LIMA: Peru hopes to increase agricultural investment with a significant reduction in income tax for large export companies, the sector’s minister told Reuters on Monday.
The Peruvian Congress last week passed a law that reduces income tax to 15% from the current 29.5% for large agricultural exporters over the next 10 years. Medium-sized businesses would pay 1.5% income tax, while small businesses would be exempt from the tax. Peru expects agricultural sales to surpass mining, considered the country’s economic engine, by 2050. Peru is the world’s third-largest copper producer.
“This will allow us to attract investment,“ said Agriculture Minister Ángel Manero in a telephone interview, of the new law. The country recorded $12.8 billion in agricultural exports last year, and Manero expects increased fruit shipments to drive sales to about $15 billion by 2025.
The star product of Peruvian agricultural exports is blueberries, which are exported primarily to the United States and Europe. Minister Manero also highlighted the sharp increase in sales of table grapes, avocados, cocoa, and mangos. Peru has a portfolio of approximately $24 billion in largely public-private irrigation projects to expand its agricultural area, primarily on the country’s coast, to more than 1 million hectares (2.5 million acres). Manero said that eight projects worth $11 billion have been launched from that portfolio. Manero noted that the next market to conquer is India, with which a free trade agreement is expected to be signed this year. Peru last week announced a new trade deal with Indonesia. – Reuters