Technical Assistance and Its Impact On Income Tax

In accordance with the provisions of paragraph j) of Article 9 of the IR Law, and Article 4-A of its Regulations, “technical assistance” means any independent service, whether provided from abroad or in the country, by which the provider undertakes to use its skills through the application of certain procedures, arts or techniques, in order to provide specialized knowledge, not patentable, that are necessary in the production process, marketing, service delivery or any other activity performed by the user.

The regulatory standards cited in the preceding paragraph indicate the requirements that, concomitantly or simultaneously, must be verified in order to have the concept of technical assistance referred to in the IR Law configured. These requirements are the following:

  1. It is an independent service: Which implies an obligation to “do” by means of which a company or legal person other than the user, performs or offers to the latter a specific service or action.
  2. It can be provided from abroad or in the country: It does not matter if the service is provided within the country or from abroad.
  3. The provider undertakes to use his or her skills: The provider undertakes to apply certain procedures, arts or techniques, which imply that their skills rely either on professional knowledge, based on the development of a trade, or acquired by the successive repetition of acts that allow him to enjoy a unique expertise in the field.
  4. The provider provides specialized knowledge: With respect to this requirement, two considerations arise:
  • The provider of the service “provides” specialized knowledge, which implies, in good faith, that the provider “transmits” and/or “transfers” such knowledge to the user. Such transmission of knowledge is materialized through recommendations, suggestions and/or instructions.

In this way, the concept of technical assistance involves not only a task, but must also provide added value for the user, to the extent that the latter takes direct advantage of the provider’s skills.

  • The specialized knowledge provided may correspond to both technological and other types of knowledge.
  1. The knowledge is “non-patentable”: It differs from the services that generate royalties, in which the object of the service contract is the assignment of patented or patentable knowledge.
  2. The technical assistance is necessary for the development of the taxpayer’s activity: This requirement is verified from the analysis of other conjunctive elements:
  • That it is necessary implies that it is required for the normal development of some activity. If the service is dispensable there would be no technical assistance.
  • The activity in which the technical assistance service is subsumed is that of the business of the service user, the social purpose of an unaffected entity, or the fulfillment of its functions in the case of the National Public Sector. Thus, technical assistance is interpreted as equivalent to an input in the process or in the activity carried out by the user.

In this respect, it is convenient to take into account the pronouncements of the Tax Administration and the Tax Court in relation to the compliance with this requirement:

Report 168-2008-SUNAT/200000


“Thus, in order for a service to qualify as technical assistance, the service provided must have such a degree of connection with the production process, marketing, service provision or any other activity carried out by the user, that it becomes indispensable for the development of said process. In other words, without the provision of said service, the user would not be able to carry out his activity, which is essential to consider the service as technical assistance”.

Letter 133-2008-SUNAT/200000


“In other words, the consulting or advisory services provided by non-domiciled subjects will be considered technical assistance services when they make it possible for the user to develop his or her productive process, marketing, service provision or any other activity that generates income for said user; without prejudice to compliance with the other characteristics contemplated in the regulatory standards”.

Through Report No. 139-2013-SUNAT/4B0000, the Tax Administration has indicated that although Report No. 168-2008-SUNAT/2B0000 states that for a service to qualify as technical assistance it must be indispensable for the development of the production process, marketing, service provision or any other activity carried out by the user, and that without the provision of such service the user would not be able to carry out his activity; this is to highlight that the service provided must have a substantial degree of connection with the processes in question.

For its part, the Tax Court by Resolution No. 18368-8-2012 has stated the following:

“That the third necessary requirement is that the non-patentable specialized knowledge provided is necessary in the production process, marketing, service provision or any other activity carried out by the user; that is, the service provided must have such a degree of connection with the production process, marketing, service provision or any other activity carried out by the user, that it is indispensable for the development of such process, so that without the provision of this the user would not be in the possibility of developing its activity (…).

Likewise, the above is in accordance with the criterion set forth in the Statement of Reasons for Supreme Decree No. 134-2004-EF, which establishes that technical assistance is necessary when “it is essential for the development of some activity. If the service is dispensable, there is no technical assistance”. Furthermore, it states that “the activity in which the technical assistance service is subsumed is that of the business (…)” and that technical assistance “serves to develop the user’s activities that generate taxed or non-taxed income. This is reduced to understanding that technical assistance serves to generate some type of result: taxed or non-taxed”, hence it is clear that the concept of “necessary” goes beyond simple causality, since it is based on the type of link between the service provided and the activity itself developed by the user to generate income.

In accordance with the above, it is evident that in order to determine whether we are dealing with a service that qualifies as technical assistance whose remuneration constitutes income of Peruvian source, it is indispensable to verify in each specific case the configuration of the constituent elements described above, being relevant to bear in mind that what the Income Tax Law intends to tax is not any type of service but only those services that are highly specialized and that, at the same time, are necessary for the development of the user’s activity destined to generate income”.

For its part, the National Superintendence of Tax Administration (SUNAT), through Report 139-2013-SUNAT, has indicated the following:

“(…) it is observed that a characterizing element of the concept of technical assistance is that it must be a “necessary” one for the user to develop his activities (…).

In this regard, the concept of “necessary” referred to in paragraph c) of Article 4°-A of the Income Tax Law Regulations is based on the type of link that exists between the service provided and the productive process, marketing, service provision or any other activity carried out by the user according to the purpose of his business, social purpose or compliance with his function, as the case may be (2); which is the relationship of need that must be established between said service and those processes, which must be direct (3).

It is in this context that what is stated in Report No. 168-2008-SUNAT/2B0000 should be understood, in which it has been concluded that a service will be considered as technical assistance when, in addition to complying with the other characteristics indicated by the standard, it transmits specialized non-patentable knowledge essential to the production process, marketing, service provision or any other activity carried out by the user from which the taxpayer’s income originates.

Therefore, the character of essential (4) for such processes should not be understood as referring only to a service such that in its absence the user could not develop its productive processes, marketing, service provision or any other activity that it performs; but also to those whose absence would imply that such processes are not carried out with the expected efficiency and productivity (5) (6).

This is so because, as it has already been stated, the concept of “necessary” referred to in paragraph c) of Article 4°-A of the Income Tax Law Regulations only refers to the relationship of necessity that must be established between the technical assistance service and the productive process, commercialization, provision of services or any other activity carried out by the user according to the purpose of his business, social purpose or compliance with his function, as the case may be; and that such relationship must be direct(7).

In this sense, the services whose purpose is to improve, modernize, renew, develop or optimize the productive process, commercialization, provision of services or any other activity carried out by the user (or a stage thereof) and without which these processes could not be developed, meet the characterizing element of the concept of technical assistance referred to in paragraph c) of Article 4°-A of the Income Tax Law Regulations, referring to such services being necessary in such processes.

Therefore, if the referred services meet the other characterizing elements of the concept of technical assistance, they qualify within such concept”.

From the above, it can be concluded that a technical assistance service qualifies as necessary if the subject matter of the service is related to the Company’s business and allows the development of the user’s activities; in other words, it allows the maintenance and growth of the activity that generates income for the user of the service. Note, that also qualify as technical assistance, services that aim to improve, modernize, renew, develop or optimize the production process, marketing, service delivery or any other activity performed by the user (or a stage thereof) and without which these processes could not be developed.

Likewise, the IR Law points out certain services in which, in any case, technical assistance is presumed to exist, even if the requirements set forth above are not verified.

Among these assumptions are the following:

  • Engineering services, which include the execution and supervision of the assembly, installation and start-up of machines, equipment and production plants; the calibration, inspection, repair and maintenance of machines, equipment; and the performance of tests and trials, including quality control, feasibility studies and final engineering and architectural projects.
  • Research and development of projects, which includes the elaboration and execution of pilot programs, research and laboratory experiments; exploitation services and technical planning or programming of production units.
  • Financial advice and consultancy, defined as advice on the valuation of financial and banking entities and on the preparation of plans, programs and international promotion for their sale; technical assistance for the distribution, placement and sale of securities issued by financial entities.

Finally, technical assistance also includes the training of people in the application of specialized knowledge.

It should be noted that the rate to be applied in the case of services provided by a person not domiciled in the country by the technical assistance service is of the order of 15%, as determined by literal f) of article 56 of the Income Tax Law.

This rate will be applied provided that the following conditions are met:

The local user must obtain and submit to SUNAT a report from an auditing company, certifying that the technical assistance has been effectively provided, provided that the total consideration for the technical assistance services included in the same contract, including its extensions and/or modifications, exceeds one hundred and forty (140) UIT in force at the time of its execution, which for the year 2020 is S/ 4,300.00 and USD 1,221.00 approximately.

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Technical Assistance and Its Impact On Income Tax

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