🌎 On September 9th, the Peruvian tax authority (SUNAT) released a very interesting consultation ruling – and we thank Roberto E. Polo Ch. for sharing it with his comments. In Informe N.º 000070-2024, SUNAT is asked whether the “benefits test” of Art. 32-A of the Peruvian Income Tax Law (part of the local transfer pricing rules) applies to (a) the lease of movable/immovable property and (b) the license to use a trademark between related companies.
Pursuant to item (i) of Art. 32-A, the benefits test is considered to have been met in relation to intra-group services if a service provides economic or commercial value for its client, improving or maintaining their commercial position. The provision is inspired by paragraph 7.6 of subchapter B.1.1 of chapter VII of the OECD – OCDE Transfer Pricing Guidelines, and Art. 32-A says that its interpretation should follow them except in those circumstances where such an interpretation would be contrary to other provisions in the Income Tax Law.
SUNAT refers to the Guidelines to state that services require the execution of “an activity” (see page 23 of the Guidelines). It then adds that, pursuant to the Spanish Dictionary of RAE (Real Academia Española), the term “activity” comes from “action”, or doing something, and that in civil law the obligation to do something is carried out by the use of “an energy of work” of the provider in favor of the client. On that basis:
âž¡ SUNAT states that the lease of movable/immovable property is an obligation to “give”, not to “do” something, which means it cannot be considered an activity and therefore is not a service – meaning the “benefits test” does not apply to intra-group leasing.
âž¡ They reach the same conclusion in relation to the trademark license, referring to a 2022 ruling of the Court of Justice of the Andean Community in which it is said that a trademark license is just an authorization to use the trademark (and because the obligation to “give” something in Peruvian Law is not just the obligation to cede property, but also the use or possession of something, licensing is an obligation to “give”, not to “do” something).
Interestingly enough, the Brazilian Supremo Tribunal Federal stated in a 2016 ruling about taxable services (subject to the Municipal Tax on Services) that the classification of obligations into those that are “to give” and those that are “to do” something is civil in nature and is not appropriate for the assessment of their economic impact. Minister Luiz Fux stated in his majority opinion that the constitutional allocation of taxing rights had a different design altogether: to capture all business activities that resulted in services, those being “immaterial assets” as opposed to “material assets”. Available in Portuguese here: https://bit.ly/4gp1Pls
