Banking & Insurance Law Peru
With the Peruvian economy growing, insuring the country’s future is not just for its residents. Developing new business ventures has generated opportunities for foreign insurance companies, and the clear regulations each must adhere to.
Peru’s economy remains strong, attracting the attention from overseas investors. At the end of July 2012, the Wall Street Journal named Peru the “New South American Tiger”. Not surprising, as economic authorities reported a 7.07 percent growth for July and issued a conservative projection of 8.7 percent annual growth to be reached by the end of the year.
Growth is driven by finance, and Peru has developed a solid financial system in only a few years. One of the most important pillars of this system is the insurance industry. When new businesses start and substantial loans are made to financial institutions, corporations and individuals, creative risk management becomes indispensable; it is for this reason that Peru has streamlined its insurance system, and it is precisely for this reason that you need to have specialized attorneys that know Peruvian Insurance Laws.
Opportunities for foreign insurance companies in Peru have increased considerably, especially in the reinsurance business. With many other areas of economic activity, Peru has enacted clear and brief regulations as part of a national strategy designed to spur growth, and avoid excessive regulatory burdens.
Governing Banking & Insurance Laws in Peru:
The General Banking and Insurance Law and its complementary regulations govern insurance and finance matters in Peru. Peru’s Superintendence of Banking and Insurance (SBS) is the agency charged with regulating financial entities, insurance companies, and pension funds.
Only insurance companies duly authorized by the SBS may write insurance business in Peru. An important exception to this general rule, however, is the freedom Peruvian residents experience when contracting foreign insurance services outside Peru.
Neither the Banking and Insurance Law nor the Banking and Insurance Regulations establish any restriction or limitations addressing non-residents. Currently the SBS does not regulate the sale of life insurance policies by brokers issued by foreign companies to Peruvian residents or non-residents.
Let the Banking and Insurance attorneys at Monteblanco & associates be of service to your endeavors.
Taxation of Insurance Premiums
Peru has simplified the tax treatment of premiums payable to foreign insurance and reinsurance companies, making investments in Peru’s insurance industry even more beneficial. Peru’s income tax law establishes a “presumption of income”, where seven percent of the insurance premium value is deemed to come from a Peruvian source, taxable at 30 percent, which is applied only to the seven percent of presumed income.
Peru’s income tax law deems the Peruvian payor a withholding agent, and charges him with the obligation of withholding the Peruvian Income Tax – paying it to Peruvian National Tax Authority (SUNAT). If this tax option were not acceptable, then it is possible under Peruvian law to negotiate an up-front gross clause that would increase the premiums to include the payment of Peru’s income tax.
As you can appreciate, Banking and insurance Law in Peru is quite tedious and multidisciplinary. The experienced attorneys at MONTEBLANCO & ASSOCIATES can steer you in the right direction. Let us know how we can be of service.