Because of this, at the present time, there have been processes of privatization of enterprises which were from the government, money exchange is not controlled any more and a free use of currency has been guaranteed. (Art. 64º, 1993 Constitution).

1. INTERNAL NORMS

• Peruvian Political Constitution of 1993: Articles 51º, 55º, 58º, 59º, 60º, 61º, 62º, 63º, 64º,65º, 66º, 67º, 68º, 70º, 71º, 72º, 73º, 74º, 79º, 103º and 109º.
• Legislative Decree No.662 = Law of foreign investments promotion. 
• Legislative Decree No.757,  Law for private investment development .
• Regulations for private investments guarantees, legislative Decree No.674. Investment Law.

2.1 In The Multilateral Field

• Constitutional Agreement of the multilateral investment's guarantees agency of the World Bank (MIGA).
• Constitutional Convention of the international center of arrangements upon relative differences in investments (CIADI)
• Paris Convention for the protection of the industrial property.
• Agreement about the aspects of copying rights related with commerce (ADPIC o TRIP'S).

In the bilateral field, conventions for the promotion and protection of investments with more than 20 countries in Europe, Asia and America have been undersigned.

With the Government of the U.S.A. a Financial Agreement to promote investments has been subscribed.

The Peruvian Legislation recognizes different kinds of enterprises such as chartered companies, Joint Stock Companies, Commercial Limited-Liability Companies and Joint Ventures.

Of all the above mentioned, the chartered companies or corporations are the best ones because:

• There is no minimum amount of capital to form the partnership. 
• The contributions to the capital stock can be given in national or foreign currency, as well as government property or real chattels or in technological contributions (like goods, documents and instructions).
• The partners limit their responsibility to the contribution that they have done.
• The minimum amount of shareholders is two (individuals or juridical).
• It could be formed in one act (simultaneous constitution) or in scessive form (offer to a third party).
• The time it can last is undetermined.

Therefore, a certificate from the competent authority, must be attached, which will have to be legalized by the Peruvian consular representative, who will certify the existence and duration of the society; and also, the document in which the faculty to establish branches in other countries is allowed.
 

To be considered a foreign -investment they will have to come from abroad and practice activities which create income under any of these ways.

• Direct Foreign Investment, as a contribution to the social capital.
• Contributions to the development of contractual joint ventures. 
• Investments in goods and properties located within the national territory.
• Investments directed towards the purchasing of titles, documents and financial papers worth in the stock market or banking bond notes in national or foreign currency.

• Free exchange currency, directed through the financial system.
• Tangible assets.
• Capitalization of duties.
• Re-investment of profit
• Tangible Technological Contributions
• Others which contribute to the development of the country.

Foreigners who invest in Perú have the following rights:

• Equal treatment to the national investor.
• Freedom to purchase stocks, shares, property rights of national investors.
• Free remittance  of their capital after deducing the corresponding taxes.
• Free remittance of shares after deducing the corresponding taxes.
• Access to all internal credits for short, medium or  long term.
• Free Technological contract and remittance of commissions.
• Freedom to obtain in or outside the country; insurance  companies that cover their investment.
• The possibility to subscribe with the Government Juridical Stability Conventions for its investment in the country.

3. QUALIFIED NATIONAL ORGANISM

The foreign investments directed towards the capital of a certain enterprise as well as the ones done through a contract with a Peruvian enterprise, including the Joint Stock Companies and the Joint Ventures will have to register before The National Commission of Foreign Investments and Technologies - CONITE.

It is good to mention that to invest in Perú is not necessary to have a written authorization from the -CONITE, contrary to that, the investment is automatically registered in CONITE with just filling the concerning documents.
 

Based on what is barred by the statute of limitations of the Legislative Decree No.662, foreign investors and receptive enterprises of the investment have the right to subscribe "Conventions of Juridical Stability" with the capable national organization of the investments registry, for a ten year period at the most to guarantee the planning and execution of their investments.  The benefits that the Juridical Stability Conventions guarantee are:

• Stability of income tax regulations
• Stability of free foreign currency availability regulations. 
• Stability of equal treatment, by which the national legislation does not discriminate the investors in enterprises, by means of national and foreign participation.

To receive all the before mentioned benefits the legislative decree No.662 points out that the investor must fulfil one of the 3 commitments that follow:

• To perform, within 2 years capital contributions  not less than 2 million dollars.
• To perform in less than 2 years, contributions to the capital below 2 million dollars but above 500 thousand only if:
• They generate more than  20 permanent posts for work.
• Generate export fore more than 2 million dollars 
• Get more than 50% of the stocks of an enterprise  in the process of privatization.

3. CONDITIONS THAT AN ENTERPRICE MUST EXECUTE

• That one of the shareholders have subscribed the concerning juridical stability convention.
• That in case that the taxpayers  stability is solicited,  the contributions to receive constitute an increase of 50% related to the total capital amount and undistributed profits, and to be used to increase the productive capability or the technological development of the enterprise.
• That is the case of a transfer  of more than  50% of the stock  of an enterprise in privatization process.

In this way the practice of the property and ownership rights, for mines, lands, forests, water, sources of energy and fuels by foreign investors within 50 km  of the country’s borderlines will have to get an authorization, the same  that will be given by supreme resolution (norm gives by the executive power) countersigned by the Prime Minister and the Minister of the according field.

In the above mentioned  Supreme Resolution the conditions and restrictions to the practice of the property and ownership rights will be established, the ones that could only be restricted for national security reasons.

Individuals or enterprises can send foreign currency product of their investment abroad, or keep it in the country.

Investments in foreign currency could be exchanged to the national currency at the best price in the financial  system or deposited in those  entities.

Residents and non-residents in Perú could open an account and keep deposits in foreign currency in the local banking system, in a savings or overdraft account. Also, individuals and enterprises could open accounts in foreign currency abroad.

The legislative Decree N° 668; regulates  overseas trading establishing: free import of any kind of good and elimination of non technical restrictions.

Export is not assessed by any tax, contrary to that the right of reimbursement from the indirect taxes (IGV and ISC) previously paid in the process of production is gives to the enterprises Moreover, the licenses  and authorizations have been cancelled except for goods which are prohibited to be exported.

2.  LABOR NORM

The Peruvian government has pronounced flexible policies  and labor norms, deleting the ones that changed the concept  "work" as load for the businessman. The main characteristics of the labor code are:

• Possibility to establish conventions of training, learning and pre professional formation  without creating  a laboral  bond between employee and employer. 
• Elimination of labor stability. 
• The possibility to make agreements about integral payment of remunerations (for all concepts) deal in the salary (in all concepts).
• Direct hiring under a determined or undetermined period.
• Workers Cooperative Associations or others enterprise that provide human resources.
• Possibility to contract foreign staff.

The Legislative Decree No.663, that approves the investment immigration-program prescribes that foreigners who want to invest in Perú could ask for a Visa as a qualified immigrant, in the Diplomatic Representation Officer or consular offices, being able to ask as well for every member of the migratory unit (wife, children under 18 and under 21 only if they are still economically dependant of the qualified immigrant).

4. TAX LAWS

The main taxes that affect investors, and the enterprise in which their work are:

4.1 Income Tax
According to this law, juridical people whose residential address is in Peru are subject to the  tax payment, juridical people non-resident and branches are subject to the tax payment applicable only to the income generated by the Peruvian source.

The main tax rating are:
 

• Resident with permanent address

· Tax towards the juridical people ( ) , Associations as joint ventures is 30%.
· The tax to individuals, marriage societies and non-profitable successions is calculated upon its global annual income applying the  following rates:
1. Until 54 UIT: 15% (Impositive Tax Unit)
2. Over 54 UIT : 30%(2)
 From the calculated tax the credits which preceded by law will be deduced.
• Non-Addressed (non-permanent residents)

The tax in charge of the enterprises will be determined applying the following scale:

· Interest from external credits : 1%
· Interests with the Peruvian Financial and Banking entities send abroad as a result of the use in the country of their credit abroad: 1%
· Derived income from aircrafts rental and similars: 10%
· Royalties : 30%
· Other incomes: 30%

• Dividends and any other kinds of utility distribution  if they get dividends or utilities from other  enterprises will not be considered in their in come.
• Self- emitted stocks which, belong to the reexpression of capitals as the consequence of a complete adjustments due to inflation.

     The general sales tax, as it is named in Perú is applied to:

• Sales in the country of tangible  goods
• Use of credit services in the country except the credit services from financial  institutions, passengers transport  service in the country  load transport service  in and  outside the country, interests created by registered bonds emitted by any  enterprise (3).
• Construction contracts.
• First sale of real  states from the constructors, the following sales that real state companies related to the constructor, are associated  economically with its owner.
• Import of goods

The rating tax is 18% which  includes rating taxes of municipal promotion (2%). The General Sales Tax (IGV) should be supported by an invoice which certifies the ownership of good services and construction contracts  or the ones paid when the good has been exported.
 

4.3 Selective Consumption Tax

The selective consumption tax assesses determined product considered "expensive" in addition to the general sales tax. Fossil fuels such us petrol, gambling and bets are also assessed. 

Respecting the affected products, the tax only assesses:

• Sale by producer, in case of goods manufactured in the country.
• Import and following sale by the importer of products such as liquors and wines.
• Sale of enterprises economically related to the producer or importer.

The rating tax is between 2% and 118% depending on the type of product or service.

The selective consumption tax is totally separated from the treasury of government credits, for this one there is no credit.
 

4.4 Municipal Taxes

The main municipal taxes are the following:

• Excise Tax: Assesses transfers from urban or rustic real states at onerous or free title.  The rating tax is 3% of the amount property tax corresponding real state at the time of the transfer.  This is in charge of the buyer.
• Real State Tax: Assesses the value of the urban or rustic property. The chattel mortage is a duty of the proprietor, being either individuals or juridical people.  The tax rating is obtained applying to the dutiable base.

The progressive accumulative scale as follows:

· Until 15 UIT : 0.2%
· From 15 UIT to 60 UIT: 0.6%
· More than 60 UIT : 1%
 

Vehicular Proprietorship Tax: Assesses this proprietorship to the ones manufactured in the country or imported within the last 3 years. The tax base is obtained by the original acquisition value, import or proprietorship income.  The tax base is 1%.

     In this context, it is considered a direct foreign investment the resources which are directed to this type of contract giving the foreign investor some kind of participation in the production capacity, which does not mean providing capital, in these way the investor cooperates with commercial assignments through the ones he provides with products and services to the receptive enterprise.  The receptive enterprise in exchange provides the foreign investor with a certain amount of the physical production, in the global amount of sales or in the utilities from the mentioned receptive enterprise.
 

The concession, as  a mechanism of national and foreign investment, is regulated in article 23 of the Peruvian Politic Constitution. In addition, concessions are regulated by Supreme Decree 059-96-PCM (Law for Foreign Investments)

At the present, the projects to be granted under the mechanism of concessions can be divided in three groups: Highway, Airports and Ports. 
Highway Concessions:

By means this tipe of concessions, the Peruvian State has as a goal the construction of  335 Kilometers of new highways, to asphalt 606 Kilometers of present roadbed ways , and also to restore 1300 kilometers of  asphalted roads.

The highway concession chronogram will start with the call for bids programmed for the beggining of november of 1998, with the licitation of the highway Lima-Huacho-Pativilca-Canta highway (the latest, as a penetration road).

The term of the concessions will be of 25 years ( which should be modified according to the highway network granted by the Peruvian state) 

The Investment estimated in building the 410 Kilometers of  the Lima-Huacho-Pativilca-Canta Highway amounts to 151,3 millions of dollars of the United States of America.

Airports Concessions.-

Regarding the airports concessions, the State hopes investments over the 300 millions of dollars of the United State of America.

The concessions will be circumscribed to the building of charges terminals, passengers terminals, roads and Malls.

The airports concessions processes are not subject to any requirement related to the minimum percentage of Peruvian investment participation (it has to be taken into consideration that it is not possible that any airline participate in this concessions process). 

Type of concession: BOT (Built, Operate and Transfer)

The term of the airports concessions will last from 25 to 30 years approximately.

The airports concessions chronogram will  start with the call for bids programmed for January of 1999.

Ports Concessions:

Through this kind of concessions, the Peruvian State looks forward to be developing and providing with technology, the ports infrastructure mainly the aspects related to the freight handling and the transport mechanisms.

At the present  time, almost all the Peruvians ports (with no exceptions) have a port infrastructure does not allow the traffic of  ships of third and forth generation ( 65 thousand Tons. of capacity).

 As an exception, the Peruvian ports can receive ships  of 25 thousand Tons of capacity. Therefore, it is necessary to improve the infrastructure port by, deeping the ports, reinforcing the wharves and giving offering betters services.

The Ilo and Matarani ports  will be the first to be introduced in the concession process. the call of bids will take place in October of 1998. The concession term will be of 30 years.

Subsequently, the ports of Callao, Chimbote, Salaverry, Pisco, etc., will be introduced into the process of concessions) . 
 

• Invention Patents:  Patents will be given for the inventions either of products or procedures. The right to receive a patent is for the inventor or its employer.  The patent titles could be for individuals or juridical people. This patent will have a duration of twenty years, after the ones, the invention will be of public domain. The owner of the patent is able to give another person a license for it´s exploitation. To maintain in force the patent shall pay the corresponding annual Payments should be made, otherwise the patent will expire.

• Protection Certificates: Protects the projects of inventions for a year. If the inventor does not ask for a patent within this time he or she could lose the preference to receive it.

• Utility Models: The duration for the utility model of a patent. Will be of ten years, after this the utility models will be of public domain.

• Industrial Designs: The registration of an industrial design. Will last ten years, after these ten years it will be of public domain.

• Industrial Secrets: They are protected against their  revelation, acquisition or use. It could be transferred and authorized for its use.

• Products and Services Brands: The right of the exclusive use of  a brand is given if is registered in the appropriate office. A brand registration will last for ten years, and it could be renewed for ten year periods.  The rights on a brand could be object of license, warranty or even distrait. The brand registration could expire if the entitled does not ask for its renewal within six months of grace period at the legal end of its registration. This registration could be cancelled if the brand has not been used (without any reason) during the consecutive three years after the date of the annulment action.

• Commercial Names: The right of the exclusive use of a name starts with the first use at the place where the commerce is practiced and finishes at the same time this place finishes its activities is closed. It can be transferred only with the place or the enterprise that has been using it. The registration of the commercial name last for ten renewable years.

• Commercial Motto: The registration of a commercial motto will have to specify the solicitated brand or registered with wish it would be used. The registration of the commercial motto is conceded for a period of 10 years renewable. The cancellation, nullity, caducity of the brand registration will determine the cancellation, nullity and caducity of the commercial motto, even when the gives time, mentioned in the last paragraph, has not expired. 

• Trade Names with a Source: The Peruvian Government is the owner of the trade names with a source and upon these, authorizations could be given for their use. The authorization will last for ten years, the one that could be renewed for same time periods.

It is good to say that contracts of Technological Transfer, licenses for patent’s use, brands or other industrial property element of a foreign source, could be signed without a previous authorization of the CONITE, but for the payment of its royalties a registration with CONITE is necessary.

Both sides can freely negotiate the parts of their contract. However, the ones that contain articles in which any kind of exportation of manufactured product according to that technology is prohibited or limited, will not be registered.