Peru Market Entry

Peru Market Entry

Subchapters:

  • Market entry
  • Forms and conditions of operation on the market
  • Marketing and Communications
  • Issues of intellectual property protection
  • Public procurement market
  • Payment terms, payment ethics and resolution of commercial disputes
  • Visas, fees, specific conditions of travel to the territory
  • Employment of citizens from the Czech Republic
  • Fairs and events

Market entry

A large part of industry and trade is concentrated in the region of Lima (up to 70%), consumers (32%) and this region also contributes to the creation of GDP from 44% and other large Arequipa and Trujillo. The use of local agents is common and widespread. The Peruvian market is highly competitive and has long been occupied by major global suppliers of all types of goods and services. Therefore, it is very important to have a permanent representative or a branch that would respond flexibly to the needs of the market. Distance business is very difficult, although the covid era has shown that it is possible. In some cases, local distribution companies distinguish whether they are offered a foreign product by a manufacturer or a Peruvian representative and proceed with the purchase accordingly – they then buy directly from the foreign manufacturer’s warehouse, in the case of a representative, they force him to put the goods on consignment. Before negotiating with a potential business partner, it is definitely advisable to consult whether it is more advantageous for the company to sell directly or through a representative. However, in general, a local representative is a prerequisite for success. Check smber for agriculture and fishing facts of Peru.

Peruvian foreign trade is liberalized. Apart from prohibited goods, there are no formal barriers to export and import. Customs rates when importing goods to Peru can be searched by entering the customs item code (HS code) in the system of the Peruvian Finance and Customs Administration SUNAT (http://www.aduanet.gob.pe/itarancel/arancelS01Alias). All importers must be registered as legal entities and have a tax identification number – RUC assigned by the tax authority (SUNAT). In addition, all business entities must be registered in the commercial register (SUNARP – www.sunarp.gob.pe/index.asp). In general, import documents are required in the Spanish language. A procedure is commonly used (to speed things up) where the importer or the customs declarant authorized by him registers information about the goods in question 15 days in advance. When importing goods with a value higher than 2. 000 USD, the services of a customs declarant must be used for clearance. A natural person can carry out customs clearance of goods up to USD 2,000 himself, but the use of a specialized company is recommended. Import duties are applied to imported goods, the rate of which is at the same time ad valorem 0%, 6% and 11%. Similarly, a general sales tax of 18% applies to imported goods. In addition, depending on the type of goods, imports may be subject to excise duties, anti-dumping duties, countervailing duties, etc. In the case of live animals and goods of animal origin, permission from the veterinary administration SENASA must be given. Imported food and beverages must be registered with the Ministry of Health’s food safety unit DIGESA. Pharmaceutical and cosmetic products require registration at the relevant department of the Ministry of Health DIGEMID. The import of telecommunications equipment is subject to authorization and homologation under the responsibility of the Ministry of Transport and Communications (MTC). The Peruvian system of standards is based on the international practice of the WTO. For more precise information, you can contact the competent institution, which is the Office for the Protection of Competition and Intellectual Property INDECOPI. INDECOPI also accredits national and international organizations that can evaluate and confirm compliance with applicable standards.

Export control applies to certain types of products (and related services, maintenance, etc.) such as weapons and ammunition, special military equipment and equipment, explosives, strategic goods (encryption technology), dual-use goods (including software and technology), e.g..aircraft and goods that could be used for torture, capital punishment and similar inhumane treatment. Similar restrictions apply when importing to Peru.

Forms and conditions of operation on the market

Investors and/or foreign companies must decide if they will operate a business established according to a partnership agreement or a branch. The establishment of companies, including the definition of legal forms, can be found in the Business Companies Act No. 26887. The establishment of mixed enterprises is regulated by the Act on the Support of Foreign Investments No. 662. The current legislation allows branches of foreign companies to transform into commercial companies of any legal form. Any form of company must be registered in the public register (Registros Públicos – SUNARP), registered at the tax office SUNAT and obtained an ID number (RUC). The company must also be registered with the local self-governing office (municipalidad), without this registration it is not possible to start operations and failure to do so leads to heavy fines. The establishment of a company theoretically takes 15 days, the whole process may take 26 days or more to obtain the necessary documents. The most common form of business is a joint-stock company (sociedad anónima – SA) and a limited liability company (sociedad comercial de responsabilidad limitada – SRL), which also offer relatively the most advantages. Other legal forms are closed joint stock company (sociedad anónima cerrada – SAC) and open joint stock company (Sociedad Anónima Abierta – SAA), intended for a company with more than 750 shareholders and listed on the stock exchange.

Foreign companies can freely establish their branches in Peru. They need to be registered with the local commercial register in Peru. In addition, a legalized certificate from an authorized body certifying the existence and validity of the company, a document stating the authorization to establish branches in foreign countries and the company’s consent to establish a branch in Peru must be attached. In accordance with the Companies Act (LGS – Ley General de Sociedades), a branch of a foreign company can acquire any legal form provided by law.

Joint ventures operate on the basis of contracts signed between the parties. In this case, registration in the commercial register is not required. Resources provided on the basis of the relevant contracts (Asociación en Participación, Consorcio, Joint Venture) are considered foreign direct investments if they are directed in the form of participation in production capacities without having to be a capital investment.

Marketing and communication

Without advertising, the Peruvian consumer will not buy the product – because they simply do not know it. Czech products are still exotic on the local market (not only because many Peruvians have no idea where the Czech Republic is on the map), but also because the locals do not trust an unknown product. It must be taken into account that advertising and promotional materials must be in the Spanish version, English or another language mutation is unsatisfactory. The best advertising when promoting sales through chains or distribution networks is the physical presentation of the product (if it is technically possible) using trade fairs, specialized seminars, etc. Most likely, however, the Czech company or its representative supplying the chains will not miss participating in advertising as part of the distributor’s events; a personal presentation by a representative of the manufacturer/authorized dealer is the most effective sales promotion. In this context, the Peruvian partner takes a much more positive attitude towards the realized business operation if he knows the partner personally. Presentations by mail, attempts at distance sales, etc. can be considered an unnecessary waste of funds. Television advertising, social media, billboards, daily newspapers, magazines, specialized or general magazines are effective.

Top PR agencies: Trend, Realidades, AGC Comunicaciones, Pop Com PR, Extrategia.

Top HR agencies: Adecco Profesional, Experis Peru Logo, Great Place to Work Peru, Lee Hecht Harrison – DBM Peru, Career Partners Peru.

Issues of intellectual property protection

The issue of intellectual property protection in Peru has improved in recent years, however, it does not reach a satisfactory level and the required standards. The main problems occur with piracy in the areas of music copyright, film production and software. To ensure the protection of intellectual property, it is recommended to contact a specialized legal office. Intellectual property protection is ensured by the Office for the Protection of Competition and Intellectual Property (Instituto Nacional de Defensa de la Competencia y de la Protección de la Propiedad Intelectual – INDECOPI). The legal framework for the protection of intellectual property is provided by Law No. 822 of 1996 and Decisions No. 344, No. 486 and 351 of the Cartagena Agreement (establishment of the Andean Community) on the protection of patents, trademarks and commercial designations. Peru is a member of the WTO and the International Organization for the Protection of Intellectual Property (WIPO), is a signatory to the 1884 Paris Convention on Industrial Property and other conventions in this area. In 1994, Peru ratified the WTO Agreement on Trade-Related Aspects of Intellectual Property (TRIPS Agreement). Peru is also an active member of the Lisbon Agreement on the Protection of Appellations of Origin and their International Registration. Foreign brands must comply with the same rules as national brands.

Public procurement market

By law, tenders are issued for public contracts. An overview of tender procedures is available on the Internet (Organismo Supervisor de las Contrataciones del Estado – OSCE) on the Sistema Electrónico de Contrataciones del Estado. To participate in the tender procedure for the state sector, the company must be registered in the RNP – Registro Nacional de Proveedores del Estado. There is also a “black list” which prohibits some companies from participating in public tenders either temporarily or indefinitely for various reasons (most often fraud in public tenders, non-fulfilment of won tenders, etc.) (Registro de Inhabilitados para Contratar con el Estado). A foreign company can be registered, but this means providing all documents, including reference actions (whether designed or implemented) in the Spanish language. These documents may not be authenticated by the Peruvian embassy in the respective country. A sworn statement by the company about the truthfulness of the submitted data is enough. Registration is valid for one year. When registering for the tender, a fee is payable, which must be paid on the spot. Due to the large distances in Peru, this favors local companies. Registration in the RNP must be performed by the legal representative of the non-resident foreign company in the location. A special chapter is made up of the contracts of the Ministry of the Interior of Peru in tenders of the state-state type, which concern the so-called strategic material for the police. The new directive No. 05-2018-IN-OGAF issued in December 2018 requires all companies that want to participate in these tenders to register in the list of foreign suppliers. For it, companies (if they are private entities) need to document a guarantee from the competent authority of their state (e.g.

Payment terms, payment ethics and resolution of commercial disputes

Participants in any dispute, including those of a commercial nature, can turn to an independent court. However, one must expect a lot of bureaucracy and the necessary help of a local legal representative. In 1998, the Limsk Chamber of Commerce started arbitration activities. Even if its results are not legally binding, members of the Chamber of Commerce are obliged to respect the arbitration decision.

Business operations are also hampered by bureaucracy and corruption. The prerequisite for success is securing business financing. In many cases, Peruvian customers request payment deferrals and loans.

Regarding payment ethics, it is generally true that in the case of foreign companies or large business chains, it is significantly better compared to the local environment. The largest retail chain Wong, for example, pays with a delay of 30-90 days, the same applies to other retail chains. In principle, it is necessary to spread the risks (advance payments, letters of credit, etc.) for the first deals. Counterpayments of payments in local currency are remitted abroad within the normal terms of the bank administration. The situation is similar when opening letters of credit, only their price changes depending on the current economic situation. All common payment instruments used in foreign trade are currently used in the commercial payment system. The payment morale of local entities is usually not high and generally corresponds to general fiscal and payment discipline. This fact should always be kept in mind when choosing a payment instrument. The enforcement of funds is difficult in the local system. It is recommended to use insurance services (e.g. EGAP) against all short-term and long-term commercial risks.

Visas, fees, specific conditions for traveling to the territory

A passport valid for at least 6 months is required to enter Peru. The maximum permitted visa-free stay is 180 days (6 months). The immigration officer may require the presentation of documents confirming the provision of the planned stay in Peru and return from the country (return ticket, financial security, accommodation reservation, etc.). Formally, there is no limit to the number of entries (however, in the case of repeated entries, the length of stay is shortened and eventually repeating the immediate next entry is also prohibited). In the case of trips to Peru for purposes other than tourism, citizens of the Czech Republic are required to obtain a visa at the Embassy of Peru in Prague (www.peru-embajada.cz). The length of stay for a visa is a maximum of 90 days. The visa can be extended at the migration office in Peru. If it is a stay for the purpose of business, study, internship, work, etc., the inviting Peruvian entity should help arrange a stay longer than 90 days. In this case, it is also possible to use the option to arrive as part of a visa-free tourist stay and request a change of migration status. Registration is not mandatory in Peru. When traveling by motor vehicle, a valid driver’s license, vehicle technical certificate and insurance with either a Peruvian or an international insurance company recognized in Peru are required upon entry to Peru. In Peru, the usual import restrictions for travelers apply, with the fact that it is forbidden to import raw food, more than 200 cigarettes or 3 liters of alcoholic beverages. An airport fee of up to USD 5 is required on some domestic flights. As of September 2015, Peru has a new migration law. Among the most important changes to this law are that that this new law simplifies the arrival of highly qualified foreign workers, specialists or managers of multinational companies to Peru. Thanks to the new law, these people can directly apply to stay in Peru. Another change concerns international investors, who can be granted a flexible length of stay of up to 365 calendar days with the possibility of extension and multiple entries. Foreign citizens can also obtain a work contract or contract for the provision of services in the public sector. Business visas are required to set up a company. With visa-free entry, it is necessary to apply for a special permit for signing documents. Another change concerns international investors, who can be granted a flexible length of stay of up to 365 calendar days with the possibility of extension and multiple entries. Foreign citizens can also obtain a work contract or contract for the provision of services in the public sector. Business visas are required to set up a company. With visa-free entry, it is necessary to apply for a special permit for signing documents. Another change concerns international investors, who can be granted a flexible length of stay of up to 365 calendar days with the possibility of extension and multiple entries. Foreign citizens can also obtain a work contract or contract for the provision of services in the public sector. Business visas are required to set up a company. With visa-free entry, it is necessary to apply for a special permit for signing documents.

In general, the most dangerous city in Peru is Lima, with high levels of street crime, followed by the tourist centers and large cities of Arequipa, Puno, Trujillo and Cusco. Even other regional cities (including medium-sized ones) do not stand out (especially at night and in remote places) with too much security, so you need to be careful even there. Long-distance movements at night are also risky. Therefore, before traveling to Peru, it is recommended to register on the DROZD portal, monitor current developments and respect the regulations and recommendations of local state authorities. It often happens that some roads are blocked by demonstrators, or access to some areas of Peru is restricted.

During your stay in Peru, it is advisable to contact the PromPerú and IPerú information offices, where you can get up-to-date information on e.g. road closures. The “Visitor’s Guide to Peru” has useful contacts for important offices and institutions. Peru is located in a highly active tectonic region, so it is possible to encounter earthquakes or minor tremors during your stay. The basic rule of thumb for how to behave during an earthquake is: stay calm. In cities, taxis are safer for transportation than minibuses, in which tourists are robbed. In general, you need to be careful when traveling by public transport (taxi, minibus). The price of a taxi is contractual (there are no taximeters), it is safer to use, for example, a hotel taxi or an established application. Long-distance buses can be used to travel between cities. Intercity bus transportation is not expensive. It is recommended to travel only with established bus companies, where there is a guarantee of good technical condition of the buses. You cannot leave the country with a rental car in Peru. According to the agreement, it is possible to return the vehicle elsewhere than it was rented. Road tolls are not high. The surface of the local roads is relatively good, especially for the main road, which is the Pan American Highway. Inland, however, frequent potholes must be expected, especially after rain, or with falling rocks and collapses. Caution is advised when traveling in Peru, as the driving style of local drivers is quite reckless. The surface of the local roads is relatively good, especially for the main road, which is the Pan American Highway. Inland, however, frequent potholes must be expected, especially after rain, or with falling rocks and collapses. Caution is advised when traveling in Peru, as the driving style of local drivers is quite reckless. The surface of the local roads is relatively good, especially for the main road, which is the Pan American Highway. Inland, however, frequent potholes must be expected, especially after rain, or with falling rocks and collapses. Caution is advised when traveling in Peru, as the driving style of local drivers is quite reckless.

In general, the rule is that tap water is not consumed, only bottled water – i.e. in bottles or jars. Vegetables and fruits are recommended to be washed well with water before consumption, or disinfect.

In addition to cash, credit or debit cards are considered the most convenient method of payment. In connection with the pandemic, cashless transactions have increased. As the distance from Lima increases, the probability of the presence of ATMs decreases. The necessary cash is recommended to be divided into smaller amounts and kept in different parts of clothing or luggage. A passport with an entry stamp is required when staying at the hotel facilities.

Employment of citizens from the Czech Republic

Peru has a relatively liberal economy and opening up to the world is one of the government’s priorities. In this regard, the legislation is also modified, which generally allows the employment of foreigners and local forces by foreign entities operating in the country.

In the case of foreigners, their share in the total number of employees may not exceed 20% and in the total volume of wages and salaries 30% (in other words, the company must employ at least 4 Peruvians for each foreign worker).

Local legislation is otherwise non-discriminatory, but administrative matters are very lengthy and difficult without knowledge of local legislation or without the help of a local legal representative or consultancy firm. Peru has long been characterized by a high administrative burden in this area. When entering the Peruvian market, it is recommended to contact one of the advisory and consulting offices, which for a fee will help with the legal aspects of establishing a representative office, even if it is only a representative contract. Consultations on employment law and tax issues are absolutely necessary – the necessary information can of course also be obtained from state institutions, but not in an exhaustive form and usually after a longer search for an official who not only knows all the necessary regulations, but is also willing to tell.

Labor relations regarding foreign nationals traveling to Peru to provide services for domestic companies are governed by employment contracts for foreign workers. These workers are entitled to the same conditions provided to all employees in the private sector and are also subject to the application of the same amount of taxes and contributions if they are so-called residents.

The minimum wage for 2021 was set at 930 PEN/month. On April 4, 2022, the minimum wage was increased to PEN 1,025/month.

There is a network of private and public health facilities in Peru. Private facilities are at a significantly higher level. Practice in the case of outpatient treatment or hospitalization is similar for both types of healthcare institutions. The patient must pay for the examination in cash or by credit card (in most cases payment for the examination in advance is required), with the patient subsequently arranging reimbursement of costs with the health insurance company on the basis of an invoice issued by a Peruvian medical facility. In general, every traveler should take out health insurance for their stay in Peru and contact their insurance company in case of using a local medical facility.

Fairs and events

EXPOMINA PERU 2022 – mining industry, 27-29 April 2022 (every two years), Lima, www.expominaperu.com

SEGURITEC PERU – International Security Fair; equipment, supplies and services for physical, industrial, fire, rescue and police security, 18-20/05/2022 (biennial), Lima, www.thaiscorp.com/seguritec

EXPO PLAST PERÚ – plastics industry, 24.-27.8.2022 (every two years), Lima, www.expoplastperu.com

EXPOALIMENTARIA – food industry, 21-23/09/2022 (annually), Lima, www.expoalimentariaperu.com

PERUMIN – Mining Industry, 26-30/09/2022 (every two years), Arequipa, www.convencionminera.com/perumin35

TOC AMERICAS – Ports and Port Service Providers, 26-28/10/2022 (Annual), Lima, www.tocevents-americas.com

FIGAS – International trade fair specialized in gas, 26-28 October 2022 (every two years), Lima, www.thaiscorp.com/figas

EXPOTEXTIL – textile industry, 3-6 November 2022 (annually), Lima, www.expotextilperu.com

Peru Market Entry