In depth

Under the pacta sunt servanda principle, no internal norm can transgress a treaty and thus the provisions of Supreme Decree No. 090-2008-EF (SD), which regulates the requirements of the tax residency certificate, cannot prevail over the provisions of the tax convention. Therefore, the SD cannot demand as a requirement that such certificate be issued at a certain time or date, but it is sufficient to have it.

These are the criteria that have been established as binding precedent of obligatory compliance in the commented cassation.

Our comments

• A binding precedent dictates mandatory interpretation guidelines for lower courts. Therefore, from the date of the precedent , no administrative or judicial body should deviate from what was established in the cassation, unless this criterion is modified by another cassation decision or if there are circumstances different from what was established by the cassation.
• Despite the fact that the Supreme Court has issued binding cassation rulings, both the Tax Court and SUNAT have departed from the criteria included in such rulings on numerous occasions under the argument that these are applicable only to judicial bodies. For example, the Tax Court, referring to Cassation No. 4293-2013- Lima, has stated in RTF No. 09516-2-2016 that "it is only binding for the jurisdictional bodies and not for the administrative ones", and also RTF No. 508-8-2017 states that "it is not binding for this Court, since it does not depend on the Judiciary".

This opinion of the Tax Court is incorrect since it does not take into account what is generally established by Article 384 of the Code of Civil Procedure, e.g., that the purpose of the cassation is "the uniformity of the national jurisprudence." If this is a general function of the appeal in cassation, this should be even more so for the binding precedent regulated in Article 36 of the Law of Contentious-Administrative Procedure.

Likewise, it does not consider in its analysis the rule provided in Rule III of the Tax Code that establishes "jurisprudence," without distinguishing between judicial and administrative, as a source of law, and the rule of hierarchy of sources established in Article V of the General Administrative Procedure Law. Therefore, by deviating from binding precedents, the principle of predictability and legal certainty of taxpayers is violated.

It should be noted that the cassation makes an error because it states that the SD provides for the obligation to have a tax residency certificate at the time of the accounting for the income corresponding to the non-domiciled subject. This is not the case since what this SD states is that if the withholding agent does not have the tax residency certificate, it must make the withholding without taking into account the benefits of the tax treaty. it is important to bear in mind that this cassation is related to a fiscal year in which the withholding agent had to pay an amount equivalent to the withholding at the time of recording of the expense in its accounting records, that is, regardless of whether or not it had paid the taxable income to the non-domiciled individual.

Notwithstanding the above, the purpose of the SD is to validate to non-domiciled taxpayers their status as residents of countries with which Peru has signed tax treaties to avoid double taxation. Therefore, it is not valid to interpret that the opportunity to issue and deliver the tax residency certificate can limit the application of the treaty if such formality has not been included in the DTAA.

None of the articles of the DTAA establishes that the taxpayer paying the taxable income to the non-resident subject must have the tax residency certificate at the time of the withholding or even less when the expense is recorded. Therefore, it should not be relevant when the tax residency certificate was issued; the only important thing is that such certificate is presented to the Tax Administration upon a tax audit to the domiciled withholding agent. Therefore, it is clear that by establishing this requirement (defining the moment in which the certificate must be available), the DS has exceeded the provisions of the DTAA by transgressing the principles of hierarchy of norms and the principle of pacta sunt servanda.

We trust that this information will be useful to you. Should you require any legal advice on this issue for your company, please do not hesitate to contact us.

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