Investments in Work for Taxes is reaching its lowest level since 2015
Promo Inversion the government entity that promotes the investment mechanism of work for taxes indicates that so far this year there are 9 projects worth S/.254 million earmarked for this mechanism which is below the amount considered for this year of S/.701 million.
In 2017 71 projects were approved for S/927 million. This is due in part for the uncertainty to invest in the public and private sector in general. Another reason is that the system is new for the Promo Inversion authorities who are learning how to use it.
Work for taxes allows a private sector taxpayer that has a substantial amount of funds to pay as income taxes to use those funds to invest in public sector projects of rural electrification, fishing, sports, environment, urban empowerment, social protection, social development, transport, communications and justice besides infrastructure in public sector real estate properties approved by Legislative Decree 1250 in 2016. In terms of sanitation, the execution of public investment projects includes the operation of said projects for a period of 1 year.
The scheme was approved by Law 29230 that promotes regional and local public investment with participation of the private sector. Supreme Decree 409-2015 regulates article of Law No. 30264, which incorporates the entities of the national government in the scope of Law No. 29230. Article 17 of Law 30264 establishes measures to promote economic growth. It allows the national government to execute Works for Taxes.
The national government assigned S/11800 million for execution of projects through work for taxes for regional and local governments and public universities. Of this amount S/9000million are distributed among the 1800 municipalities, S/1873 to regional governments. The regional government of Ancash has S/568.5 million to invest while Arequipa, Cajamarca, La Libertad, Lima, Moquegua, Piura, Puno and Ucayali do not have access to these funds in 2019. This is due because they have not complied with fiscal regulations in the previous years.