TAXES

The Peruvian Political Constitution states that taxes are created, modified, ordischarged only by a Congress Law or by a Legislative Decree, the latter incases in which certain attributions have been granted by the Congress to theExecutive Branch of the Government.

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Among the main taxes and their sources we can find the following:A. The General Sales and Excise Tax Law (VAT and ISC Law in Peru)regulates the VAT applied on the sale of goods or services, constructioncontracts and on the first sale of real estate property performed by theconstructor, as well as on the importation of goods. Such Law alsoregulates the Excise tax (ISC), which levies the production or importationof specific goods such as cigarettes, liquors, beers, soft drinks, fuels, etc

B. Excise TaxExcise tax is applied on fuels (gas, gas-oils, diesel), alcoholic beverages,cigarettes and tobacco, beer, vehicles, gassed drinks including mineral water,gambling, chance and lottery games, raffles and other related activities. Taxrates are variable and for some items this tax is applied by charging a fixamount per unit sold.

C. Real Estate Property TaxThe Real Estate Property Tax is applied on the total value of real estateproperty owned by the same person within the same local jurisdiction. The tax base is determined on the value of the real estate property declared by the owner. The corresponding rates are applied according to a cumulative progressive scale.

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D. Business LicensesOperating License Fee is a local tax that must be paid upon obtaining theOperation License before the Municipality where the premises of the businessare located, in order to operate an industrial, commercial or serviceestablishment. That fee is paid once only at requirement of the license and,afterwards, it is only necessary to file a yearly form before the Municipality.Only will be necessary to pay again that fee if the activity of the companychanges.Operating License Fee rate is obtained from applying a pre-establishedpercentage ranging from 0.13% to 0.25% of the UIT (tax reference unit),depending on the nature of the business activity

E. Health CareThe employer, on behalf of the employee, pays the National Health Service, ESSALUD. The withholding rate is 9% of the monthly wage. For employees of the private sector the Private Health Service (EPS) is also paid by the employer on behalf of the worker

Pension contributionsA National Pension System contribution of 13% must be paid by affiliates to the National Pension System, while a contribution of around 12.5% must be paid by Private Pension System affiliates to their own Private Pension Entity.