<12th Japan Peru Economic Council > For the establishment of a Tax Treaty between Japan and Peru September 2016 Japan-Peru Chamber of Commerce Norihide Tsutsumi 堤儀秀 (Mitsubishi Peru S.A. CEO)
CAMARA DE COMERCIO E INDUSTRIA PERUANO JAPONESA (CCIPJ) Basic Information [Foundation] May 23, 1969 [Purpose] Promote Investment, Trade, and Personal Exchanges between Japan and Peru [Members] 106 members (33 Japanese members, 66 Peruvian members, +others) Organization Sructure 1
History Japan and Peru 1873 Establishment of diplomatic agreement between Peru and Japan 1980 First JICA volunteer dispatched to Peru 1999 100 th anniversary after the arrival of Japanese immigrants to Peru 2008 Prime Minister Abe visit to Peru for APEC President Garcia visit to Japan 2016 1899 First 790 Japanese immigrants arrive to Peru 1990 Alberto Fujimori Becomes president of Peru (First Japanese immigrant to become President) 2012 President Humala visit to Japan 2014 140 year anniversary of diplomatic relation between Peru and Japan 2
Economic Treaties between Japan and Peru 1961 2009 2011 Agreement of Commerce ( 通商協定 ) Promotion, Protection and Liberalization of Investment Agreement ( 日 ペルー投資協定 ) Economic Partnership [EPA] ( 日 ペルー経済連携協定 ) 2012 Free Trade Agreement [FTA] ( 日 ペルー自由貿易協定 ) Source: Ministry of Foreign Affairs of Japan 3
Japan Countries with Tax Treaty Tax Convention with 65 countries and regions. In South America Brazil (1967) Mexico (1996) Chile (2016) Source: Ministry of Foreign Affairs of Japan 4
Japan Countries with Tax Convention Asia-Pacific Americas Europe Eastern Europe Central Asia Middle East Africa China USA Ireland Rumania Egypt South Korea Canada UK Hungary Zambia Hong Kong Brazil Italy Poland Israel Taiwan Mexico Austria Russia Turkey Singapore Chile Netherlands Bulgaria South Africa Malesia Switzerland Kyrgyzstan Saudi Arabia Indonesia Sweden Uzbekistan Kuwait Philippines Spain Czech Republic UAE Vietnam Denmark Slovakia Oman Thailand Germany Georgia Qatar Brunei Norway Tajikistan India Finland Turkmenistan Pakistan France Ukrain Bangladesh Belgium Armenia Sri Lanka Portugal Moldova Fiji Australia New Zealand Azerbaijan Kazakhstan Total 18 Total 5 Total 15 Total 17 Total 10 Source: Ministry of Foreign Affairs of Japan 5
Peru - Countries with Tax Convention Tax Convention with 9 countries. In Asia Korea (2015) Source: Ministry of Foreign Affairs of Japan 6
Peru - Countries with Tax Convention Asia-Pacific Americas Europe Eastern Europe Central Asia Middle East Africa South Korea Canada Switzerland Brazil Portugal Mexico Bolivia Colombia Ecuador Total 1 Total 6 Total 2 Total 0 Total 0 Source: Ministry of Foreign Affairs of Japan 7
GDP Growth Rate of Peru Country Name 2010 2011 2012 2013 2014 2015 LAT Average 6.5 6.1 4.0 5.2 3.2 2.3 Peru 8.5 6.5 6.0 5.9 2.4 3.3 Argentina 9.5 8.4 0.8 2.9 0.5 N/A Bolivia 4.1 5.2 5.1 6.8 5.5 4.0 Brazil 7.5 3.9 1.9 3.0 0.1-3.8 Chile 5.8 5.8 5.5 4.0 1.9 2.1 Colombia 4.0 6.6 4.0 4.9 4.4 3.1 Ecuador 3.5 7.9 5.6 4.6 3.7 0.3 Guatemala 2.9 4.2 3.0 3.7 4.2 4.1 Mexico 5.1 4.0 4.0 1.3 2.3 2.5 Panama 5.8 11.8 9.2 6.6 6.1 5.8 Paraguay 13.1 4.3-1.2 14.0 4.7 3.0 Uruguay 7.8 5.2 3.5 4.6 3.2 1.0 Source: World Bank 8
Mining Sector Investment Plans Company Country of Company Project Beginning of Project Production per year (t) (Amount: US$ Million) Investment (US 100M) Expansion Project SOUTHERN PERU COOPER CORP Mexico Cuajone 2013 22,000 300 SOUTHERN PERU COOPER CORP Mexico Fundición N.D. 200,000 N.D. SOUTHERN PERU COOPER CORP Mexico Toquepala 2014 100,000 600 SOUTHERN PERU COOPER CORP Mexico Refinería de Ilo N.D. 820,000 N.D. SOCIEDAD MINERA CERRO VERDE USA/ JPN Cerro Verde 2016 272,000 4,400 MINERA CHINALCO PERÚ S.A. China Toromocho 2016 25,000 1,320 Mining Projects with EIA Approved ANGLO AMERICAN QUELLAVECO UK / JPN Quellaveco 2016 225,000 3,300 MINERA CHINALCO PERÚ China Toromocho 2013 275,000 3,500 MINERA YANACOCHA USA/ Peru Minas Conga 2017 54,000 4,800 HUDBAY MINERALS. Canada Constancia 2014 80,000 1,790 XSTRATA LAS BAMBAS China Las Bambas 2015 400,000 5,200 COMPAÑÍA MINERA ALPAMARCA Peru Alpamarca-Rio Pallanga 2013 N.D. 90 MINERA SHOUXIN PERU China Explotation de relaves 2015 19,040 239 Mining Projects with EIA Submitted COMPAÑIA MINERA MILPO Brazil Pukaqaqa 2016 40,000 630 TOTAL 2,532,040 26,169 Source: JETRO Peru 9
Energy Sector Investment Plans (Amount: US$ Million) 2016 2017 2018 2019 2020 2016-2020 Improvement of energy security and Development of Sothern Peru Gas Pipeline 1,200 1,200 1,200 - - 3,600 Lima/Callao LNG Supply System - 125 125 - - 250 Improvement of rural electricity coverage 294.8 261.6 136.5 85.7 60.5 839 Mystification of the use of natural gas in the center and south of Peru 175.0 175.0 - - - 350 Transmission Lines 229.4 229.4 - - - 459 Others 90 61 60 0 0 210 TOTAL 1,989 2,052 1,521 86 60 5,708 Source: JETRO Peru 10
Infrastructure Sector Investment Plans (Amount: US$ Million) Sector 2016 2025 (Needs) 2016 2020 (Investment Estimation) 2016 2020 (Investment GAP) Water 12,252 3,217 9,035 Portable Water 2,629-2,629 Waste Water Treatment 9,623-9,623 Communication 27,036 2,024 25,012 Cell Phone 6,884 - - Broadband 20,151 - - Transportation 57,499 16,420 41,079 Train 16,983 7,615 9,368 Road 31,850 6,121 25,729 Airport 2,378 1,624 754 Port 6,287 1,060 5,227 Energy 30,775 5,708 25,067 Health 18,944 1,797 17,147 Education 4,568 937 3,631 Pre-school 1,621-1,621 Primary School 274-274 Middle School 2,672-2,672 Hydraulic power 8,477 3,100 5,377 TOTAL 159,549 33,204 126,345 Source: JETRO Peru 11
Foreign Investment to Peru (Amount: US$ Million) Data by Proinversion Country 2014 2015 1980~2015 Amount Amount Ratio % Difference % Amount Ratio % Spain 116.4 22.8 32.4-80.4 4,486.1 18.5 UK 21.1 0.0 0.0-100.0 4,336.0 17.9 USA -44.0 0.0 0.0-100.0 3,193.8 13.2 Chile 26.1 2.5 3.6-90.3 2,226.3 9.2 Netherlands 0.0 0.0 0.0-1,532.8 6.3 Brazil 24.3 0.0 0.0-100.0 1,188.9 4.9 Colombia 0.0 45.0 64.0 24690867.2 1,124.1 4.6 Canada -3.8 0.0 0.0-100.0 1,070.3 4.4 Panama 8.2 0.0 0.0-100.0 947.9 3.9 Luxemburg 2.2 0.0 0.0-100.0 543.3 2.2 Switzerland 18.1 0.0 0.0-100.0 487.8 2.0 Mexico 19.7 0.0 0.0-100.0 476.7 2.0 Singapore 0.0 0.0 0.0-365.5 1.5 Bermuda 82.4 0.0 0.0-100.0 293.1 1.2 Japan 0.0 0.0 0.0-238.4 1.0 France 0.0 0.0 0.0-220.5 0.9 China 0.0 0.0 0.0-208.1 0.9 Others 16.9 0.0 0.0-100.0 1,294.0 5.3 TOTAL 287.5 70.3 100.0-75.5 24,233.5 100.0 Data by Central Reserve Bank of Peru TOTAL 7,885 6,861 - - 100,061 - Data by the Central Bank of Japan (Japan s Investment to Peru) TOTAL 137 160-12
Japan s Foreign Investment (Amount: US$ Million) 2500000 2000000 Average ratio of investment to countries with Tax Treaties is 68% (Min: 62%, Max: 76%) 1500000 1000000 500000 0 67% 66% 73% 76% 75% 75% 72% 70% 68% 67% 65% 65% 64% 63% 64% 63% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Investment to foreign countries Investment to countries with Tax Conventions Source: Central Bank of Japan 13
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Trade between Peru and Japan (Amount: US$ Million) Trade Amount between Japan and Peru (2015) 3,000 2,571 2,500 2,175 2,226 2,000 1,500 1,315 1,501 1,438 1,584 1,106 1,119 1,073 1,000 Import from Japan 500 Export to Japan 0 2011 2012 2013 2014 2015 Source: JETRO Peru 15
Trade between Peru and Japan Import from Japan (2015) Export to Japan (2015) Metal Product 11.1% Non-metals 0.9% Others 7.1% Natural Gas 3% Fish Meal 5% Coffee 1% Others 10% Chemicals 16.5% US$ 1,119 M Automobile and parts 40.1% Petroleum Products 4% US$ 1,073M Other Machinery 2.1% Metal Products 79% Electronics and parts 5.0% Machinery and parts 17.3% Source: JETRO Peru 16
Benefits of Tax Convention Establishment of maximum tax rate on investment income Clarification on taxation scope Secure discussion table between the Peruvian Gov. and Japanese Gov. The treaty will enable to set a an upper limit to the tax rate, preventing excess taxation. Clarification on scope of corporate taxation law to avoid conflicts caused by different interpretation. Less risk for new businesses to enter the local market. Any conflict cause by different interpretations of the taxation law can be resolved between tax authorities. Faster solution to multi-lateral taxation conflicts. 17