Executive publishes decree so that bribes cannot be deductible from IR

The government of President Pedro Castillo published the Legislative Decree No. 1522, which modifies the Income Tax Law, in order to expressly establish that payments for bribery in its different forms are not deductible as a cost or as an expense to determine this tax.

This, in line with the recommendations made by the Organization for Economic Cooperation and Development (OECD), the United Nations (UN) and the Organization of American States (OAS) on the occasion of the evaluations carried out to verify the compliance with international anti-corruption treaties signed by Peru.

In this way, the decree incorporates the fifty-fourth transitory and final provision to the Income Tax Law, referring to the “Non-deductibility of bribery payments”, according to the following text:

“In accordance with the provisions of articles 20, 37 and 51-A of the Law, the disbursements described in the criminal types of bribery crimes in their different forms do not constitute a deductible cost or expense for purposes of determining Income Tax. modalities regulated in the Penal Code or in special penal laws”, the document refers.

The document bears the signatures of President Pedro Castillo, the head of the Council of Ministers, Mirtha Vásquez, and the Minister of Economy and Finance, Pedro Francke.

MEF: bribes may not be deductible

Last October, Francke had already announced that, among the tax powers that he requested from the Congress of the Republic, and which were partially given to him, was the elimination of the figure that allows offending companies to deduct the payment of their bribes as if they were costs of the company, in order to pay less Income Tax (IR).

“An issue that seems to us in terms of collection, but it is important for Peru, is the issue of corruption. Personally, I am outraged that, having seen how million-dollar bribes have been paid in our country, it turns out that these companies deduct these bribes as if they were company costs, and thanks to that they pay less IR,” he said on that occasion.

Francke Ballvé explained that, as a result of this gap in Peruvian law, “30% of bribes are paid by all Peruvians with worse services.” In this sense, he recalled that Odebrecht continues to be investigated for declaring this type of service, whose existence was never verified.

“I am not an expert on corruption issues, but we have all talked about companies like Odebrecht, which paid for financial services that, really, have not been found to have existed for certain figures in national politics who are today under preventive detention or constitutional charges. We know that this is what has happened,” said the head of the MEF.

What is bribery?

The crime of bribery consists of soliciting, offering or accepting gifts, favors or compensation to a public official so that he commits an administrative infraction in the exercise of his position.