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Peruvian Congress Approves Tax Exemption For Stock Market Gains

by Mike Godfrey, Tax-News.com, Washington

08 September 2015


Peru's Congress voted in favor of a bill that would exempt the country's stock market from the capital gains tax.

The tax exemption was proposed following an announcement from index and analytics provider MSCI Inc that it may reclassify Peru's stock market from "Emerging Market" to "Frontier Market" due to low liquidity. The President of the Lima Stock Exchange, Christian Laub, noted that such a reclassification could have an "extremely negative" impact not only on the stock market but also on the Peruvian economy as a whole. He said that it could cause outflows of capital from the Peruvian market of between USD1.7bn and USD5bn.

Currently, a tax of five percent is levied on capital gains from the sale of Peruvian stock by non-domiciled individuals and corporations if the transaction takes place via the Lima Stock Exchange. Domiciled individuals are also subject to a five percent rate. However, a rate of 30 percent applies to transactions that do not meet those conditions.

The tax exemption will not apply to capital gains on share transfers that make up more than 10 percent of a company's shares. Certain liquidity conditions also apply.

TAGS: individuals | capital gains tax (CGT) | tax | investment | tax incentives | equity investment | stock exchanges | Peru | tax breaks | Economy

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