Peru vs. Telefonica, February 2021, Supreme Court, Case No 210/2021

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Telefónica have been in a long lasting tax dispute with SUNAT – the Peruvian tax authorities – over various tax and transfer pricing issues, and interest on tax debt has been accumulating.

Telefonica requests the non-application of article 33 of the Tax Code with regard to the late payment interest on the tax debt related to income tax for the years 2000 and 2001, with respect to the periods that exceed the deadlines set forth in articles 142, 150 and 156 of the aforementioned code.

Judgement of the Constitutional Court

In this Judgement, the Constitutional Court declares Telefónica’s claim for violation of the right to reasonable time and ORDERS the recalculation of the default interest without considering those generated in excess of the legal time limit established to resolve the dispute.

Although the purpose of late payment interest is to encourage the payment of taxes, the disproportionate increase due to the excess of the legal term to resolve (without valid justification based on the “Complexity Test”), is a violation of the taxpayers’ rights.

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Peru Telefonica 00225-2017-AA

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