Second National Reconcilation Study EITI Peru - unofficial…

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Consultoría para la Elaboración del Segundo Estudio Nacional de Conciliación de la Iniciativa de Transparencia para las Industrias Extractivas (ITIE) en el Perú (2008 – 2010) (continuación) (v) The payments that have been reconciled correspond to what the companies actually paid according to the criteria established in the EITI Manual. In the case of Income tax and according to the agreement reached by the Working Commission for EITI Peru, we have reconciled the amount declared in box 504 of the annual Income Tax declaration and the advance payments for Income Tax that have been credited against the ITAN declared in box 126 (where applicable) with the exception of the companies that have more than one administrative economic unit, where we considered the amount declared in the mining or hydrocarbons annexes of the same income tax declarations. The amounts declared in boxes 504 and/or in the mining and hydrocarbon annexes are paid through monthly payments, deductible tax applications, payment regularization of final balances, miscellaneous credit applications, among others. The distribution of Tax Revenues, both in the geographic regions through the canons as well as directly to the Public Treasury, is effected according to annual tax declaration provided by the companies every year in their Sworn Tax declarations. It is important to stress that according to Peruvian tax norms, taxpayers are classified according to scale and taxes paid. This classification is divided into two large groups: Medium and Small Taxpayers (MEPECOs) and Main Taxpayers (PRICOs). Being part of the PRICOS category gives companies certain benefits but their importance (in terms of the scale of their contributions) also means that they are subjected to more monitoring by the Tax Administration. In practice, higher levels of monitoring are manifested in more frequent fiscalization, which of course entails more requests for information. SUNAT determines which companies qualify for Main Contributor (PRICO) status based on taxpayer declarations and its own criteria and calculations. Companies that are part of the PRICOS category tend to receive better service in the form of more personalized attention; access to special locales for format reception and administrative procedures; as well as access to on-line recalculation of taxes owed (automatic reliquidation of the amount declared) when tax declarations are presented. When PRICOS present their tax declarations, the system recalculates the taxes owed (on-line) while the information contained on the formats is uploaded. Consequently, if an inconsistency is detected on the tax declaration the filer is automatically informed (See Annex IX, Classification of the companies included in the Second Study for National Reconciliation EITI). Accordingly, it is important to mention that Peruvian legislation does not contemplate, as part of its requirements for declaration and payment of the concepts included in this study, certification or auditing of the figures presented. In light of this, it is important to consider the following: - Income Tax and Mining Tax: the information provided to the Tax Administration (SUNAT) is considered a sworn declaration according to the Peruvian tax code and as such is subject to review by SUNAT following presentation. The statute of limitations in these cases in generally 4 years in the case of Income Tax, beginning on January 1 of the year after the corresponding Sworn Tax declaration and Mining Royalties Declaration has been presented. In the case of Mining Royalties, the statute of limitations was set at four years in 2007. - Hydrocarbon royalties: are calculated by the collections agency (Perupetro); companies are obligated to pay the calculated amount following a simple a validation process. Consultoría para la Comisión Multisectorial Permanente de la ITIE Perú 34
Consultoría para la Elaboración del Segundo Estudio Nacional de Conciliación de la Iniciativa de Transparencia para las Industrias Extractivas (ITIE) en el Perú (2008 – 2010) (continuación) - Validity rights are determined by INGEMMET, which issues a database of the amounts paid for denouncements based on their calculations and sends it to the banking entities so that title owners can make the corresponding payments. Review the legal basis of the concepts mentioned above in numeral 1.2 of the Conceptual Framework for concepts that are included in the Second Reconciliation Study (Section IV). Public institutions are supervised by the General Controller of the Republic, which is the highest oversight body of the Peruvian State. The latter monitors these institutions to determine if their internal control is adequate and evaluate the reasonability of their financial statements among other factors. The information provided by the companies that participated in the reconciliation study was presented on formats that had been specifically designed for the Second Study’s purposes. These formats were signed by the legal representatives of the companies participating in the Second Study, who declared that Management at their organizations was responsible for the veracity of the information contained therein. IV. Conceptual framework of the concepts that are part of the Second Reconciliation Study EITI Payment concept Income Tax (IR) In the Peruvian context, the extractive sector, through its most representative segments (the mining, petroleum and gas industries), makes cash payments to the Peruvian State for different tax concepts (Income Tax) and non-tax concepts (Royalties and Validity Rights) among others. The table below provides a summary of how the payments made by extractive companies are collected by public institutions and how they are distributed. Collection frequency Institution responsible for collections Annual SUNAT Mining royalty Monthly SUNAT Petroleum royalty Gas Royalty Every two weeks Every two weeks Perupetro Perupetro Institution responsible for distribution DGDFAS-MEF (formerly DGAES – MEF) PCM DGTP - MEF DGDFAS-MEF (antes DGAES – MEF) PCM DGTP - MEF Perupetro DGDFAS-MEF (antes DGAES – MEF) PCM DGTP - MEF Perupetro DGDFAS-MEF (antes DGAES – MEF) PCM DGTP - MEF Consultoría para la Comisión Multisectorial Permanente de la ITIE Perú Distribution frequency Annual Monthly Monthly Monthly Distribution concept Mining Canon (50% income tax) Gas canon (50% income tax + 50% Gas royalty) Mining royalty (100% Mining Royalty) Petroleum Canon (100% Petroleum Royalty) Gas Canon (50% income tax + 50% Gas Royalty) Validity Rights Annual INGEMMET INGEMMET Monthly Validity Rights 35
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Page 3 and 4: Lima, 13 December 2011 Mr José Lui
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