents or nonresidents.
Limited Liability CompaniesThe capital stock of this type of company is divided into quotas.
Here, as in corporations, partners or quota holders have limited liability and their capital is divided into quotas. Contributions, on the other hand, are not freely transferable and require the partners or quota holders' consent and must be registered in the Mercantile Register. In addition, partners or quota holders have the right of pre-emption.
Shareholders must be twenty individuals at most.
Civil PartnershipsHere, as in limited liability companies, capital stock is made up of contributions or participation. Contributions are not freely transferable. Contribution by the partners may be in services no capital outlay is required.
Entities least commonly used:
General PartnershipsThe partners are jointly and unlimited liable for the partnership's obligations. A partner cannot make a decision that affects the partnership without prior consent of the other partners.
Simple or Stock Limited PartnershipsThis type of company can be incorporated as Simple or By Stocks.
Simple Limited Partnership: There are two types of partners: General Partners, jointly and unlimited liable for the partnership's obligations and Limited Partners, liable for the amount they contribute to the partnership. The capital is made up of shares. Stock Limited Partnership. As the name indicates, the capital is made up of registered stocks. General Partners are unlimited liable and Limited Partners are only liable for the amount they contributed to the partnership. Joint VenturesTwo or more parties can subscribe to a contract to carry out a particular business activity. One of the associates should be the operator who conducts the joint venture and is responsible to third parties and the other parties who participate in the losses up to the limit of their contributions to the joint venture.
Foreign Investment and Investors Rules in Peru: Legal System and Law Stability
INVESTMENTS POLICYRegarding investments, the Government since the 1990's has established a policy for foreign or domestic investment promotion, with attractive, clear and stable rules. In this context, the legal framework is axed on the Law of Private Investment of 1991 and the Law of Foreign Investment, defining that there is no difference between foreign and local investments; and, at the same time, the Government providing full guarantees on the return of the 100% of invested capital, the resulting profits and the financial charges or others related with the investment process.
In Peru, foreign enterprises subscribe agreements of Legal Stability with the National Commission of Investments and Foreign Technologies (CONITE), which have a validity time of ten years. In these agreements, the Government assumes the obligation to maintain in force the stability of the agreements establishing, among others, the same taxation regime at the moment of the agreement's signature; the right to acquire shares, participations, or copyrights on national or sub regional enterprises; the right to use the optimal exchange rate at the moment of the exchange operation; the non discriminatory treatment vis-a-vis other investors, national or foreigners, etc.
Lets insist on some relevant points regarding the protection of private and foreign investment:
Full respect for private or intellectual property. Security for foreign investment. The Government assures law stability (no change of rules) and free return of capital and profits. Governmental guarantees foreign investments against any commercial or non commercial risk. Peru is part of several international agreements, among them the MIGA (Agreement with the Multilateral Investments Guarantee Agency) that acts on the framework of the World Bank. The Government has freezed for ten years the legal scheme regarding taxes, labor rights and investment rules and procedures. There is no limit to contract assurances for investments. There are not restrictions to obtain local credits or to establish technological contracts. One important point to take into consideration, as it was said before, is the fact that Peru is fully involved in the Multilateral Investment Guarantees Agency (MIGA) since 1988, with guarantees investments for non-commercial risk (expropriations, wars, among others). Also, MIGA assures consultant's services to improve the image of the countries and to attract foreign investments.
Within MIGA, Peru allows foreign investors to receive all the guarantees and assurances for foreign investments. There are four kind of risks covered by MIGA:
a. Risks in exchange rates, which covers the impossibility for the shareholder to exchange in foreign currency his benefits, interests, profits or bonus obtained in national currency. Also, those risks which are the result from the deterioration of the conditions that regulate the conversion and transfer of the national currency.
b. Expropriation risks, including the nationalization, confiscation, the frozen of assets and any kind of measures which could do the receiver Government of the investment.c. Risks resulting from the not accomplishment of contracts by the recipient Government, when the investor cannot obtain a legal solution, or when the legal way is obstructed or delayed, or when it is impossible to execute a favorable judgment.
d. Risks resulting from war, civil disturb, revolutions, insurrections, coup d¡Šetat, terrorism, among others.INVESTMENT PROSPECTS
For this year, Peru expects important investments in key economic areas such as mining (gold production), oil (gas production), fisheries, non-traditional industries such as textiles and clothing, agriculture, infrastructure and tourism. A wide range of countries like United States, Canada, Spain, United Kingdom, Netherlands, Germany, France, Panama, Chile, Argentina, Brazil, Japan, China, among others, are at the origin of the investments in Peru.
LEGAL FRAMEWORK IN PERUThe Foreign Investment Promotion Law, approved by Legislative Decree 662, 1991, is based on the equal treatment to national and foreign capital. Therefore, foreign investment is permitted to be established in any economic sector. No prior authorization is required due to its foreign status. Once made, the foreign investment shall be registered with the Comision Nacional de Inversiones y Tecnologias Extranjeras - CONITE.
Investment commitment by the foreign investor
The investor shall fulfill one of the following investment commitments:Direct Foreign Investment, as contribution to the capital stock. Contributions for the development of contractual joint ventures Investment in goods and properties located within the national land. Portfolio investments. Capital contributions
CONITE shall consider as foreign investment the contributions made under the following forms:
Freely convertible currency, channeled through the national financial system. Goods and equipments Capitalization of debts Reinvestment of profits Intangible technological contributions Others contributing the development of the country Rights granted by the law to the foreign investor:
Non-discriminating treatment against the national investor. Free remittance of profits or dividends Free re-exportation of his capital Unrestricted access to the domestic credit Free acquisition of technology and remittance of royalties Freedom to acquire shares owned by national investors Freedom to contract abroad insurances for his investment Possibility to conclude with the State Law Stability Agreements for his investment in the country GUARANTEE AND SECURITY FOR THE INVESTMENT
With the purpose of complementing the new juridical framework to promote the private investment and create the right climate to encourage a bigger flow of foreign investments, foreign investors have been granted with some mechanisms of multilateral, bilateral and national nature granting guarantees and protection for their investment.
Agreements Protecting InvestmentsIn April 1991, the Congress ratified the subscription of the Convention Establishing the Multilateral Investment Guarantee Agency - MIGA, of the World Bank. Nowadays, important investments, mainly of the mining and financial sectors, are being executing under the covers granted by the MIGA.In the same way, Peru has ratified the subscription of the Convention Establishing the International Center of Settlement of Investment Disputes - ICSID, thus, eventual disputes on investment matters with the State may be settled with this arbitrage tribunal.
In the bilateral field, Peru has concluded agreements for the promotion and protection of investments with more than 28 countries of Europe, Asia, and America, further detailed. Nowadays, negotiations to conclude these agreements with 23 countries more are under way.
With the same purpose, in December 1992, the Financial Agreement on Incentives to Investments was concluded with the United States. In conformity with such agreement, the Overseas Private Investment Corporation (OPIC) is issuing insurances, re-insurances or guarantees to cover American investments in Peru.
Business Visas Business Visas are issued for people not establishing as Residents and not going just as a tourist. They are allowed to sign agreements.
General Requirements
Completed Visa Application Form. Please do not use it in thermal paper.
Valid Passport (for up to 6 months).
Copy of Airline return ticket. Please do not send itinerary.
Letter from applicant's company stating the reason and length of the trip, signed by the manager or the president of the company. If applicant wants to add something else, please write it in a cover letter.
Two passport size photographs in color with white background.
Certified check or money order cash for the respective fee and payable tothe order of the Consulate General of Peru.
Application form must be signed in person at the Consulate General of Peru office; otherwise, the signature must be legalized by a public notary. The applicant must send the Notarized Certificate of Identity and the Certificate of Authenticity emitted both by The Society of Public Notaries .If the Notary is a Lawyer, a Certification from the Law Society is required. If the Public Notary is from other place, a certification from the Government of that place is required. A fee applies to legalize the public Notary signature.
Business Visas are usually granted for up to 90 days and renewals can be requested in this Consulate. A extension for up to 30 days, once a year, can be requested to the General Direction of Migration and Naturalization - Digemin, Ministry of Interior, while being in Peru.
Multiple entries are allowed if adjusted to the previous considerations.
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