SUNAT analyzes whether the VAT (IGV) non-applicability provided for in item (w) of Article 2 of the VAT (IGV) Law applies where, under a turnkey, lump-sum works contract entered into with a non-resident, the client seeks to assume the status of importer of the goods supplied by the contractor.
Scope of the VAT (IGV) non-applicability in turnkey works contracts
Item (w) of Article 2 of the VAT (IGV) Law provides that the importation of goods is not subject to such tax when:
- The entry of the goods into the country is carried out pursuant to a turnkey, lump-sum works contract.
- A non-resident undertakes to design, construct, and put the works into operation, assuming full responsibility vis-à-vis the client.
- The customs value of the goods forms part of the consideration for the service provided by the non-resident, which is subject to VAT (IGV).
In addition, to apply this non-applicability, the contract information, the transactions, and the details of the goods to be brought into the country must be reported to SUNAT.
Scenario where the client imports the goods
The VAT (IGV) non-applicability on the importation of goods applies only when:
- The entry of the goods into the country is carried out under a turnkey, lump-sum works contract.
- The non-resident contractor assumes full responsibility for designing, constructing, and putting the project into operation in Peru.
- The customs value of the imported goods forms part of the total consideration paid by the client for the service, which is in turn subject to VAT (IGV).
The purpose of the non-applicability is to avoid double taxation, since the value of the goods is already included in the price of the service subject to VAT (IGV).
Accordingly, if the contractor does not assume full responsibility—for example, if the client directly imports the goods and the contractor only performs the construction—the requirements under item (w) of Article 2 of the VAT (IGV) Law are not met, and the non-applicability does not apply.
SUNAT’s Conclusion
For the VAT (IGV) non-applicability provided for in item (w) of Article 2 of the VAT (IGV) Law to apply, the client under the works contract—allegedly entered into under a turnkey, lump-sum modality—cannot be the importer of the goods supplied by the contractor and, therefore, cannot qualify as the VAT (IGV) taxpayer under the terms set forth in that provision.
Commentary
The issuance of Report No. 000016-2026-SUNAT/7T0000 may impact the review of turnkey, lump-sum works contracts where the importation of goods was not carried out in accordance with SUNAT’s stated position. Accordingly, it is advisable to assess the implications on a case-by-case basis.
To view the full report, please click the link below: https://n9.cl/avxs9.