Peruvian Tax Cases: Advance Payments, Services, Property VAT

Tax Case Studies in Peru

Case 1: Tax Liability on Advance Payment

CASE: The SAC Llaque Company, dedicated to the marketing of clothing, dated January 15, 2009, received in advance from its client, Ms. Miluska Briones, the amount of S/. 20,000 corresponding to a purchase order for a batch of goods whose value is S/. 80,000 plus IGV. Such goods will be delivered in 30 calendar days, and the balance of the transaction will be canceled upon delivery. When is the tax liability incurred in this transaction?

Solution

SOLUTION: For the amount that is received. Thus, in the present case, receiving as an advance the sum of S/. 20,000 for an operation for which property has not yet been transferred, the tax liability will arise in January 2009, but only for the amount received, not for the total amount of the operation.

12.1: 2000 * 38.9:3800 / 12.2:20000 * 40.11:3800.
BRIONES MRS REGISTRATION: 42.2:20000 * 40.11:3800 / 42.1:20000 * 46:3800.

Case 2: VAT on Printing Services

CASE: The Institute of Higher Education, "The Good to Know", with RUC No. 20123546871, requested the printing of 1,000 books from Gutenberg Printers SA, RUC No. 20,231,245,966. The price was S/. 15 per unit, excluding VAT, an amount that was approved by the school, with a deadline of 30 calendar days for review. Following the relevant law, the printer considered this indication relevant and proceeded to issue the payment voucher for S/. 15,000, representing only the sale value and not including VAT, on the grounds that the operation was exempt.

The Error Detected

The Error Detected: However, after a review by SUNAT held on January 31, 2009, the printer was informed through a requirement that it had made a mistake by not charging VAT for the printing service of 1,000 books. The error is that the printer did not make a sale of books as a finished product, which itself is exempt, but provided a printing service subject to IGV (which is not included in the list of exempted services contained in Appendix II of the TUO of the Value Added Tax Law).

Case 3: VAT on Property Sale (Related Parties)

Event

EVENT: The company VCC is dedicated to building construction, having built a villa in the district of Baños del Inca, which once completed transfers to the brokerage firm Juniper SA with a value of S/. 45,000 (excluding the value of the land) for the transaction to be taxed with VAT. Subsequently, Juniper SA sold the villa to a third party for the amount of S/. 90,000 (excluding the land value). It is known that VCC is an 85% shareholder of Juniper SA, and that the price at which VCC normally sells similar houses is S/. 70,000. The sale by VCC to Juniper SA was the first sale of the property made by the builder, so the operation is subject to VAT on S/. 45,000.

Solution

SOLUTION: Also, because the first sale made by VCC to Juniper SA was below the market value (S/. 70,000), the subsequent sale made by Juniper SA to unrelated parties will be taxed by VAT on the market value of S/. 70,000.

Therefore, both the first sale (VCC to Juniper SA) and the second sale (Juniper SA to the third party) are subject to VAT, with the second sale being taxed on the market value due to the related party transaction below market value.