UK and Peru reach DTA on double taxation and advance CPTPP Minister Greg Hands | Economy

The agreement, negotiations for which began in December 2019, which – according to the Ministry of Economy and Finance (MEF)-will be signed.”In the coming months“, will play a key role in increasing cross-border trade and investment, providing businesses on both sides with greater opportunities Certainty and stability long-term.

To know more details about this agreement, which aims to eliminate double taxation, please visit: administration Talk to him British Trade Policy Minister, Greg HandsHe visited Peru again in order to promote his country’s accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a trade bloc made up of Peru and ten other Pacific countries.

What is the purpose of your visit? What does your agenda include?

There are two major announcements during my visit: first, there is the Double Taxation Treaty and then the fact that the UK is ratifying the terms of our accession to the CPTPPP. The main outcome at bilateral level is the DTA, which facilitates more foreign investment from both sides, such as Peruvian investment in the UK, because businesses want to have certainty about the tax regime and certainty about the basis of the taxes being levied. To turn off.

We want to ensure that Peru is as attractive a destination as possible to invest in. The DTA has been a long time coming to negotiate, but it will bring certainty to businesses and increase investment, which means more jobs, economic development and business opportunities. This is a good time for business and DTA is very positive for the prosperity of both countries.

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The last time I was in Lima in 2017, we signed an agreement for the UK to be a partner in the development of the 2019 Pan American Games and so we started to do more government-to-government collaboration, attracting more British companies to be active in Peru, which had not been On the radar of British companies for several decades.

Since then, we have engaged several infrastructure companies. We’ve just had a major investment from Actis, which has bought a lot of Enel’s renewable energy assets, so we have a lot of British investment coming into Peru again, and the DTA will certainly help facilitate further investment. I think the country needs more infrastructure both in Lima and throughout the country so that travel within the country is faster.

To what extent will investments increase?

I don’t have that projection at hand. What I know, and experience shows, is that the UK has already achieved some bilateral trade agreements, resulting in increased trade and investment; This is the experience with other countries. Sometimes the lack of a DTA causes investments to be postponed.

Number of British investors [en Perú] It’s definitely growing, partly because of government-to-government agreements, but also because of the increased promotion of Peru in terms of the work we did at the Pan American Games, where we brought in the infrastructure through a consortium of big British players and investors. Now they are betting on renewable energy in Peru; So there is good investment from UK coming into the country.

What’s next for DTA?

The next step is for Peru to approve it. Ratification in the UK should not take long, it is usually a regulatory matter in a committee in the House of Commons, and should be quick. So the UK will ratify it and the question is how quickly Peru will do so. It is usually approved quickly in the House of Representatives, taking a few weeks.

I want to reiterate that this agreement will be a great facilitation for more investors to come to Peru when they see tax certainty and predictability. DTA is very important when an international investor is thinking about which country to invest in, because it will always make the company prefer that country because it gets certainty and predictability regarding taxes.

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How are efforts to join the CPTPP going?

The United Kingdom is the first country to join the CPTPP. There are 11 founding members including Peru; The United Kingdom will be the first country to join. This is a new process, no one has done this before, and the way this process works is that half of the current members have to agree. Ratification must be done by the United Kingdom itself, but also by half of the current members.

So everyone came to an agreement [firmado el año pasado]But they must ratify it, and then it will enter into force. It was eventually ratified by everyone, but for it to enter into force it must be ratified by half of the eleven countries. So far, Japan, Singapore and Chile have ratified the agreement, and we want Peru to be one of the six countries to ratify it because they have supported us a lot and are hosting the TPP meeting in Arequipa.

When will the CPTPP come into force?

Hopefully, it will be much more before the end of the year. We want it to be ratified and put into effect before the end of the year, and I think we will reach six in the coming months.

What does the CPTPP mean for the UK?

The CPTPP represents a great opportunity for the UK, currently accounting for 11% of global GDP which rises to 15% when the UK joins. With the UK joining the bloc, the nature of the TPP changes from being a Pacific agreement to a global agreement. Moreover, it helps the UK set the rules for future trade, as the Trans-Pacific Partnership (CPTPP) is a very important trade bloc that includes large free trade countries such as Japan, the UK, Canada, Australia, Vietnam and others.

We will be the second largest economy in the TPP, after Japan. So, we will be an important member and we want to see it grow even more with new members, with fast-growing economies, not just from the Asia-Pacific region but beyond. It would be a great opportunity for the UK to expand its free trade, that’s the way it will be.

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How does binary trade progress?

Trade is about £2 billion between the two countries, and we expect that figure to grow overall by the end of the year partly thanks to the TPP, but it’s a somewhat volatile number because Peru sells us LNG from time to time. The arrival of a large shipment of LNG to the UK could significantly increase this figure. I would like to look at the general trend, the general trend is increasing, although I think it should be higher than that, I would like to see a trade figure greater than £2,000 million, so CPTPP membership for both countries will help increase that number.

What other agreements are under discussion?

We are always excited to see more agreements, we have a free trade agreement between Peru and the United Kingdom that is part of the agreement with the Andean countries and we want to move forward with our economic cooperation. The UK will support Peru’s application to join the OECD. We are always conscious of putting more effort into agreements that facilitate progress and tangible improvements.

What is a double taxation agreement or DTA?

Also known as the Double Taxation Agreement, the DTA is a bilateral treaty that addresses how each country taxes cross-border income, prevents tax avoidance and evasion, and provides relief against double taxation.

It also sets limits on how each country’s domestic laws can tax cross-border income, such as payments of dividends, interest and royalties. This treaty is the first of its kind between Peru and the United Kingdom and will require signature and ratification before it can enter into force.

The UK has similar agreements with Mexico (since 1994), Chile (2005; updated as of April 2022), and Colombia (2020), all of whom are members of the Pacific Alliance alongside Peru. Currently, the free trade agreement with Brazil, signed in November 2022, is about to enter into force.

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