Peru is one of the most open LATAM markets to foreign investment, with a relatively stable regulatory framework and no general restriction on 100% foreign ownership in almost every sector. But 'open' doesn't mean 'simple': here's what you actually need to know before setting up.
1. Legal entities: which one to choose. Sociedad Anónima Cerrada (S.A.C.) — the most common form for SMEs and foreign subsidiaries, requires a minimum of 2 shareholders, flexible governance via a Gerente General. Sucursal (branch) — allows operating as a direct extension of the foreign parent without incorporating a new Peruvian legal person, useful for public contracts or fixed-term projects. Sociedad Anónima (S.A.) — requires a more complex governance structure (Directorio), suited to larger operations.
2. The incorporation process: realistic timelines. Setting up an S.A.C. typically takes 3-6 weeks including: name reservation at SUNARP, drafting of the minuta and public deed with a notary, registration with SUNARP, obtaining the RUC (tax code) with SUNAT, and opening a business bank account — this last step is often the slowest for foreign companies without a legal representative already resident in Peru.
3. Essential tax regime. Impuesto a la Renta (corporate income tax): standard rate 29.5% on net profit. IGV (equivalent to VAT): 18%, applied to most goods and services. Withholding taxes on payments to foreign non-resident suppliers/services, with rates varying by service type and the existence of double-taxation treaties. Regime de participación de los trabajadores (mandatory employee profit-sharing) in certain sectors above a specific employee threshold.
4. Labor law: points that surprise European companies. Peruvian labor law provides the Compensación por Tiempo de Servicios (CTS), a mandatory semi-annual accrual equivalent to an additional labor cost on top of base salary, plus statutory bonuses (gratificaciones) in July and December. Total labor cost is typically 30-40% higher than the nominal gross salary — a calculation many European companies underestimate in initial budgeting.
5. Cultural aspects that impact business. Building personal rapport almost always precedes formal commercial negotiation — invest time in face-to-face meetings before drilling into contract terms. Decision-making hierarchy is often more centralized than in Northern European organizations — always identify the real decision maker, not just the operational counterpart. Formal punctuality on meeting schedules carries more cultural flexibility than in Northern Europe, but contract deadlines still need to be spelled out with explicit clarity.
FAQ. Can a foreign company own 100% of a Peruvian entity? Yes, in almost every sector there are no restrictions on 100% foreign ownership. Specific limitations exist in a few strategic sectors (e.g. certain security activities near borders). How long does it realistically take to be operational in Peru? Factoring in incorporation, bank account opening, tax registrations and first contracts with local suppliers/employees, a realistic horizon is 2-4 months to be fully operational — not the few weeks often quoted in generic guides.
If you're evaluating opening a business in Peru, book a call: I've directly led operational expansions in this market and can help you avoid the most common hidden times and costs.
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