A draft law has been recently presented to the Peruvian Congress that would reduce the country's value added tax (VAT) rate to 15% from 1 January 2015, with a further reduction to 14% from 1 January 2016. The 2% municipal sales tax applied in addition to VAT would not change.

Peru's current effective VAT rate is 18% (16% VAT plus 2% municipal sales tax), while certain supplies are exempt and e…