The Foreign Investment Promotion Law, approved by Legislative Decree 662, 1991, is based on the equal treatment to national and foreign capital. Therefore, foreign investment is permitted to be established in any economic sector. No prior authorization is required due to its foreign status. Once made, the foreign investment shall be registered with the Comisión Nacional de Inversiones y Tecnologías Extranjeras - CONITE.

Investment commitment by the foreign investor

The investor shall fulfill one of the following investment commitments:

• Direct Foreign Investment, as contribution to the capital stock.
• Contributions for the development of contractual joint ventures
• Investment in goods and properties located within the national land.
• Portfolio investments.

Capital contributions

CONITE shall consider as foreign investment the contributions made under the following forms:

• Freely convertible currency, channeled through the national financial system.
• Goods and equipments
• Capitalization of debts
• Reinvestment of profits
• Intangible technological contributions
• Others contributing the development of the country

Rights granted by the law to the foreign investor:

• Non-discriminating treatment against the national investor.
• Free remittance of profits or dividends
• Free re-exportation of his capital
• Unrestricted access to the domestic credit
• Free acquisition of technology and remittance of royalties
• Freedom to acquire shares owned by national investors
• Freedom to contract abroad insurances for his investment
• Possibility to conclude with the State Law Stability Agreements for his investment in the country

GUARANTEE AND SECURITY FOR THE INVESTMENT

With the purpose of complementing the new juridical framework to promote the private investment and create the right climate to encourage a bigger flow of foreign investments, foreign investors have been granted with some mechanisms of multilateral, bilateral and national nature granting guarantees and protection for their investment.

In April 1991, the Congress ratified the subscription of the Convention Establishing the Multilateral Investment Guarantee Agency - MIGA, of the World Bank. Nowadays, important investments, mainly of the mining and financial sectors, are being executing under the covers granted by the MIGA.

In the same way, Peru has ratified the subscription of the Convention Establishing the International Center of Settlement of Investment Disputes - ICSID, thus, eventual disputes on investment matters with the State may be settled with this arbitrage tribunal.

In the bilateral field, Peru has concluded agreements for the promotion and protection of investments with more than 28 countries of Europe, Asia, and America, further detailed. Nowadays, negotiations to conclude these agreements with 23 countries more are under way.

With the same purpose, in December 1992, the Financial Agreement on Incentives to Investments was concluded with the United States. In conformity with such agreement, the Overseas Private Investment Corporation (OPIC) is issuing insurances, re-insurances or guarantees to cover American investments in Peru.

Empowered by the Political Constitution, and under the Foreign Investment Promotion Law and the Framework Law for the Growth of the Private Investment, the State guarantees the law stability to foreign investors and to the enterprises where they invest, through the subscription of agreements with contract-law status, and abide by the general provisions on contracts established in the Civil Code.

Guarantees granted by the State to the Foreign Investor

• Equal treatment, by which the national legislation does not discriminate against investors participating in enterprises, due to their
• status of foreign person.
• Stability of the Income Tax System in force when the agreement is concluded.
• Stability of the system of free availability of foreign currency and remittance of profits, dividends and royalties.

Guarantees granted by the State to the Enterprise receiving the investment

• Stability of the systems of labor engagement in force when the agreement is concluded.

• Stability of the system of export promotion applicable when the agreement is concluded.

• Stability of the Income Tax System.

Who can conclude Law Stability Agreements?

Investors and enterprises receiving the investment, in the case of new enterprises or in the case of increasing the capital stock of the enterprises already established. Also in the case of investors participating in the privatization process and the enterprises involved in such process, which fulfill the following requirements:

Investment commitment by the foreign investor

The investor shall fulfill one of the following investment commitments:

• To make, in a two-year term, capital contributions for an amount not under US$ 2 million.
• To make, in a two-year term, capital contributions under US$ 2 million, but over US$ 500 hundred; and additionally:
  1. To generate exports of over US$ 2 million worth; or,
  2. To generate more than twenty jobs
• To acquire more than 50% of the shares of an enterprise participating in the privatization process.

Requirements for the enterprise:

• One of its shareholders shall have concluded the corresponding Law Stability Agreement
• In case tax stability is required, the contributions shall account for 50% increase in relation with the total amount of capital and reserves, and shall be destined to the enlargement of the production capacity or to the technological development of the enterprise.
• The case of transfer of more than 50% of the shares of an enterprise participating in the privatization process.

PROPIEDAD INDUSTRIAL Y CONTRATACION DE TECNOLOGIA

The State protects the intellectual and industrial property rights, and therefore, foreign people's rights abide by the same conditions than those applied to the national ones. Contracts for the use of technology, patents, trademarks or any other element of the industrial property of foreign origin, as well as technical assistance, basic and detail engineering, management and franchising are freely negotiated between the parties and further registered with the National Institute of Defense of the Competence and Protection of the Intellectual Property - INDECOPI.

Royalties remittance is freely made through the national financial system, prior payment of the pertaining taxes. The corresponding financial entity shall further inform it to CONITE, only for statistical purposes.