• Share
  • Email
  • Embed
  • Like
  • Save
  • Private Content
Per
 

Per

on

  • 549 views

doing bussines

doing bussines

Statistics

Views

Total Views
549
Views on SlideShare
548
Embed Views
1

Actions

Likes
1
Downloads
2
Comments
0

1 Embed 1

https://bb9.apsb.org 1

Accessibility

Upload Details

Uploaded via as Adobe PDF

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

    Per Per Document Transcript

    • Economy Profile:Peru
    • © 2012 The International Bank for Reconstruction and Development /The World Bank1818 H Street NWWashington, DC 20433Telephone 202-473-1000Internet www.worldbank.orgAll rights reserved.1 2 3 4 08 07 06 05A copublication of The World Bank and the International Finance Corporation.This volume is a product of the staff of the World Bank Group. The findings,interpretations and conclusions expressed in this volume do not necessarilyreflect the views of the Executive Directors of the World Bank or thegovernments they represent. The World Bank does not guarantee the accuracyof the data included in this work.Rights and PermissionsThe material in this publication is copyrighted. Copying and/or transmittingportions or all of this work without permission may be a violation of applicablelaw. The World Bank encourages dissemination of its work and will normallygrant permission to reproduce portions of the work promptly.For permission to photocopy or reprint any part of this work, please send arequest with complete information to the Copyright Clearance Center, Inc.,222 Rosewood Drive, Danvers, MA 01923, USA; telephone 978-750-8400;fax 978-750-4470; Internet www.copyright.com.All other queries on rights and licenses, including subsidiary rights, should beaddressed to the Office of the Publisher, The World Bank, 1818 H Street NW,Washington, DC 20433, USA; fax 202-522-2422; e-mailpubrights@worldbank.org.Copies of Doing Business 2012: Doing Business in a More Transparent World,Doing Business 2011: Making a Difference for Entrepreneurs, Doing Business2010: Reforming through Difficult Times, Doing Business 2009, Doing Business2008, Doing Business 2007: How to Reform, Doing Business in 2006: CreatingJobs, Doing Business in 2005: Removing Obstacles to Growth and Doing Businessin 2004: Understanding Regulations may be downloaded atwww.doingbusiness.org.ISBN: 978-0-8213-8833-4E-ISBN: 978-0-8213-8834-1DOI: 10.1596/978-0-8213-8833-4ISSN: 1729-2638Printed in the United States
    • Doing Business 2012 Peru 3CONTENTSIntroduction .................................................................................................................................. 4The business environment .......................................................................................................... 5Starting a business ..................................................................................................................... 14Dealing with construction permits ........................................................................................... 23Getting electricity ....................................................................................................................... 34Registering property .................................................................................................................. 40Getting credit .............................................................................................................................. 50Protecting investors ................................................................................................................... 57Paying taxes ................................................................................................................................ 67Trading across borders .............................................................................................................. 75Enforcing contracts .................................................................................................................... 84Resolving insolvency .................................................................................................................. 91Data notes ................................................................................................................................... 97Resources on the Doing Business website ............................................................................ 102
    • Doing Business 2012 Peru 4INTRODUCTIONDoing Business sheds light on how easy or difficult it is the paying taxes indicators, which cover the periodfor a local entrepreneur to open and run a small to January–December 2010).medium-size business when complying with relevant The Doing Business methodology has limitations. Otherregulations. It measures and tracks changes in areas important to business—such as an economy’sregulations affecting 10 areas in the life cycle of a proximity to large markets, the quality of itsbusiness: starting a business, dealing with construction infrastructure services (other than those related topermits, getting electricity, registering property, trading across borders and getting electricity), thegetting credit, protecting investors, paying taxes, security of property from theft and looting, thetrading across borders, enforcing contracts and transparency of government procurement,resolving insolvency. macroeconomic conditions or the underlying strengthIn a series of annual reports Doing Business presents of institutions—are not directly studied by Doingquantitative indicators on business regulations and the Business. The indicators refer to a specific type ofprotection of property rights that can be compared business, generally a local limited liability companyacross 183 economies, from Afghanistan to Zimbabwe, operating in the largest business city. Becauseover time. The data set covers 46 economies in Sub- standard assumptions are used in the data collection,Saharan Africa, 32 in Latin America and the Caribbean, comparisons and benchmarks are valid across24 in East Asia and the Pacific, 24 in Eastern Europe economies. The data not only highlight the extent ofand Central Asia, 18 in the Middle East and North obstacles to doing business; they also help identify theAfrica and 8 in South Asia, as well as 31 OECD high- source of those obstacles, supporting policy makers inincome economies. The indicators are used to analyze designing regulatory reform.economic outcomes and identify what reforms have More information is available in the full report. Doingworked, where and why. Business 2012 presents the indicators, analyzes theirThis economy profile presents the Doing Business relationship with economic outcomes andindicators for Peru. To allow useful comparison, it also recommends regulatory reforms. The data, along withprovides data for other selected economies information on ordering Doing Business 2012, are(comparator economies) for each indicator. The data in available on the Doing Business website atthis report are current as of June 1, 2011 (except for http://www.doingbusiness.org.
    • Doing Business 2012 Peru 5THE BUSINESS ENVIRONMENTFor policy makers trying to improve their economy’sregulatory environment for business, a good place to ECONOMY OVERVIEWstart is to find out how it compares with the regulatoryenvironment in other economies. Doing Businessprovides an aggregate ranking on the ease of doing Region: Latin America & Caribbeanbusiness based on indicator sets that measure andbenchmark regulations applying to domestic small to Income category: Upper middle incomemedium-size businesses through their life cycle.Economies are ranked from 1 to 183 by the ease of Population: 29,496,120doing business index. For each economy the index iscalculated as the ranking on the simple average of its GNI per capita (US$): 4,710.00percentile rankings on each of the 10 topics included inthe index in Doing Business 2012: starting a business, DB2012 rank: 41dealing with construction permits, getting electricity,registering property, getting credit, protecting DB2011 rank: 39investors, paying taxes, trading across borders, Change in rank: -2enforcing contracts and resolving insolvency. Theranking on each topic is the simple average of thepercentile rankings on its component indicators (see Note: See the data notes for sources andthe data notes for more details). 1 definitions.The aggregate ranking on the ease of doing businessbenchmarks each economy’s performance on theindicators against that of all other economies in theDoing Business sample (figure 1.1). While this rankingtells much about the business environment in aneconomy, it does not tell the whole story. The ranking onthe ease of doing business, and the underlyingindicators, do not measure all aspects of the businessenvironment that matter to firms and investors or thataffect the competitiveness of the economy. Still, a highranking does mean that the government has created aregulatory environment conducive to operating abusiness.1 Except for the ease of getting credit, for which the percentile rankings on its component indicators are weighted, the depth of creditinformation index at 37.5% and the strength of legal rights index at 62.5%.
    • Doing Business 2012 Peru 6THE BUSINESS ENVIRONMENTFigure 1.1 Where economies stand in the global ranking on the ease of doing businessSource: Doing Business database.
    • Doing Business 2012 Peru 7THE BUSINESS ENVIRONMENTFor policy makers, knowing where their economy the regional average (figure 1.2). The economy’sstands in the aggregate ranking on the ease of doing rankings on the topics included in the ease of doingbusiness is useful. Also useful is to know how it ranks business index provide another perspective (figurecompared with other economies and compared with 1.3).Figure 1.2 How Peru and comparator economies rank on the ease of doing businessSource: Doing Business database.
    • Doing Business 2012 Peru 8THE BUSINESS ENVIRONMENTFigure 1.3 How Peru ranks on Doing Business topicsSource: Doing Business database.
    • Doing Business 2012 Peru 9THE BUSINESS ENVIRONMENTJust as the overall ranking on the ease of doing This measure shows the distance of each economy tobusiness tells only part of the story, so do changes in the ―frontier,‖ a synthetic measure based on the mostthat ranking. Yearly movements in rankings can efficient practice or highest score observed for eachprovide some indication of changes in an economy’s Doing Business indicator across all economies andregulatory environment for firms, but they are always years included in the Doing Business sample sincerelative. An economy’s ranking might change because 2005. Nine areas of business regulation are covered.of developments in other economies. An economy that Comparing the measure for an economy at 2 points inimplemented business regulation reforms may fail to time allows users to assess how much the economy’srise in the rankings (or may even drop) if it is passed regulatory environment as measured by Doingby others whose business regulation reforms had a Business has changed over time—how far it has movedmore significant impact as measured by Doing toward (or away from) the most efficient practices andBusiness. strongest regulations in areas covered by DoingMoreover, year-to-year changes in the overall rankings Business (figure 1.4). The results may show that thedo not reflect how the business regulatory pace of change varies widely across the areasenvironment in an economy has changed over time— measured. They also may show that an economy isor how it has changed in different areas. To aid in relatively close to the frontier in some areas andassessing such changes, Doing Business 2012 relatively far from it in others.introduces the distance to frontier measure.Figure 1.4 How far has Peru come in the areas measured by Doing Business?Distance to frontier, 2005 and 2011Note: For economies added to the Doing Business sample after 2005, the starting point is the year in which they were added: 2006 forMontenegro; 2007 for Brunei Darussalam, Liberia and Luxembourg; 2008 for The Bahamas, Bahrain and Qatar; and 2009 for Cyprus andKosovo. See the data notes for more details on the distance to frontier measure.Source: Doing Business database.
    • Doing Business 2012 Peru 10THE BUSINESS ENVIRONMENTThe absolute values of the indicators tell another part business regulation—such as a regulatory process thatof the story (table 1.1). The indicators, on their own or can be completed with a small number of proceduresin comparison with the indicators of a good practice in a few days and at a low cost. Comparison of theeconomy or those of comparator economies in the economy’s indicators today with those in the previousregion, may reveal bottlenecks reflected in large year may show where substantial bottlenecks persist—numbers of procedures, long delays or high costs. Or and where they are diminishing.they may reveal unexpected strengths in an area ofTable 1.1 Summary of Doing Business indicators for Peru Best performer globally Venezuela, RB DB2012 Argentina DB2012 Honduras DB2012 Mexico DB2012 Indicator Bolivia DB2012 Brazil DB2012 Peru DB2012 Peru DB2011 DB2012 Starting a Business 55 53 146 169 120 150 75 147 New Zealand (1)(rank)Procedures (number) 5 6 14 15 13 13 6 17 Canada (1)*Time (days) 26 27 26 50 119 14 9 141 New Zealand (1) Cost (% of income per 11.9 13.6 11.9 90.4 5.4 46.7 11.2 26.1 Denmark (0.0)*capita)Paid-in Min. Capital (% 0.0 0.0 2.2 2.3 0.0 17.0 8.4 0.0 82 Economies (0.0)*of income per capita) Dealing with Hong Kong SAR,Construction Permits 101 96 169 107 127 70 43 109 China (1)(rank)Procedures (number) 16 16 25 14 17 14 10 10 Denmark (5)Time (days) 188 188 365 249 469 94 81 381 Singapore (26)* Cost (% of income per 76.3 87.5 107.7 77.5 40.2 309.8 333.1 161.9 Qatar (1.1)capita)
    • Doing Business 2012 Peru 11 Best performer globally Venezuela, RB DB2012 Argentina DB2012 Honduras DB2012 Mexico DB2012 Indicator Bolivia DB2012 Brazil DB2012 Peru DB2012 Peru DB2011 DB2012Getting Electricity (rank) 82 83 58 124 51 114 142 155 Iceland (1)Procedures (number) 5 5 6 8 6 8 7 6 Germany (3)*Time (days) 100 100 67 42 34 33 114 125 Germany (17) Cost (% of income per 441.6 500.0 20.4 1181.2 130.3 1082.2 395.5 1341.1 Japan (0.0)capita) Registering Property 22 24 139 138 114 94 140 91 New Zealand (3)(rank)Procedures (number) 4 4 7 7 13 7 7 8 Portugal (1)*Time (days) 7 7 53 92 39 23 74 38 Portugal (1) Cost (% of property 3.3 3.3 7.0 4.8 2.3 5.7 5.3 2.5 Slovak Republic (0.0)value)Getting Credit (rank) 24 21 67 126 98 8 40 182 United Kingdom (1)* Strength of legal rights 7 7 4 1 3 8 6 1 New Zealand (10)*index (0-10) Depth of credit 6 6 6 6 5 6 6 0 Japan (6)*information index (0-6) Public registry coverage 28.5 25.5 35.9 11.8 36.1 16.3 0.0 0.0 Portugal (86.2)(% of adults) Private bureau coverage 36.0 33.3 100.0 35.9 61.5 31.2 98.1 0.0 New Zealand (100.0)*(% of adults) Protecting Investors 17 21 111 133 79 166 46 179 New Zealand (1)(rank) Extent of disclosure 8 8 6 1 6 0 8 3 France (10)*index (0-10)
    • Doing Business 2012 Peru 12 Best performer globally Venezuela, RB DB2012 Argentina DB2012 Honduras DB2012 Mexico DB2012 Indicator Bolivia DB2012 Brazil DB2012 Peru DB2012 Peru DB2011 DB2012 Extent of director 5 5 2 5 7 5 5 2 Singapore (9)*liability index (0-10) Ease of shareholder suits 8 7 6 6 3 4 5 2 New Zealand (10)*index (0-10)Strength of investor 7.0 6.7 4.7 4.0 5.3 3.0 6.0 2.3 New Zealand (9.7)protection index (0-10)Paying Taxes (rank) 85 93 144 179 150 140 109 183 Canada (8) Payments (number per 9 9 9 42 9 47 6 70 Norway (4)year)Time (hours per year) 309 380 415 1080 2600 224 347 864 Luxembourg (59) Trading Across Borders 56 56 102 126 121 103 59 166 Singapore (1)(rank) Documents to export 6 6 7 8 7 6 5 8 France (2)(number) Hong Kong SAR,Time to export (days) 12 12 13 19 13 18 12 49 China (5)* Cost to export (US$ per 860 860 1480 1425 2215 1242 1450 2590 Malaysia (450)container) Documents to import 8 8 7 7 8 8 4 9 France (2)(number)Time to import (days) 17 17 16 23 17 22 12 71 Singapore (4) Cost to import (US$ per 880 880 1810 1747 2275 1420 1780 2868 Malaysia (435)container) Enforcing Contracts 111 110 45 135 118 177 81 77 Luxembourg (1)(rank)
    • Doing Business 2012 Peru 13 Best performer globally Venezuela, RB DB2012 Argentina DB2012 Honduras DB2012 Mexico DB2012 Indicator Bolivia DB2012 Brazil DB2012 Peru DB2012 Peru DB2011 DB2012Time (days) 428 428 590 591 731 920 415 510 Singapore (150)Cost (% of claim) 35.7 35.7 16.5 33.2 16.5 35.2 32.0 43.7 Bhutan (0.1)Procedures (number) 41 41 36 40 45 47 38 30 Ireland (21)* Resolving Insolvency 100 102 85 65 136 131 24 161 Japan (1)(rank)Time (years) 3.1 3.1 2.8 1.8 4.0 3.8 1.8 4.0 Ireland (0.4)Cost (% of estate) 7 7 12 15 12 15 18 38 Singapore (1)* Recovery rate (cents on 28.0 27.2 32.9 39.3 17.9 19.2 67.1 6.2 Japan (92.7)the dollar)Note: The methodology for the paying taxes indicators changed in Doing Business 2012; see the data notes for details. For theseindicators, the best performer globally is the economy that has implemented the most efficient practices in its tax system and isnot necessarily the one with the highest ranking. For more information on “no practice” marks, see the data notes for details.* Two or more economies share the top ranking on this indicator. A number shown in place of an economy’s name indicates thenumber of economies that share the top ranking on the indicator. For a list of these economies, see the Doing Business website(http://www.doingbusiness.org).Source: Doing Business database.
    • Doing Business 2012 Peru 14STARTING A BUSINESSFormal registration of companies has many WHAT THE STARTING A BUSINESSimmediate benefits for the companies and forbusiness owners and employees. Legal entities can INDICATORS MEASUREoutlive their founders. Resources are pooled asseveral shareholders join forces to start a company. Procedures to legally start and operate aFormally registered companies have access to company (number)services and institutions from courts to banks as Preregistration (for example, namewell as to new markets. And their employees can verification or reservation, notarization)benefit from protections provided by the law. Anadditional benefit comes with limited liability Registration in the economy’s largestcompanies. These limit the financial liability of business citycompany owners to their investments, so personal Postregistration (for example, social securityassets of the owners are not put at risk. Where registration, company seal)governments make registration easy, moreentrepreneurs start businesses in the formal sector, Time required to complete each procedurecreating more good jobs and generating more (calendar days)revenue for the government. Does not include time spent gatheringWhat do the indicators cover? informationDoing Business measures the ease of starting a Each procedure starts on a separate daybusiness in an economy by recording all Procedure completed once final document isprocedures that are officially required or commonly receiveddone in practice by an entrepreneur to start up andformally operate an industrial or commercial No prior contact with officialsbusiness—as well as the time and cost required to Cost required to complete each procedurecomplete these procedures. It also records the (% of income per capita)paid-in minimum capital that companies mustdeposit before registration (or within 3 months). Official costs only, no bribesThe ranking on the ease of starting a business is No professional fees unless services requiredthe simple average of the percentile rankings on by lawthe 4 component indicators: procedures, time, costand paid-in minimum capital requirement. Paid-in minimum capital (% of income per capita)To make the data comparable across economies,Doing Business uses several assumptions about the Deposited in a bank or with a notary beforebusiness and the procedures. It assumes that all registration (or within 3 months)information is readily available to the entrepreneur  Has a start-up capital of 10 times income perand that there has been no prior contact with capita.officials. It also assumes that all government andnongovernment entities involved in the process  Has a turnover of at least 100 times income per capita.function without corruption. And it assumes thatthe business:  Does not qualify for any special benefits. Is a limited liability company, located in the  Does not own real estate. largest business city.  Is 100% domestically owned. Conducts general commercial or industrial activities.
    • Doing Business 2012 Peru 15STARTING A BUSINESSWhere does the economy stand today?What does it take to start a business in Peru? costs 11.9% of income per capita and requires paid-inAccording to data collected by Doing Business, starting minimum capital of 0.0% of income per capita (figurea business there requires 5 procedures, takes 26 days, 2.1).Figure 2.1 What it takes to start a business in PeruPaid-in minimum capital (% of income per capita): 0.0Note: For details on the procedures reflected here, see the summary at the end of this chapter.Source: Doing Business database.
    • Doing Business 2012 Peru 16STARTING A BUSINESSGlobally, Peru stands at 55 in the ranking of 183 regional average ranking provide other usefuleconomies on the ease of starting a business (figure information for assessing how easy it is for an2.2). The rankings for comparator economies and the entrepreneur in Peru to start a business.Figure 2.2 How Peru and comparator economies rank on the ease of starting a businessSource: Doing Business database.
    • Doing Business 2012 Peru 17STARTING A BUSINESSWhat are the changes over time?While the most recent Doing Business data reflect how changed—and which have not (table 2.1). That caneasy (or difficult) it is to start a business in Peru today, help identify where the potential for improvement isdata over time show which aspects of the process have greatest.Table 2.1 The ease of starting a business in Peru over timeBy Doing Business report yearIndicator DB2004 DB2005 DB2006 DB2007 DB2008 DB2009 DB2010 DB2011 DB2012Rank .. .. .. .. .. .. .. 53 55Procedures (number) 10 10 10 10 10 10 9 6 5Time (days) 98 98 102 72 72 65 41 27 26 Cost (% of income per 39.4 36.4 38.0 32.5 29.9 25.7 17.2 13.6 11.9capita)Paid-in Min. Capital (% 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0of income per capita)Note: n.a. = not applicable (the economy was not included in Doing Business for that year). DB2012 rankings reflect changes tothe methodology.Source: Doing Business database.
    • Doing Business 2012 Peru 18STARTING A BUSINESSEqually helpful may be the benchmarks provided by Peru on ways to improve the ease of starting athe economies that today have the best performance business. And changes in regional averages can showregionally or globally on the procedures, time, cost or where Peru is keeping up—and where it is fallingpaid-in minimum capital required to start a business behind.(figure 2.3). These economies may provide a model forFigure 2.3 Has starting a business become easier over time?Procedures (number)Time (days)
    • Doing Business 2012 Peru 19STARTING A BUSINESSCost (% of income per capita)Paid-in minimum capital (% of income per capita)Note: The economy with the best performance regionally on each indicator, and the economy with the best performanceglobally, are included as benchmarks. In some cases 2 or more economies share the top regional or global ranking on anindicator. In the case of paid-in minimum capital, 82 economies globally and 21 economies in Latin America & Caribbeanhave no paid-in minimum capital.Source: Doing Business database.
    • Doing Business 2012 Peru 20STARTING A BUSINESSEconomies around the world have taken steps making greater firm satisfaction and savings and moreit easier to start a business—streamlining procedures registered businesses, financial resources and jobby setting up a one-stop shop, making procedures opportunities.simpler or faster by introducing technology and What business registration reforms has Doing Businessreducing or eliminating minimum capital requirements. recorded in Peru (table 2.2)?Many have undertaken business registration reforms instages—and they often are part of a larger regulatoryreform program. Among the benefits have beenTable 2.2 How has Peru made starting a business easier—or not?By Doing Business report year DB Year Reform Peru made starting a business easier by eliminating the DB2012 requirement for micro and small enterprises to deposit start- up capital in a bank before registration. Peru eased business start-up by simplifying the requirements DB2011 for operating licenses and creating an online one-stop shop for business registration. Business start-up was simplified by allowing submission of DB2010 electronic payroll books online at no cost and making company forms available online. DB2009 No reform.Note: For information on reforms in earlier years (back to DB2005), see the Doing Business reportsfor these years, available at http://www.doingbusiness.org.Source: Doing Business database.
    • Doing Business 2012 Peru 21STARTING A BUSINESSWhat are the details?Underlying the indicators shown in this chapter for STANDARDIZED COMPANYPeru is a set of specific procedures—thebureaucratic and legal steps that an entrepreneurmust complete to incorporate and register a new City: Limafirm. These are identified by Doing Businessthrough collaboration with relevant local Legal Form: Sociedad Anónima – simple corporationprofessionals and the study of laws, regulations and Start-up capital: 10 times GNI per capitapublicly available information on business entry inthat economy. Following is a detailed summary of Paid-in minimum capital (% of income perthose procedures, along with the associated time capita): 0.0and cost. These procedures are those that apply toa company matching the standard assumptions(the ―standardized company‖) used by DoingBusiness in collecting the data (see the section inthis chapter on what the indicators measure).Summary of procedures for starting a business in Peru—and the time and cost Time to No. Procedure Cost to complete complete Check the uniqueness of company name and reserve it online The entrepreneurs selects a company name and conducts a search to USD 2.22 per search verify that the name is unique in SUNARP website. A link to the 1 day and USD 6.66 per 1 SUNARP website is provided in the Portal de Servicios al Ciudadano y a reservation las Empresas (http://www.serviciosalciudadano.gob.pe/).The proposed name may be reserved or blocked for 30 days in the Public Registry so that no other company can register the same name during that time. Prepare draft deed of incorporation with the notary online The entrepreneur can access the system through the Portal de Servicios 1 day no charge 2 al Ciudadano y a las Empresas (http://www.serviciosalciudadano.gob.pe/). The entrepreneur selects a notary and sends him the necessary information for incorporation. Sign the deed of incorporation before a notary public, file online USD 200 notary fee the deed of incorporation with the Public Register of Commerce (both fees depend on and obtain Certificate of Registration and obtain taxpayer market conditions) identification number (Registro Unico del Contribuyente, RUC) plus registration fees which are composed After the Notary receives the information sent by the entrepreneur, 8 days by: 0.3% of capital + 3 creates the public deed and, after signature by the shareholders, files it with the Mercantile Registry through the Notarys module. Notary fees USD 15 for are up to 1% of capital, depending on the company size, the length of performing the the public deed, and the initial capital contribution. The entrepreneur registration + USD 8 also pays the registration fees to the Notary. The Registrar receives the per appointment of public deed and proceeds to register the company. The Registrar is also each director, interconnected with the tax authority (SUNAT) to register the company manager or other
    • Doing Business 2012 Peru 22 Time to No. Procedure Cost to complete complete as a taxpayer. If the Notary follows the model of deed of the system, representative, up to the tax registration certificate and the tax Identification number (RUC) the limit of PEN 3,600 are delivered to the notary in 72 hours. (equivalent to 1 UIT - Peruvian Tax Unit for The incorporation documents must include, at least, (a) the company FY 2010). name; (b) its purpose and duration; (c) the company domicile; (d) the initial capital contribution; (e) the shares nominal value and the total number of shares; (f) the classes of shares, if needed; (g) the name, nationality, marital status, occupation, and residence of any individual shareholder; (h) the names of the initial directors, managers, and agents; and the (i) the date of startup operations. USD 7 per book of no more than 100 pages. Most companies have The notary stamps the accounting book and the minute book between 5 and 9 of 4 1 day these books. Thus, the cost will range between USD 35 and USD 63. Obtain municipal license from the City Council A municipal license, required to operate commercially, is obtained from the municipality of the jurisdiction where the company is located. Some district councils require a provisional license while the permanent license is being processed. In most cases, the district council requires a copy of the incorporation documents, the public deed, the distribution Fees vary depending plan, property title documents (if applicable). Ordinance No. 857 on the District Council simplified the license application process in the metropolitan where the company’s municipality of Lima (Municipalidad Metropolitana de Lima). Law 28976 15 days office is located. In 5 of 19 January 2007 on the operating license (Ley Marco de Licencia de San Isidro between Funcionamiento) has further simplied the system by eliminating the PEN 391 and PEN need of a Certificate of Compatibility as a requisite and by replacing it 489. by a simple verification that the new company meets zoning regulations. The requirements for the Certificate of INDECI have also been simplified. Categories I and II licenses (premises up to 500 m2) do not need to submit a Certificate of INDECI but the compliance with health ans security requirements is now checked by the municipality with inspections after submitting request for Municipal Operating License. This system is now operational in all Lima’s District Councils.* Takes place simultaneously with another procedure.Source: Doing Business database.
    • Doing Business 2012 Peru 23DEALING WITH CONSTRUCTION PERMITSRegulation of construction is critical to protect the WHAT THE DEALING WITH CONSTRUCTIONpublic. But it needs to be efficient, to avoid PERMITS INDICATORS MEASUREexcessive constraints on a sector that plays animportant part in every economy. Where complyingwith building regulations is excessively costly in Procedures to legally build a warehousetime and money, many builders opt out. They may (number)pay bribes to pass inspections or simply build Submitting all relevant documents andillegally, leading to hazardous construction that obtaining all necessary clearances, licenses,puts public safety at risk. Where compliance is permits and certificatessimple, straightforward and inexpensive, everyone Completing all required notifications andis better off. receiving all necessary inspectionsWhat do the indicators cover? Obtaining utility connections for water,Doing Business records the procedures, time and sewerage and a fixed telephone linecost for a business to obtain all the necessary Registering the warehouse after itsapprovals to build a simple commercial warehouse completion (if required for use as collateral orin the economy’s largest business city, connect it to for transfer of the warehouse)basic utilities and register the property so that it Time required to complete each procedurecan be used as collateral or transferred to another (calendar days)entity. Does not include time spent gatheringThe ranking on the ease of dealing with informationconstruction permits is the simple average of the Each procedure starts on a separate daypercentile rankings on its component indicators:procedures, time and cost. Procedure completed once final document is receivedTo make the data comparable across economies,Doing Business uses several assumptions about the No prior contact with officialsbusiness and the warehouse, including the utility Cost required to complete each procedure (%connections. of income per capita)The business: Official costs only, no bribes  Is a limited liability company operating in  Will be connected to water, sewerage the construction business and located in (sewage system, septic tank or their the largest business city. equivalent) and a fixed telephone line. The  Is domestically owned and operated. connection to each utility network will be 10 meters (32 feet, 10 inches) long.  Has 60 builders and other employees.  Will be used for general storage, such as ofThe warehouse: books or stationery (not for goods requiring  Is a new construction (there was no special conditions). previous construction on the land).  Will take 30 weeks to construct (excluding all  Has complete architectural and technical delays due to administrative and regulatory plans prepared by a licensed architect. requirements).
    • Doing Business 2012 Peru 24DEALING WITH CONSTRUCTION PERMITSWhere does the economy stand today?What does it take to comply with the formalities to there requires 16 procedures, takes 188 days and costsbuild a warehouse in Peru? According to data collected 76.3% of income per capita (figure 3.1).by Doing Business, dealing with construction permitsFigure 3.1 What it takes to comply with formalities to build a warehouse in PeruNote: For details on the procedures reflected here, see the summary at the end of this chapter.Source: Doing Business database.
    • Doing Business 2012 Peru 25DEALING WITH CONSTRUCTION PERMITSGlobally, Peru stands at 101 in the ranking of 183 economies and the regional average ranking provideeconomies on the ease of dealing with construction other useful information for assessing how easy it is forpermits (figure 3.2). The rankings for comparator an entrepreneur in Peru to legally build a warehouse.Figure 3.2 How Peru and comparator economies rank on the ease of dealing with construction permitsSource: Doing Business database.
    • Doing Business 2012 Peru 26DEALING WITH CONSTRUCTION PERMITSWhat are the changes over time?While the most recent Doing Business data reflect how the process have changed—and which have not (tableeasy (or difficult) it is to deal with construction permits 3.1). That can help identify where the potential forin Peru today, data over time show which aspects of improvement is greatest.Table 3.1 The ease of dealing with construction permits in Peru over timeBy Doing Business report year Indicator DB2006 DB2007 DB2008 DB2009 DB2010 DB2011 DB2012Rank .. .. .. .. .. 96 101Procedures (number) 16 16 16 16 16 16 16Time (days) 208 208 208 208 203 188 188 Cost (% of income per 133.6 124.6 112.7 95.4 88.8 87.5 76.3capita)Note: n.a. = not applicable (the economy was not included in Doing Business for that year). DB2012 rankings reflect changes tothe methodology. For more information on “no practice” marks, see the data notes for details.Source: Doing Business database.
    • Doing Business 2012 Peru 27DEALING WITH CONSTRUCTION PERMITSEqually helpful may be the benchmarks provided by ways to improve the ease of dealing with constructionthe economies that today have the best performance permits. And changes in regional averages can showregionally or globally on the procedures, time or cost where Peru is keeping up—and where it is fallingrequired to deal with construction permits (figure 3.3). behind.These economies may provide a model for Peru onFigure 3.3 Has dealing with construction permits become easier over time?Procedures (number)Time (days)
    • Doing Business 2012 Peru 28DEALING WITH CONSTRUCTION PERMITSCost (% of income per capita)Note: The economy with the best performance regionally on each indicator, and the economy with the best performanceglobally, are included as benchmarks. In some cases 2 or more economies share the top regional or global ranking on anindicator. In cases where no data are displayed above for the economy, this indicates that the economy has received a“no practice” mark; see the data notes for details.Source: Doing Business database.
    • Doing Business 2012 Peru 29DEALING WITH CONSTRUCTION PERMITSSmart regulation ensures that standards are met while building safety while keeping compliance costsmaking compliance easy and accessible to all. reasonable, governments around the world haveCoherent and transparent rules, efficient processes and worked on consolidating permitting requirements.adequate allocation of resources are especially What construction permitting reforms has Doingimportant in sectors where safety is at stake. Business recorded in Peru (table 3.2)?Construction is one of them. In an effort to ensureTable 3.2 How has Peru made dealing with construction permits easier—or not?By Doing Business report year DB Year Reform DB2012 No reform. DB2011 Peru streamlined construction permitting by implementing administrative reforms. DB2010 No reform. DB2009 No reform.Note: For information on reforms in earlier years (back to DB2006), see the Doing Business reportsfor these years, available at http://www.doingbusiness.org.Source: Doing Business database.
    • Doing Business 2012 Peru 30DEALING WITH CONSTRUCTION PERMITSWhat are the details? The indicators reported here for Peru are based BUILDING A WAREHOUSEon a set of specific procedures—the steps that acompany must complete to legally build awarehouse—identified by Doing Business through City : Limainformation collected from experts in constructionlicensing, including architects, construction Estimatedlawyers, construction firms, utility service providers PEN 977,247 Warehouse Value :and public officials who deal with buildingregulations. These procedures are those that apply The procedures, along with the associated time andto a company and structure matching the standard cost, are summarized below.assumptions used by Doing Business in collectingthe data (see the section in this chapter on whatthe indicators cover).Summary of procedures for dealing with construction permits in Peru —and the time and cost Time to No. Procedure Cost to complete complete Obtain property ownership certificate A property ownership certificate is obtained from the Property Registry. 1 2 days PEN 15 SUNARP has implemented various measures to improve its efficiency. Additional staff was recruited, and training on quality services conducted. Obtain Land Development and Building Parameter Certificate (Certificado de Parámetros Urbanísticos y Edificatorios) This document grants approval of land development and building conditions of a land plot or property in order to carry out works, projects, and compatible uses, and so forth. The document is granted according to the General Zoning Regulations for the city of Lima, National Building Regulations, Rule No. 201 of the Master Plan for the Historical Center and District of Lima, and the Use Index for the Location of Urban Activities, in keeping with the zoning and urban structuring area of each plot or property. 2 15 days PEN 213 This certificate provides the following information: - Land development regulations, which refer to urban land classification, urban policy areas, zoning, compatible use indexes, and densities. - Building indexes, which refer to building ratios, heights, minimum free area percentages, minimum spacing, and parking indexes. The cost includes the cost of forms that must be completed and submitted along with the location map of the plot (PEN 4.0 per form). The tax unit fee (Unidad impositiva tributaria, UIT) to PEN 3,550 in 2009. The UIT is the reference unit for the calculation of license costs.
    • Doing Business 2012 Peru 31 Time toNo. Procedure Cost to complete complete The legal basis for this procedure is D.S. 008-2000-MTC, Law No. 23853, Article 10. * Obtain project authorization certificate (boleta de Habilitación del Proyecto) from the Professional Association of Engineers (Colegio de Ingenieros) 1 day PEN 3203 The cost of the authorization form is PEN 300, and the cost of the certificate is PEN 20. Submit Preliminary Design for Consultation to the Municipality (Revision de Anteproyecto) This procedure requires the following documents: - A special multiple-use form completed by the draftsperson and a procedure form (hoja de trámite). - Proof of payment of the municipal fee (derecho municipal). - Proof of payment of delegate services fee (servicios de delegado).4 - The current land development and building parameter certificate. 10 days PEN 1,466 - The architectural plans. - A report justifying the purpose of the construction (memoria justificativa), signed by the draftsperson. - A construction work valuation based on the current official unit values (valores unitarios oficiales). At the discretion of the commission, other plans, land surveys, memorias justificativas, and other additional documents may be requested. Obtain Construction License from the Municipality (Licencia de Obra para Edificacion nueva) The following documents are needed in order to obtain the building permit: - Procedure form (two copies). - Single official form. - Specification of the construction work budget. - Authenticated copy of property title. - Land development and building parameter certificate. - Project authorization certificate and proficiency certificate for the person in charge of the construction work. - Memoria justificativa. - Photocopies in color. 45 days PEN 3,9095 - Location and site maps. - Architectural, structural, sanitary system, and electrical plans. - Drawings and records to be reviewed by the ad-hoc delegates. - Proof of payment. Payment grants the right to a specialized review before the Technical Qualifying Commission (Comisión Técnica Calificadora). If pertinent, a licensing and filing fee will be paid as follows: - For the building permit: 0.4% of construction work value. - For construction work control: 0.1% of construction work value (includes a minimum of three inspections). Note: If necessary, the Technical Qualifying Commission requests the environmental impact assessment and land surveys.
    • Doing Business 2012 Peru 32 Time toNo. Procedure Cost to complete complete Receive first of a minimum of three inspections during construction6 1 day PEN 977 There is a minimum of three inspections in connection with the building permit. The cost for all of them is 0.1% of the construction value. Receive second of a minimum of three inspections during the construction7 1 day no charge There is a minimum of three inspections in connection with the building permit. The cost for all of them is 0.1% of the construction value. Receive third of a minimum of three inspections during the construction8 1 day no charge There is a minimum of three inspections in connection with the building permit. The cost for all of them is 0.1% of the construction value. Request water supply service feasibility study from water utility SEDAPAL9 30 days PEN 220 The water utility (SEDAPAL) conducts a feasibility study for a residential potable water installation. The study does not include the meter installation. * Receive inspection from SEDAPAL10 1 day no charge SEDAPAL conducts a feasibility inspection. Request potable water service installation11 50 days PEN 60 * Request and obtain telephone line installation Increased coverage by fixed telephone providers in the past few years 7 days PEN 40712 has yilded in higher density of coverage. Peru Telefonica, which has 77% of fixed telecom market in Peru, has reduced the average time for providing new telephone lines to 7 days. Notify of project completion to and receive final inspection from the Municipality13 3 days no charge Once the construction work has been completed, the owner has 15 days to notify the municipality that the building has been constructed according to the approved plans (Law No. 27157, Article 31). Obtain construction work conformity certificate14 3 days no charge The municipality has a maximum of 7 working days to grant the construction work a certificate of approval Obtain Factory Statement (Declaratoria de Fábrica)15 The law stipulates that legal recognition of the existence of any type of 7 days PEN 217 building, regardless of its construction date, should be made through an owner’s statement in accordance with the requirements and
    • Doing Business 2012 Peru 33 Time to No. Procedure Cost to complete complete procedures stated by the law. This recognition is referred to as a ―factory statement‖ (declaratoria de fábrica) (Article 27). Register the Factory Statement (Declaratoria de Fábrica) with SUNARP The registration cost of the declaratoria de fábrica is 0.97% of the UIT on the account of a qualification fee, plus 3% of the construction work value. The time required to complete the registration is 20 days, unless a postponement has been made. The required documents are the following: - Registration application form, duly completed and signed. - Copy of the legal representatives identity card, with a certificate stating that the representative voted in the last election or was 20 days PEN 2,966 16 exempted from this obligation. - Single official form (parts 1 and 2), as provided for by Law 27157 and the corresponding documents according to the provisions valid as of statement date. - Location and siting plans and story or level distribution drawing, signed by the inspector, if required. - Technical report issued by the designed inspector, the plan development, and the building parameter certificate, in case of building regularization. - Proof of payment of registration fees. - Possibly other documents, according to the registration qualification and regulations at the time of registration.* Takes place simultaneously with another procedure.Source: Doing Business database.
    • Doing Business 2012 Peru 34GETTING ELECTRICITYAccess to reliable and affordable electricity is vital WHAT THE GETTING ELECTRICITYfor businesses. To counter weak electricity supply,many firms in developing economies have to rely INDICATORS MEASUREon self-supply, often at a prohibitively high cost.Whether electricity is reliably available or not, the Procedures to obtain an electricityfirst step for a customer is always to gain access by connection (number)obtaining a connection. Submitting all relevant documents andWhat do the indicators cover? obtaining all necessary clearances and permitsDoing Business records all procedures required for Completing all required notifications anda local business to obtain a permanent electricity receiving all necessary inspectionsconnection and supply for a standardizedwarehouse, as well as the time and cost to Obtaining external installation works andcomplete them. These procedures include possibly purchasing material for these worksapplications and contracts with electricity utilities, Concluding any necessary supply contract andclearances from other agencies and the external obtaining final supplyand final connection works. The ranking on theease of getting electricity is the simple average of Time required to complete each procedurethe percentile rankings on its component (calendar days)indicators: procedures, time and cost. To make the Is at least 1 calendar daydata comparable across economies, severalassumptions are used. Each procedure starts on a separate dayThe warehouse: Does not include time spent gathering information  Is located in the economy’s largest business city, in an area where other Reflects the time spent in practice, with little warehouses are located. follow-up and no prior contact with officials  Is not in a special economic zone where Cost required to complete each procedure the connection would be eligible for (% of income per capita) subsidization or faster service. Official costs only, no bribes  Has road access. The connection works Excludes value added tax involve the crossing of a road or roads but are carried out on public land.  Is 150 meters long.  Is a new construction being connected to  Is to either the low-voltage or the medium- electricity for the first time. voltage distribution network and either overhead  Has 2 stories, both above ground, with a or underground, whichever is more common in total surface of about 1,300.6 square the economy and in the area where the meters (14,000 square feet), and is built on warehouse is located. The length of any a plot of 929 square meters (10,000 square connection in the customer’s private domain is feet). negligible.The electricity connection:  Involves installing one electricity meter. The monthly electricity consumption will be 0.07 Is a 3-phase, 4-wire Y, 140-kilovolt-ampere gigawatt-hour (GWh). The internal electrical (kVA) (subscribed capacity) connection. wiring has been completed.
    • Doing Business 2012 Peru 35GETTING ELECTRICITYWhere does the economy stand today?What does it take to obtain a new electricity procedures, takes 100 days and costs 441.6% ofconnection in Peru? According to data collected by income per capita (figure 4.1).Doing Business, getting electricity there requires 5Figure 4.1 What it takes to obtain an electricity connection in PeruNote: For details on the procedures reflected here, see the summary at the end of this chapter.Source: Doing Business database.
    • Doing Business 2012 Peru 36GETTING ELECTRICITYGlobally, Peru stands at 82 in the ranking of 183 regional average ranking provide another perspectiveeconomies on the ease of getting electricity (figure in assessing how easy it is for an entrepreneur in Peru4.2). The rankings for comparator economies and the to connect a warehouse to electricity.Figure 4.2 How Peru and comparator economies rank on the ease of getting electricitySource: Doing Business database.
    • Doing Business 2012 Peru 37GETTING ELECTRICITYEven more helpful than rankings for other economies economies, the practices of their utilities may provide amay be the indicators underlying those rankings (table model for Peru on ways to improve the ease of getting4.1). If obtaining a new electricity connection requires electricity. Regional and global averages on thesefewer procedures, less time or less cost in other indicators may provide useful benchmarks.Table 4.1 The ease of getting electricity in Peru and comparator economies Latin America & Global average Venezuela, RB Caribbean Argentina Honduras average Mexico Bolivia Brazil Peru IndicatorRank 82 58 124 51 114 142 155 72 ..Procedures (number) 5 6 8 6 8 7 6 5 5Time (days) 100 67 42 34 33 114 125 65 111 Cost (% of income percapita) 441.6 20.4 1181.2 130.3 1082.2 395.5 1341.1 593.7 1,942.3Source: Doing Business database.
    • Doing Business 2012 Peru 38GETTING ELECTRICITYWhat are the details?The indicators reported here for Peru are based on a OBTAINING AN ELECTRICITY CONNECTIONset of specific procedures—the steps that anentrepreneur must complete to get a warehouseconnected to electricity by the local distribution City: Limautility—identified by Doing Business. Data are collectedfrom the distribution utility, then completed and Name of Utility: Luz del Surverified by electricity regulatory agencies andindependent professionals such as electrical engineers, The procedures are those that apply to a warehouseelectrical contractors and construction companies. The and electricity connection matching the standardelectricity distribution utility surveyed is the one assumptions used by Doing Business in collecting theserving the area (or areas) in which warehouses are data (see the section in this chapter on what thelocated. If there is a choice of distribution utilities, the indicators cover). The procedures, along with theone serving the largest number of customers is associated time and cost, are summarized below.selected.Summary of procedures for getting electricity in Peru—and the time and cost Time to No. Procedure Cost to complete complete The client submits a service application and awaits that Luz del Sur prepares a feasibility study and the budget With a single application, the client can request the feasibility study, the feed point and the budget. The following documents are required with the application: • location map, • title or ownership of the land- or lease agreement in force and • details of the electrical load. The plans for the System of Use by the client are also required, so that Luz de Sur can verify that the customers installation will not cause a 17 calendar days no charge 1 failure in the distribution network system. Similarly, the client has to mention the closest point of connection to confirm the exact location of the applicants property -this is especially relevant because there are many street names repeated, sometimes in the same area. The documents do not have to be notarized. After receiving the application Luz del Sur prepares the budget that indicates the technical-economic conditions to be fulfilled and the execution of works to be performed by the electricity company. The budget is valid for 30 days. During this period the parties can sign the contract. * Luz del Sur inspects in situ to prepare the feasibility report 2 11 calendar days no charge Luz del Sur inspects in situ to prepare the technical and the feasibility reports for the new service (as of the Supreme Decree 020-1997-EM).
    • Doing Business 2012 Peru 39 Time to No. Procedure Cost to complete complete Luz del Sur executes the external connection works after the customer has signed the supply contract The client pays the budget, presents the project of "System of Use" and, when approved, he has to inform the utility when to initiate the construction. If the supply is regulated (the current limit is 2,500 KW ) Luz 3 del Sur does the connection works. Luz del Sur does the external 83 calendar days USD 20,800.0 connection works from the existing network to the connection. The connection can be made to an existing substation or a new substation can be installed on the customers property which is then to be connected to an existing medium voltage network. Depending on the existing electrical capacity in the area where the property is located, the time can vary between 30 and 360 days. * During the work regarding the internal wiring Luz del Sur inspects the "System of Use" The client requests the inspection of the System of Use before the 4 beginning of the works, attaching the schedule of implementation. It is 7 calendar days no charge necessary that the engineer responsible for the completion of the internal wiring is present during the inspection. Luz del Sur requires that the engineer who does the internal wiring is registered with the Engineers Association of Peru. * Luz del Sur installs the meter and electricity starts flowing The firm installs the meter, which has been paid by the client when 5 paying the budget for the connection works. Therefore, the meter is the 1 calendar day no charge clients property. This is the final step in the implementation of the connection works. Power begins to flow once the client has its System of Use tested and approved.* Takes place simultaneously with another procedure.Source: Doing Business database.
    • Doing Business 2012 Peru 40REGISTERING PROPERTYEnsuring formal property rights is fundamental. WHAT THE REGISTERING PROPERTYEffective administration of land is part of that. If INDICATORS MEASUREformal property transfer is too costly orcomplicated, formal titles might go informalagain. And where property is informal or poorly Procedures to legally transfer title onadministered, it has little chance of being immovable property (number)accepted as collateral for loans—limiting access to Preregistration (for example, checking for liens,finance. notarizing sales agreement, paying property transfer taxes)What do the indicators cover? Registration in the economy’s largest businessDoing Business records the full sequence of cityprocedures necessary for a business to purchaseproperty from another business and transfer the Postregistration (for example, filing title with the municipality)property title to the buyer’s name. The transactionis considered complete when it is opposable to Time required to complete each procedurethird parties and when the buyer can use the (calendar days)property, use it as collateral for a bank loan or Does not include time spent gatheringresell it. The ranking on the ease of registering informationproperty is the simple average of the percentilerankings on its component indicators: procedures, Each procedure starts on a separate daytime and cost. Procedure completed once final document is receivedTo make the data comparable across economies,several assumptions about the parties to the No prior contact with officialstransaction, the property and the procedures are Cost required to complete each procedureused. (% of property value)The parties (buyer and seller): Official costs only, no bribes  Are limited liability companies, 100% No value added or capital gains taxes included domestically and privately owned.  Are located in the periurban area of the economy’s largest business city.  Has no mortgages attached and has been under the same ownership for the past 10  Have 50 employees each, all of whom are years. nationals.  Consists of 557.4 square meters (6,000 square  Perform general commercial activities. feet) of land and a 10-year-old, 2-storyThe property (fully owned by the seller): warehouse of 929 square meters (10,000  Has a value of 50 times income per capita. square feet). The warehouse is in good The sale price equals the value. condition and complies with all safety standards, building codes and legal  Is registered in the land registry or requirements. The property will be transferred cadastre, or both, and is free of title in its entirety. disputes.  Is located in a periurban commercial zone, and no rezoning is required.
    • Doing Business 2012 Peru 41REGISTERING PROPERTYWhere does the economy stand today?What does it take to complete a property transfer in 7 days and costs 3.3% of the property value (figurePeru? According to data collected by Doing Business, 5.1).registering property there requires 4 procedures, takesFigure 5.1 What it takes to register property in PeruNote: For details on the procedures reflected here, see the summary at the end of this chapter.Source: Doing Business database.
    • Doing Business 2012 Peru 42REGISTERING PROPERTYGlobally, Peru stands at 22 in the ranking of 183 regional average ranking provide other usefuleconomies on the ease of registering property (figure information for assessing how easy it is for an5.2). The rankings for comparator economies and the entrepreneur in Peru to transfer property.Figure 5.2 How Peru and comparator economies rank on the ease of registering propertySource: Doing Business database.
    • Doing Business 2012 Peru 43REGISTERING PROPERTYWhat are the changes over time?While the most recent Doing Business data reflect how process have changed—and which have not (table 5.1).easy (or difficult) it is to register property in Peru That can help identify where the potential fortoday, data over time show which aspects of the improvement is greatest.Table 5.1 The ease of registering property in Peru over timeBy Doing Business report year Indicator DB2005 DB2006 DB2007 DB2008 DB2009 DB2010 DB2011 DB2012Rank .. .. .. .. .. .. 24 22Procedures (number) 5 5 5 5 5 4 4 4Time (days) 33 33 33 33 33 14 7 7 Cost (% of propertyvalue) 3.2 3.2 3.3 3.3 3.3 3.3 3.3 3.3Note: n.a. = not applicable (the economy was not included in Doing Business for that year). DB2012 rankings reflect changesto the methodology. For more information on “no practice” marks, see the data notes for details.Source: Doing Business database.
    • Doing Business 2012 Peru 44REGISTERING PROPERTYEqually helpful may be the benchmarks provided by These economies may provide a model for Peru onthe economies that today have the best performance ways to improve the ease of registering property. Andregionally or globally on the procedures, time or cost changes in regional averages can show where Peru isrequired to complete a property transfer (figure 5.3). keeping up—and where it is falling behind.Figure 5.3 Has registering property become easier over time?Procedures (number)Time (days)
    • Doing Business 2012 Peru 45REGISTERING PROPERTYCost (% of property value)Note: The economy with the best performance regionally on each indicator, and the economy with the best performanceglobally, are included as benchmarks. In some cases 2 or more economies share the top regional or global ranking on anindicator. In cases where no data are displayed above for the economy, this indicates that the economy has received a“no practice” mark; see the data notes for details.Source: Doing Business database.
    • Doing Business 2012 Peru 46REGISTERING PROPERTYEconomies worldwide have been making it easier for have cut the time required substantially—enablingentrepreneurs to register and transfer property—such buyers to use or mortgage their property earlier. Whatas by computerizing land registries, introducing time property registration reforms has Doing Businesslimits for procedures and setting low fixed fees. Many recorded in Peru (table 5.2)?Table 5.2 How has Peru made registering property easier—or not?By Doing Business report year DB Year Reform DB2012 No reform. Peru introduced fast-track procedures at the land registry, DB2011 cutting by half the time needed to register property. Registering property has become easier with faster electronic processing and with an online connection between the tax DB2010 agency and notaries that facilitates payment of municipal taxes. DB2009 No reform.Note: For information on reforms in earlier years (back to DB2005), see the Doing Business reportsfor these years, available at http://www.doingbusiness.org.Source: Doing Business database.
    • Doing Business 2012 Peru 47REGISTERING PROPERTYWhat are the details?The indicators reported here are based on a set of STANDARD PROPERTY TRANSFERspecific procedures—the steps that a buyer andseller must complete to transfer the property to thebuyer’s name—identified by Doing Business City: Limathrough information collected from local property Property Value: 705,458.5lawyers, notaries and property registries. Theseprocedures are those that apply to a transaction The procedures, along with the associated time andmatching the standard assumptions used by Doing cost, are summarized below.Business in collecting the data (see the section inthis chapter on what the indicators cover).Summary of procedures for registering property in Peru—and the time and cost Time to No. Procedure Cost to complete complete Obtain a Property Registry Certificate A Property Registry Certificate (CRI, Certificado Registral Inmobiliario) is obtained from the Property Registry to verify the existence and characteristics/description of the property (land and construction), the identity of the owner, and to check whether it is a clean title (free from attachments, mortgages, or any encumbrances of judicial or extra judicial nature). The notary will verify that the municipal taxes (Property Tax (Impuesto Predial) and Municipal services (public gardening, public parks, municipal 1 police, garbage collection, other services)) have been paid. The 2-5 days PEN 60 information is obtained at the municipality by requesting a ―cortado‖ at no cost and in 1 day. The notary public must mention in the Public Deed related to the sale of real estate, the official document showing the cancelation of the Property Tax for all years. However, for the perfection of the transfer (Public Deed) it will require a Notary. The tax amounts to 1.61% of a Peruvian Tax Unit (T.U.). For Fiscal 2011 (calendar year) the TU is PEN 3,600. The notary public executes the sale-purchase agreement The notary executes the sale-purchase agreement or minuta and can deliver it for registration only through the public deed that the minuta and its legal attachments generate. Since the process to generate the 0.1-0.25% of 2 public deed could take some time, principally for the obtaining of the 1 day property value different legal attachments, it is strongly recommended to file for a (Notary’s fees) preliminary reservation (bloqueo) on the property register. Known as the blocking of the property registry, this measure protects the purchaser from any third party filings before the public deed is
    • Doing Business 2012 Peru 48 Time toNo. Procedure Cost to complete complete officially filed for registration, and can be requested by the Notary only with a copy of the minute while the public deed does not exist yet. The blocking of the Registry expires after 60 working days as of registration. The public deed generated is printed by the notary and the transfer tax is liquidated with the instructions for payment. Fees are subject to market values and conditions, the complexity of the transaction, promptness and availability of parties to comply with formalities and signing of the public deed, etc. a reasonably valid estimate could be:" 0.4-0.5% for transaction values of up to US$ 30,000. 0.1-0.25% for transaction values above US$ 30,000 on a declining basis as transaction values increase. After paying the transfer tax (impuesto de alcabala) and verifying that the seller has made the last payment of municipal taxes, the Notary will prepare the official transcription of the SPA in the Notarial Registry. The Notary verifies the identity of the parties, compliance with all mandatory formalities and as the case may be of corporate and civil Powers of Representation (powers of attorney) and proceeds to have the parties sign the Public Deed after which he himself signs thus authorizing the completion of the Public Deed as a public Notarial document. The document is ready for registration. It may be the same notary who takes the Deed to the Registry. Payment of Transfer tax (“Impuesto de Alcabala”) The Transfer tax (Alcabala) must be paid at the Tax Service Administration (Servicio de Administración Tributaria, SAT). The tax agency SAT is connected with the notaries through the internet (https://www.sat.gob.pe/TF/default.asp) to facilitate the payment of municipal taxes (including the transfer tax called Alcabala). The payment can be made on behalf of a client by the notary instantaneously, and no physical visits or wait time is involved in this process. Nevertheless, the aforementioned payment may also be executed in Notaries with debit and credit card, or bank transfers since late 2008, due to notaries have been allowed to connect to SAT system through satellite connection. As 3% of the Municipal soon as the transaction clears, the notary prints the receipt and hands it value of the property3 to the client. 1 day in excess of PEN 36,000 (10 Tax units The payment can be made at:https://www.sat.gob.pe/TF/default.asp. This UIT) reform started back in 2005 under the name ―NotarioSAT‖ with an objective of enabling the electronic payment and processing of Alcabala. In mid 2009, 71 out of 104 notaries in Lima participated in this programme. The programme is web-based and easy to access. The tax amounts to 3% of the Municipal value of the property or of the transfer value, whichever is higuest, on the excess of 10 Tax Units (T.U.). The amount of 10 Tax Units (36,000 TU) shall be discounted from the tax basis. This tax is payable by the purchaser. Since January 2009, the TU is PES 3,600. Even if there is usually a difference between the Municipal and the real value of the property, such differences are not systematic.
    • Doing Business 2012 Peru 49 Time to No. Procedure Cost to complete complete Since January 1st 2004, (non-juridical person) vendors must pay a capital gains tax levied on the difference between the purchase price of the (non residence) property acquired as of January 1st, 2004 and the sales price of the same. The tax is 5% of the difference in prices and it is an advance payment on the Income Tax (this only takes places if the property sold was acquired after 1/1/2004). The public deed is filed for registration with the Property Registry Filing for registration of the Public Deed with the Property Register. Normally, it is the Notary who carries out this act but it is not mandated by law. Filing is a free act and is not restricted to any Officer in particular. If the Notary is not in the same jurisdiction of the Property Register, he may engage a Notary with the same Notarial Jurisdiction as that of the Property Register. The registration fee is 0.15% if the value of the property is below PEN 35,000, otherwise it is 0.3% of the purchase price, up to a maximum of PEN 3,600 or 1 T.U., if the property value of the property is greater. The Public Registry (SUNARP) allows all owners to know at any time and at no cost via email all transactions that the property has undergone PEN 30 (filing and (Alerta Registral) http://www.sunarp.gob.pe/alertaregistral/ presentation fees: 2 days (simple According to the Regulation Public Registry Resolution N° 032-2010 of transfers at no extra 0.81% of 1 UIT) + 4 February 25, 2010, in the cases of simple transfers ("compra-venta 0.3% of property cost) or 9 days simples") the Public Registry must record it in a maximum of 48 hours at value (registration (regular) no extra cost; according to the said Resolution in order to be considered fee, with a limit of 1 as a simple transfer, the operation must fulfilled the following UIT) requirements: (i) the operation must be related about a unique parcel properly registered, (ii) the procedure can only involves one electronic entry, and (iii) the seller must appear as owner in the Public Registry." When the client submits the transfer to SUNARP, SUNARP checks and verifies if the sale falls into this category. It then assigns the work to the relevant "seccion" (composed of one registrador, 2 assistants and one apprentice). Some "secciones" are specifically assigned to this type of transactions. Also, standard minutes have been published in the website to promote their use. The legal framework of Peru does not allow providing incentives for employees. Regular procedures will take longer (7 working days according to the reglamento general de registros públicos).* Takes place simultaneously with another procedure.Source: Doing Business database.
    • Doing Business 2012 Peru 50GETTING CREDITTwo types of frameworks can facilitate access to WHAT THE GETTING CREDIT INDICATORScredit and improve its allocation: credit information MEASUREsystems and the legal rights of borrowers andlenders in collateral and bankruptcy laws. Creditinformation systems enable lenders to view a Strength of legal rights index (0–10)potential borrower’s financial history (positive or Protection of rights of borrowers and lendersnegative)—valuable information to consider when through collateral lawsassessing risk. And they permit borrowers to Protection of secured creditors’ rights throughestablish a good credit history that will allow easier bankruptcy lawsaccess to credit. Sound collateral laws enablebusinesses to use their assets, especially movable Depth of credit information index (0–6)property, as security to generate capital—while Scope and accessibility of credit informationstrong creditors’ rights have been associated with distributed by public credit registries andhigher ratios of private sector credit to GDP. private credit bureausWhat do the indicators cover? Public credit registry coverage (% of adults)Doing Business assesses the sharing of credit Number of individuals and firms listed ininformation and the legal rights of borrowers and public credit registry as percentage of adultlenders with respect to secured transactions populationthrough 2 sets of indicators. The depth of credit Private credit bureau coverage (% of adults)information index measures rules and practices Number of individuals and firms listed inaffecting the coverage, scope and accessibility of largest private credit bureau as percentage ofcredit information available through a public credit adult populationregistry or a private credit bureau. The strength oflegal rights index measures the degree to whichcollateral and bankruptcy laws protect the rights ofborrowers and lenders and thus facilitate lending.Doing Business uses case scenarios to determine  Has 100 employees.the scope of the secured transactions system,  Is 100% domestically owned, as is the lender.involving a secured borrower and a secured lenderand examining legal restrictions on the use of The ranking on the ease of getting credit is based onmovable collateral. These scenarios assume that the the percentile rankings on its component indicators:borrower: the depth of credit information index (weighted at 37.5%) and the strength of legal rights index  Is a private, limited liability company. (weighted at 62.5%).  Has its headquarters and only base of operations in the largest business city.
    • Doing Business 2012 Peru 51GETTING CREDITWhere does the economy stand today?How well do the credit information system and Globally, Peru stands at 24 in the ranking of 183collateral and bankruptcy laws in Peru facilitate access economies on the ease of getting credit (figure 6.1).to credit? The economy has a score of 6 on the depth The rankings for comparator economies and theof credit information index and a score of 7 on the regional average ranking provide other usefulstrength of legal rights index (see the summary of information for assessing how well regulations andscoring at the end of this chapter for details). Higher institutions in Peru support lending and borrowing.scores indicate more credit information and strongerlegal rights for borrowers and lenders.Figure 6.1 How Peru and comparator economies rank on the ease of getting creditSource: Doing Business database.
    • Doing Business 2012 Peru 52GETTING CREDITWhat are the changes over time?While the most recent Doing Business data reflect how institutions and regulations have been strengthened—well the credit information system and collateral and and where they have not (table 6.1). That can helpbankruptcy laws in Peru support lending and identify where the potential for improvement isborrowing today, data over time can help show where greatest.Table 6.1 The ease of getting credit in Peru over timeBy Doing Business report yearIndicator DB2005 DB2006 DB2007 DB2008 DB2009 DB2010 DB2011 DB2012Rank .. .. .. .. .. .. 21 24 Strength of legal rights 3 3 7 7 7 7 7 7index (0-10) Depth of credit 6 6 6 6 6 6 6 6information index (0-6) Public registry coverage 14.3 14.3 19.2 20.7 23.7 23.0 25.5 28.5(% of adults) Private bureau 27.1 27.8 28.6 33.0 33.2 31.8 33.3 36.0coverage (% of adults)Note: n.a. = not applicable (the economy was not included in Doing Business for that year). DB2012 rankings reflect changesto the methodology.Source: Doing Business database.
    • Doing Business 2012 Peru 53GETTING CREDITOne way to put an economy’s getting credit indicators index for Peru in 2011 and shows the number of otherinto context is to see where the economy stands in the economies having the same score in 2011. Figure 6.3distribution of scores across other economies. Figure shows the same thing for the depth of credit6.2 highlights the score on the strength of legal rights information index.Figure 6.2 Have legal rights for borrowers and lenders Figure 6.3 Have the coverage and accessibility of creditbecome stronger? information grown?Number of economies with each score on strength of legal Number of economies with each score on depth of creditrights index (0–10), 2011 information index (0–6), 2011Source: Doing Business database. Source: Doing Business database.
    • Doing Business 2012 Peru 54GETTING CREDITWhen economies strengthen the legal rights of lenders credit information, they can increase entrepreneurs’and borrowers under collateral and bankruptcy laws, access to credit. What credit reforms has Doingand increase the scope, coverage and accessibility of Business recorded in Peru (table 6.2)?Table 6.2 How has Peru made getting credit easier—or not?By Doing Business report year DB Year Reform DB2012 No reform. DB2011 No reform. DB2010 No reform. DB2009 No reform.Note: For information on reforms in earlier years (back to DB2005), see the Doing Business reportsfor these years, available at http://www.doingbusiness.org.Source: Doing Business database.
    • Doing Business 2012 Peru 55GETTING CREDITWhat are the details?The getting credit indicators reported here for Peru are The data on the legal rights of borrowers and lendersbased on detailed information collected in that are gathered through a survey of financial lawyers andeconomy. The data on credit information sharing are verified through analysis of laws and regulations ascollected through a survey of a public credit registry or well as public sources of information on collateral andprivate credit bureau (if one exists). To construct the bankruptcy laws. For the strength of legal rights index,depth of credit information index, a score of 1 is a score of 1 is assigned for each of 8 aspects related toassigned for each of 6 features of the public credit legal rights in collateral law and 2 aspects inregistry or private credit bureau (see summary of bankruptcy law.scoring below).Summary of scoring for the getting credit indicators in Peru Latin America &Indicator Peru OECD high income Caribbean Strength of legal rights index (0-10) 7 6 7Depth of credit information index (0-6) 6 3 5Public registry coverage (% of adults) 28.5 10.1 9.5Private bureau coverage (% of adults) 36.0 34.2 63.9Strength of legal rights index (0–10) Index score: 7 Can any business use movable assets as collateral while keeping possession of the assets; Yesand any financial institution accept such assets as collateral ?Does the law allow businesses to grant a non possessory security right in a single category of Yesmovable assets, without requiring a specific description of collateral? Does the law allow businesses to grant a non possessory security right in substantially all of Yesits assets, without requiring a specific description of collateral? May a security right extend to future or after-acquired assets, and may it extend Yesautomatically to the products, proceeds or replacements of the original assets ? Is a general description of debts and obligations permitted in collateral agreements; can alltypes of debts and obligations be secured between parties; and can the collateral agreement Yesinclude a maximum amount for which the assets are encumbered? Is a collateral registry in operation, that is unified geographically and by asset type, with an Yeselectronic database indexed by debtors names?Are secured creditors paid first (i.e. before general tax claims and employee claims) when a Nodebtor defaults outside an insolvency procedure?
    • Doing Business 2012 Peru 56Strength of legal rights index (0–10) Index score: 7Are secured creditors paid first (i.e. before general tax claims and employee claims) when a Nobusiness is liquidated?Are secured creditors either not subject to an automatic stay or moratorium on enforcementprocedures when a debtor enters a court-supervised reorganization procedure, or the law Noprovides secured creditors with grounds for relief from an automatic stay or Does the law allow parties to agree in a collateral agreement that the lender may enforce its Yessecurity right out of court, at the time a security interest is created? Private credit Public creditDepth of credit information index (0–6) Index score: 6 bureau registryAre data on both firms and individuals distributed? Yes Yes 1Are both positive and negative data distributed? Yes Yes 1 Does the registry distribute credit information fromretailers, trade creditors or utility companies as well as Yes No 1financial institutions?Are more than 2 years of historical credit information Yes Yes 1distributed?Is data on all loans below 1% of income per capita Yes Yes 1distributed? Is it guaranteed by law that borrowers can inspect Yes No 1their data in the largest credit registry?Note: An economy receives a score of 1 if there is a "yes" to either private bureau or public registry.Coverage Private credit bureau Public credit registryNumber of firms 0 180,000Number of individuals 0 5,200,000Source: Doing Business database.
    • Doing Business 2012 Peru 57PROTECTING INVESTORSInvestor protections matter for the ability of WHAT THE PROTECTING INVESTORScompanies to raise the capital they need to grow, INDICATORS MEASUREinnovate, diversify and compete. If the laws do notprovide such protections, investors may be reluctantto invest unless they become the controlling Extent of disclosure index (0–10)shareholders. Strong regulations clearly define Who can approve related-party transactionsrelated-party transactions, promote clear and efficient Disclosure requirements in case of related-disclosure requirements, require shareholder party transactionsparticipation in major decisions of the company andset clear standards of accountability for company Extent of director liability index (0–10)insiders. Ability of shareholders to hold interestedWhat do the indicators cover? parties and members of the approving body liable in case of related-party transactionsDoing Business measures the strength of minority Available legal remedies (damages, repaymentshareholder protections against directors’ use of of profits, fines, imprisonment and rescissioncorporate assets for personal gain—or self-dealing. of the transaction)The indicators distinguish 3 dimensions of investorprotections: transparency of related-party Ability of shareholders to sue directly ortransactions (extent of disclosure index), liability for derivativelyself-dealing (extent of director liability index) and Ease of shareholder suits index (0–10)shareholders’ ability to sue officers and directors for Access to internal corporate documentsmisconduct (ease of shareholder suits index). The (directly or through a government inspector)ranking on the strength of investor protection index isthe simple average of the percentile rankings on Documents and information available duringthese 3 indices. To make the data comparable across trialeconomies, a case study uses several assumptions Strength of investor protection index (0–10)about the business and the transaction. Simple average of the extent of disclosure,The business (Buyer): extent of director liability and ease of shareholder suits indices  Is a publicly traded corporation listed on the economy’s most important stock exchange (or at least a large private company with multiple the company purchase used trucks from another shareholders). company he owns.  Has a board of directors and a chief executive  The price is higher than the going price for used officer (CEO) who may legally act on behalf of trucks, but the transaction goes forward. Buyer where permitted, even if this is not specifically required by law.  All required approvals are obtained, and all required disclosures made, though the transactionThe transaction involves the following details: is prejudicial to Buyer.  Mr. James, a director and the majority  Shareholders sue the interested parties and the shareholder of the company, proposes that members of the board of directors.
    • Doing Business 2012 Peru 58PROTECTING INVESTORSWhere does the economy stand today?How strong are investor protections in Peru? The index (figure 7.1). While the indicator does noteconomy has a score of 7.0 on the strength of investor measure all aspects related to the protection ofprotection index, with a higher score indicating minority investors, a higher ranking does indicate thatstronger protections (see the summary of scoring at an economy’s regulations offer stronger investorthe end of this chapter for details). protections against self-dealing in the areas measured.Globally, Peru stands at 17 in the ranking of 183economies on the strength of investor protectionFigure 7.1 How Peru and comparator economies rank on the strength of investor protection indexSource: Doing Business database.
    • Doing Business 2012 Peru 59PROTECTING INVESTORSWhat are the changes over time?While the most recent Doing Business data reflect how ranking on the strength of investor protection indexwell regulations in Peru protect minority investors over time shows whether the economy is slippingtoday, data over time show whether the protections behind other economies in investor protections—orhave been strengthened (table 7.1). And the global surpassing them.Table 7.1 The strength of investor protections in Peru over timeBy Doing Business report year Indicator DB2006 DB2007 DB2008 DB2009 DB2010 DB2011 DB2012Rank .. .. .. .. .. 21 17 Extent of disclosure 7 8 8 8 8 8 8index (0-10) Extent of director 5 5 5 5 5 5 5liability index (0-10) Ease of shareholder 7 7 7 7 7 7 8suits index (0-10)Strength of investor 6.3 6.7 6.7 6.7 6.7 6.7 7.0protection index (0-10)Note: n.a. = not applicable (the economy was not included in Doing Business for that year). DB2012 rankings reflect changes tothe methodology.Source: Doing Business database.
    • Doing Business 2012 Peru 60PROTECTING INVESTORSBut the overall ranking on the strength of investor ease of shareholder suits indices may also be revealingprotection index tells only part of the story. Economies (figure 7.2). Equally interesting may be the changesmay offer strong protections in some areas but not over time in the regional average scores for thoseothers. So the scores recorded over time for Peru on indices.the extent of disclosure, extent of director liability andFigure 7.2 Have investor protections become stronger?Strength of investor protection index (0-10)Extent of disclosure index (0-10)
    • Doing Business 2012 Peru 61PROTECTING INVESTORSExtent of director liability index (0-10)Ease of shareholder suits index (0-10)Note: The higher the score, the stronger the investor protections. The economy with the best performance regionally oneach indicator, and the economy with the best performance globally, are included as benchmarks. In some cases 2 ormore economies share the top regional or global ranking on an indicator.Source: Doing Business database.
    • Doing Business 2012 Peru 62PROTECTING INVESTORSEconomies with the strongest protections of minority time. So reforms to strengthen investor protectionsinvestors from self-dealing require more disclosure may move ahead on different fronts—such as throughand define clear duties for directors. They also have new or amended company laws or civil procedurewell-functioning courts and up-to-date procedural rules. What investor protection reforms has Doingrules that give minority investors the means to prove Business recorded in Peru (table 7.2)?their case and obtain a judgment within a reasonableTable 7.2 How has Peru strengthened investor protections—or not?By Doing Business report year DB Year Reform Peru strengthened investor protections through a new law allowing minority DB2012 shareholders to request access to nonconfidential corporate documents. DB2011 No reform. DB2010 No reform. DB2009 No reform.Note: For information on reforms in earlier years (back to DB2006), see the Doing Business reports forthese years, available at http://www.doingbusiness.org.Source: Doing Business database.
    • Doing Business 2012 Peru 63PROTECTING INVESTORSWhat are the details?The protecting investors indicators reported here for shareholder suits indices, a score is assigned for eachPeru are based on detailed information collected of a range of conditions relating to disclosure, directorthrough a survey of corporate and securities lawyers liability and shareholder suits in a standard case studyand are based on securities regulations, company laws transaction (see the notes at the end of this chapter).and court rules of evidence. To construct the extent of The summary below shows the details underlying thedisclosure, extent of director liability and ease of scores for Peru.Summary of scoring for the protecting investors indicators in Peru Latin America &Indicator Peru OECD high income CaribbeanExtent of disclosure index (0-10) 8 4 6Extent of director liability index (0-10) 5 5 5Ease of shareholder suits index (0-10) 8 6 7Strength of investor protection index (0-10) 7.0 5.1 6.0 ScoreExtent of disclosure index (0-10) 8What corporate body provides legally sufficient approval for the transaction? 2 Whether disclosure of the conflict of interest by Mr. James to the board of directors is 2required? Whether immediate disclosure of the transaction to the public and/or shareholders is 2required? Whether disclosure of the transaction in published periodic filings (annual reports) is 2required?Whether an external body must review the terms of the transaction before it takes place? 0Extent of director liability index (0-10) 5 Whether shareholders can sue directly or derivatively for the damage that the Buyer-Seller 0transaction causes to the company? Whether shareholders can hold Mr. James liable for the damage that the Buyer-Seller 2transaction causes to the company? Whether shareholders can hold members of the approving body liable for the damage that 0the Buyer-Seller transaction causes to the company?Whether a court can void the transaction upon a successful claim by a shareholder plaintiff? 2
    • Doing Business 2012 Peru 64 Score Whether Mr. James pays damages for the harm caused to the company upon a successful 1claim by the shareholder plaintiff? Whether Mr. James repays profits made from the transaction upon a successful claim by the 0shareholder plaintiff?Whether fines and imprisonment can be applied against Mr. James? 0Ease of shareholder suits index (0-10) 8Whether shareholders owning 10% or less of Buyers shares can inspect transaction 1documents before filing suit? Whether shareholders owning 10% or less of Buyers shares can request an inspector to 1investigate the transaction? Whether the plaintiff can obtain any documents from the defendant and witnesses during 4trial? Whether the plaintiff can request categories of documents from the defendant without 0identifying specific ones?Whether the plaintiff can directly question the defendant and witnesses during trial? 1Whether the level of proof required for civil suits is lower than that of criminal cases? 1Strength of investor protection index (0-10) 7.0Source: Doing Business database.Notes:Extent of disclosure index (0–10)Scoring for the extent of disclosure index is based on 5 components:Which corporate body can provide legally sufficient approval for the transaction0 = CEO or managing director alone; 1 = shareholders or board of directors vote and Mr. James can vote; 2 =board of directors votes and Mr. James cannot vote; 3 = shareholders vote and Mr. James cannot vote.Whether disclosure of the conflict of interest by Mr. James to the board of directors is required0 = no disclosure; 1 = disclosure of the existence of a conflict without any specifics; 2 = full disclosure of allmaterial facts.Whether immediate disclosure of the transaction to the public, the regulator or the shareholders is required0 = no disclosure; 1 = disclosure on the transaction only; 2 = disclosure on the transaction and Mr. James’sconflict of interest.Whether disclosure of the transaction in the annual report is required0 = no disclosure; 1 = disclosure on the transaction only; 2 = disclosure on the transaction and Mr. James’sconflict of interest.
    • Doing Business 2012 Peru 65Whether it is required that an external body (for example, an external auditor) review the transaction before it takesplace0 = no; 1 = yes.Extent of director liability index (0–10)Scoring for the extent of director liability index is based on 7 components:Whether shareholders can sue directly or derivatively for the damage that the Buyer-Seller transaction causes to thecompany0 = suits are unavailable or available only for shareholders holding more than 10% of the company’s share capital;1 = direct or derivative suits available for shareholders holding 10% of share capital or less.Whether shareholders can hold Mr. James liable for the damage that the transaction causes to the company0 = Mr. James is not liable or is liable only if he acted fraudulently or in bad faith; 1 = Mr. James is liable if heinfluenced the approval or was negligent; 2 = Mr. James is liable if the transaction is unfair or prejudicial to theother shareholders.Whether shareholders can hold the approving body (the CEO or members of the board of directors) liable for thedamage that the transaction causes to the company0 = members of the approving body are either not liable or liable only if they acted fraudulently or in bad faith;1 = liable for negligence in the approval of the transaction; 2 = liable if the transaction is unfair or prejudicial tothe other shareholders.Whether a court can void the transaction upon a successful claim by a shareholder plaintiff0 = rescission is unavailable or available only in case of Seller’s fraud or bad faith; 1 = rescission is available whenthe transaction is oppressive or prejudicial to the other shareholders; 2 = rescission is available when thetransaction is unfair or entails a conflict of interest.Whether Mr. James pays damages for the harm caused to the company upon a successful claim by the shareholderplaintiff0 = no; 1 = yes.Whether Mr. James repays profits made from the transaction upon a successful claim by the shareholder plaintiff0 = no; 1 = yes.Whether both fines and imprisonment can be applied against Mr. James0 = no; 1 = yes.Ease of shareholder suits index (0–10)Scoring for the ease of shareholder suits index is based on 6 components:What range of documents is available to the plaintiff from the defendant and witnesses during trialScore of 1 for each of the following: information that the defendant has indicated he intends to rely on for hisdefense; information that directly proves specific facts in the plaintiff’s claim; any information relevant to thesubject matter of the claim; and any information that may lead to the discovery of relevant information.
    • Doing Business 2012 Peru 66Whether the plaintiff can directly examine the defendant and witnesses during trial0 = no; 1 = yes, with prior approval by the court of the questions posed; 2 = yes, without prior approval.Whether the plaintiff can obtain categories of relevant documents from the defendant without identifying eachdocument specifically0 = no; 1 = yes.Whether shareholders owning 10% or less of the company’s share capital can request that a government inspectorinvestigate the transaction without filing suit in court0 = no; 1 = yes.Whether shareholders owning 10% or less of the company’s share capital have the right to inspect the transactiondocuments before filing suit0 = no; 1 = yes.Whether the standard of proof for civil suits is lower than that for a criminal case0 = no; 1 = yes.Strength of investor protection index (0–10)Simple average of the extent of disclosure, extent of director liability and ease of shareholder suits indices.
    • Doing Business 2012 Peru 67PAYING TAXESTaxes are essential. They fund the public amenities, WHAT THE PAYING TAXES INDICATORSinfrastructure and services that are crucial for a MEASUREproperly functioning economy. But the level of taxrates needs to be carefully chosen—and needlesscomplexity in tax rules avoided. According to Tax payments for a manufacturing companyDoing Business data, in economies where it is more in 2010 (number per year adjusted fordifficult and costly to pay taxes, larger shares of electronic or joint filing and payment)economic activity end up in the informal sector— Total number of taxes and contributions paid,where businesses pay no taxes at all. including consumption taxes (value added tax, sales tax or goods and service tax)What do the indicators cover? Method and frequency of filing and paymentUsing a case scenario, Doing Business measuresthe taxes and mandatory contributions that a Time required to comply with 3 major taxesmedium-size company must pay in a given year as (hours per year)well as the administrative burden of paying taxes Collecting information and computing the taxand contributions. This case scenario uses a set of payablefinancial statements and assumptions about Completing tax return forms, filing withtransactions made over the year. Information is proper agenciesalso compiled on the frequency of filing andpayments as well as time taken to comply with tax Arranging payment or withholdinglaws. The ranking on the ease of paying taxes is Preparing separate tax accounting books, ifthe simple average of the percentile rankings on requiredits component indicators: number of annual Total tax rate (% of profit before all taxes)payments, time and total tax rate, with a threshold 2being applied to the total tax rate. To make the Profit or corporate income taxdata comparable across economies, several Social contributions and labor taxes paid byassumptions about the business and the taxes and the employercontributions are used. Property and property transfer taxes  TaxpayerCo is a medium-size business that Dividend, capital gains and financial started operations on January 1, 2009. transactions taxes  The business starts from the same financial Waste collection, vehicle, road and other taxes position in each economy. All the taxes and mandatory contributions paid during the second year of operation are recorded.  Taxes and mandatory contributions include  Taxes and mandatory contributions are corporate income tax, turnover tax and all measured at all levels of government. labor taxes and contributions paid by the company.  A range of standard deductions and exemptions are also recorded.2 The threshold is defined as the highest total tax rate among the top 30% of economies in the ranking on the total tax rate. It will becalculated and adjusted on a yearly basis. The threshold is not based on any underlying theory. Instead, it is intended to mitigate the effect ofvery low tax rates on the ranking on the ease of paying taxes.
    • Doing Business 2012 Peru 68PAYING TAXESWhere does the economy stand today?What is the administrative burden of complying with Globally, Peru stands at 85 in the ranking of 183taxes in Peru—and how much do firms pay in taxes? economies on the ease of paying taxes (figure 8.1). TheOn average, firms make 9 tax payments a year, spend rankings for comparator economies and the regional309 hours a year filing, preparing and paying taxes and average ranking provide other useful information forpay total taxes amounting to 26.6% of profit (see the assessing the tax compliance burden for businesses insummary at the end of this chapter for details). Peru.Figure 8.1 How Peru and comparator economies rank on the ease of paying taxesNote: DB2012 rankings reflect changes to the methodology. For all economies with a total tax rate below the threshold of32.5% applied in DB2012, the total tax rate is set at 32.5% for the purpose of calculating the ranking on the ease of payingtaxes.Source: Doing Business database.
    • Doing Business 2012 Peru 69PAYING TAXESWhat are the changes over time?While the most recent Doing Business data reflect how process have changed — and which have not (tableeasy (or difficult) it is to comply with tax rules in Peru 8.1). That can help identify where the potential fortoday, data over time show which aspects of the easing tax compliance is greatest.Table 8.1 The ease of paying taxes in Peru over timeBy Doing Business report year Indicator DB2006 DB2007 DB2008 DB2009 DB2010 DB2011 DB2012Rank .. .. .. .. .. 93 85Payments (number per 9 9 9 9 9 9 9year)Time (hours per year) 424 424 424 424 380 380 309Total tax rate (% profit) 41.6 41.5 41.5 41.2 40.3 40.2 40.7Note: n.a. = not applicable (the economy was not included in Doing Business for that year). DB2012 rankings reflect changes to themethodology. For all economies with a total tax rate below the threshold of 32.5% applied in DB2012, the total tax rate is set at32.5% for the purpose of calculating the rank on the ease of paying taxes.Source: Doing Business database.
    • Doing Business 2012 Peru 70PAYING TAXESEqually helpful may be the benchmarks provided by ways to ease the administrative burden of taxthe economies that today have the best performance compliance. And changes in regional averages canregionally or globally on the number of payments or show where Peru is keeping up—and where it is fallingthe time required to prepare and file taxes (figure 8.2). behind.These economies may provide a model for Peru onFigure 8.2 Has paying taxes become easier over time?Payments (number per year)Time (hours per year)
    • Doing Business 2012 Peru 71PAYING TAXESTotal tax rate (% of profit)Note: The economy with the best performance regionally on each indicator, and the economy with the best performanceglobally, are included as benchmarks. The best performer globally on an indicator has implemented the most efficientpractices in its tax system but is not necessarily the one with the highest ranking on the indicator. In some cases 2 ormore economies share the top regional ranking on an indicator. DB2012 rankings reflect changes to the methodology. Forall economies with a total tax rate below the threshold of 32.5% applied in DB2012, the total tax rate is set at 32.5% for thepurpose of calculating the ranking on the ease of paying taxes.Source: Doing Business database.
    • Doing Business 2012 Peru 72PAYING TAXESEconomies around the world have made paying taxes concrete results. Some economies simplifying taxfaster and easier for businesses—such as by payment and reducing rates have seen tax revenueconsolidating filings, reducing the frequency of rise. What tax reforms has Doing Business recorded inpayments or offering electronic filing and payment. Peru (table 8.2)?Many have lowered tax rates. Changes have broughtTable 8.2 How has Peru made paying taxes easier—or not?By Doing Business report year DB Year Reform Peru made paying taxes easier for companies by improving electronic filing and payment of the major taxes and DB2012 promoting the use of the electronic option among the majority of taxpayers. DB2011 No reform. Taxpaying was made easier with the use of software, distributed free of charge, for value added taxes. Additionally DB2010 the cash flow of businesses was eased by reducing the check tax and accelerating depreciation. DB2009 No reform.Note: For information on reforms in earlier years (back to DB2006), see the Doing Business reportsfor these years, available at http://www.doingbusiness.org.Source: Doing Business database.
    • Doing Business 2012 Peru 73PAYING TAXESWhat are the details?The indicators reported here for Peru are based on a completed during the year. Respondents are askedstandard set of taxes and contributions that would be how much in taxes and mandatory contributions thepaid by the case study company used by Doing business must pay and what the process is for doingBusiness in collecting the data (see the section in this so. The taxes and contributions paid are listed in thechapter on what the indicators cover). Tax practitioners summary below, along with the associated number ofare asked to review standard financial statements as payments, time and tax rate.well as a standard list of transactions that the companySummary of tax rates and administrative burden in Peru Latin America &Indicator Peru OECD high income CaribbeanPayments (number per year) 9 32 13Time (hours per year) 309 382 186Profit tax (%) 26.6 19.9 15.4Labor tax and contributions (%) 11.0 14.6 24.0Other taxes (%) 3.1 13.2 3.2Total tax rate (% profit) 40.7 47.7 42.7 Total tax Notes on Tax or mandatory Payments Notes on Time Statutory Tax base rate (% of total taxcontribution (number) payments (hours) tax rate profit) rate taxableCorporate income tax 1 online filing 39 30% 26.6 profits Social security gross 1 online filing 160 9% 10.2contributions salariesNet Assets Tax (ITAN) 0 paid jointly 0 0.4% net assets 1.2 0.2%, 0.6% real estateReal estate tax 1 0 1 & 1% value Industrial corporations gross 1 online filing 0 0.75% 0.8contribution salaries fuel 2.11 sol perFuel tax 1 0 consumptio 0.5 liter n transactionFinancial transactions tax 1 0 0.06% 0.4 value
    • Doing Business 2012 Peru 74 Total tax Notes on Tax or mandatory Payments Notes on Time Statutory Tax base rate (% of total taxcontribution (number) payments (hours) tax rate profit) rate vehicleVehicles tax 1 0 1.00% 0.1 valueValue added tax (VAT) 1 online filing 110 19.0% value added 0 not included Arbitrios (public services various 1 0 0 small amountcontributions) ratesTotals 9 309 40.7Note: DB2012 rankings reflect changes to the methodology. For all economies with a total tax rate below the threshold of32.5% applied in DB2012, the total tax rate is set at 32.5% for the purpose of calculating the ranking on the ease of payingtaxes.Source: Doing Business database.
    • Doing Business 2012 Peru 75TRADING ACROSS BORDERSIn today’s globalized world, making trade between WHAT THE TRADING ACROSS BORDERSeconomies easier is increasingly important for INDICATORS MEASUREbusiness. Excessive document requirements,burdensome customs procedures, inefficient portoperations and inadequate infrastructure all lead to Documents required to export and importextra costs and delays for exporters and importers, (number)stifling trade potential. Research shows that Bank documentsexporters in developing countries gain more from Customs clearance documentsa 10% drop in their trading costs than from asimilar reduction in the tariffs applied to their Port and terminal handling documentsproducts in global markets. Transport documentsWhat do the indicators cover? Time required to export and import (days)Doing Business measures the time and cost Obtaining all the documents(excluding tariffs) associated with exporting and Inland transport and handlingimporting a standard shipment of goods by oceantransport, and the number of documents necessary Customs clearance and inspectionsto complete the transaction. The indicators cover Port and terminal handlingprocedural requirements such as documentationrequirements and procedures at customs and other Does not include ocean transport timeregulatory agencies as well as at the port. They also Cost required to export and import (US$ percover trade logistics, including the time and cost of container)inland transport to the largest business city. The All documentationranking on the ease of trading across borders isthe simple average of the percentile rankings on its Inland transport and handlingcomponent indicators: documents, time and cost Customs clearance and inspectionsto export and import. Port and terminal handlingTo make the data comparable across economies, Official costs only, no bribesDoing Business uses several assumptions about thebusiness and the traded goods.The business:  Is of medium size and employs 60 people.  Do not require refrigeration or any other  Is located in the periurban area of the special environment. economy’s largest business city.  Do not require any special phytosanitary or  Is a private, limited liability company, environmental safety standards other than domestically owned, formally registered accepted international standards. and operating under commercial laws and regulations of the economy.  Are one of the economy’s leading export or import products.The traded goods:  Are transported in a dry-cargo, 20-foot full  Are not hazardous nor do they include container load. military items.
    • Doing Business 2012 Peru 76TRADING ACROSS BORDERSWhere does the economy stand today?What does it take to export or import in Peru? Globally, Peru stands at 56 in the ranking of 183According to data collected by Doing Business, economies on the ease of trading across bordersexporting a standard container of goods requires 6 (figure 9.1). The rankings for comparator economiesdocuments, takes 12 days and costs $860. Importing and the regional average ranking provide other usefulthe same container of goods requires 8 documents, information for assessing how easy it is for a businesstakes 17 days and costs $880 (see the summary of in Peru to export and import goods.procedures and documents at the end of this chapterfor details).Figure 9.1 How Peru and comparator economies rank on the ease of trading across bordersSource: Doing Business database.
    • Doing Business 2012 Peru 77TRADING ACROSS BORDERSWhat are the changes over time?While the most recent Doing Business data reflect how changed—and which have not (table 9.1). That caneasy (or difficult) it is to export or import in Peru today, help identify where the potential for improvement isdata over time show which aspects of the process have greatest.Table 9.1 The ease of trading across borders in Peru over timeBy Doing Business report yearIndicator DB2006 DB2007 DB2008 DB2009 DB2010 DB2011 DB2012Rank .. .. .. .. .. 56 56 Documents to export 6 6 6 6 6 6 6(number)Time to export (days) 22 22 22 22 21 12 12 Cost to export (US$ per 575 575 575 860 860 860 860container) Documents to import 8 8 8 8 8 8 8(number)Time to import (days) 29 29 29 25 24 17 17 Cost to import (US$ per 670 670 670 895 895 880 880container)Note: n.a. = not applicable (the economy was not included in Doing Business for that year). DB2012 rankings reflectchanges to the methodology.Source: Doing Business database.Equally helpful may be the benchmarks provided by economies may provide a model for Peru on ways tothe economies that today have the best performance improve the ease of trading across borders. Andregionally or globally on the documents, time or cost changes in regional averages can show where Peru isrequired to export or import (figure 9.2). These keeping up—and where it is falling behind.
    • Doing Business 2012 Peru 78TRADING ACROSS BORDERSFigure 9.2 Has trading across borders become easier over time?Documents to export (number)Time to export (days)
    • Doing Business 2012 Peru 79TRADING ACROSS BORDERSCost to export (US$ per container)Documents to import (number)
    • Doing Business 2012 Peru 80TRADING ACROSS BORDERSTime to import (days)Cost to import (US$ per container)Note: The economy with the best performance regionally on each indicator, and the economy with the best performanceglobally, are included as benchmarks. In some cases 2 or more economies share the top regional or global ranking on anindicator.Source: Doing Business database.
    • Doing Business 2012 Peru 81TRADING ACROSS BORDERSIn economies around the world, trading across borders systems. These changes help improve the tradingas measured by Doing Business has become faster and environment and boost firms’ internationaleasier over the years. Governments have introduced competitiveness. What trade reforms has Doingtools to facilitate trade—including single windows, Business recorded in Peru (table 9.2)?risk-based inspections and electronic data interchangeTable 9.2 How has Peru made trading across borders easier—or not?By Doing Business report year DB Year Reform DB2012 No reform. Peru made trading easier by implementing a new web-based DB2011 electronic data interchange system, risk-based inspections and payment deferrals. Additional cranes have expedited port and terminal handling DB2010 activities. DB2009 No reform.Note: For information on reforms in earlier years (back to DB2006), see the Doing Business reportsfor these years, available at http://www.doingbusiness.org.Source: Doing Business database.
    • Doing Business 2012 Peru 82TRADING ACROSS BORDERSWhat are the details?The indicators reported here for Peru are based on a freight forwarders, shipping lines, customs brokers,set of specific procedural requirements for trading a port officials and banks. The procedural requirements,standard shipment of goods by ocean transport (see and the associated time and cost, for exporting andthe section in this chapter on what the indicators importing a standard shipment of goods are listed incover). Information on the procedures as well as the the summary below, along with the requiredrequired documents and the time and cost to documents.complete each procedure is collected from localSummary of procedures and documents for trading across borders in Peru Latin America &Indicator Peru OECD high income CaribbeanDocuments to export (number) 6 6 4Time to export (days) 12 18 10Cost to export (US$ per container) 860 1,257 1,032Documents to import (number) 8 7 5Time to import (days) 17 20 11Cost to import (US$ per container) 880 1,546 1,085Procedures to export Time (days) Cost (US$)Documents preparation 5 150Customs clearance and technical control 2 100Ports and terminal handling 3 330Inland transportation and handling 2 280Totals 12 860Procedures to import Time (days) Cost (US$)Documents preparation 7 150Customs clearance and technical control 3 120Ports and terminal handling 5 330Inland transportation and handling 2 280Totals 17 880
    • Doing Business 2012 Peru 83TRADING ACROSS BORDERSDocuments to export Documents to importBill of lading Bill of ladingCertificate of origin Cargo release orderCommercial Invoice Certificate of originCustoms export declaration Collection orderPacking List Commercial invoiceTerminal handling receipts Customs import declaration Packing list Terminal handling receipts
    • Doing Business 2012 Peru 84ENFORCING CONTRACTSWell-functioning courts help businesses expand WHAT THE ENFORCING CONTRACTStheir network and markets. Without effective INDICATORS MEASUREcontract enforcement, people might well dobusiness only with family, friends and others withwhom they have established relationships. Where Procedures to enforce a contract throughcontract enforcement is efficient, firms are more the courts (number)likely to engage with new borrowers or customers, Any interaction between the parties in aand they have greater access to credit. commercial dispute, or between them and the judge or court officerWhat do the indicators cover? Steps to file and serve the caseDoing Business measures the efficiency of thejudicial system in resolving a commercial dispute Steps for trial and judgmentbefore local courts. Following the step-by-step Steps to enforce the judgmentevolution of a standardized case study, it collectsdata relating to the time, cost and procedural Time required to complete procedurescomplexity of resolving a commercial lawsuit. The (calendar days)ranking on the ease of enforcing contracts is the Time to file and serve the casesimple average of the percentile rankings on its Time for trial and obtaining judgmentcomponent indicators: procedures, time and cost. Time to enforce the judgmentThe dispute in the case study involves the breachof a sales contract between 2 domestic businesses. Cost required to complete procedures (% ofThe case study assumes that the court hears an claim)expert on the quality of the goods in dispute. This No bribesdistinguishes the case from simple debt Average attorney feesenforcement. To make the data comparable acrosseconomies, Doing Business uses several Court costs, including expert feesassumptions about the case: Enforcement costs  The seller and buyer are located in the economy’s largest business city.  The buyer orders custom-made goods,  The dispute on the quality of the goods then fails to pay. requires an expert opinion.  The seller sues the buyer before a  The judge decides in favor of the seller; there competent court. is no appeal.  The value of the claim is 200% of income  The seller enforces the judgment through a per capita. public sale of the buyer’s movable assets.  The seller requests a pretrial attachment to secure the claim.
    • Doing Business 2012 Peru 85ENFORCING CONTRACTSWhere does the economy stand today?How efficient is the process of resolving a commercial Globally, Peru stands at 111 in the ranking of 183dispute through the courts in Peru? According to data economies on the ease of enforcing contracts (figurecollected by Doing Business, enforcing a contract 10.1). The rankings for comparator economies and therequires 41 procedures, takes 428 days and costs regional average ranking provide other useful35.7% of the value of the claim (see the summary at benchmarks for assessing the efficiency of contractthe end of this chapter for details). enforcement in Peru.Figure 10.1 How Peru and comparator economies rank on the ease of enforcing contractsSource: Doing Business database.
    • Doing Business 2012 Peru 86ENFORCING CONTRACTSWhat are the changes over time?While the most recent Doing Business data reflect how identify which areas have changed and where theeasy (or difficult) it is to enforce a contract in Peru potential for improvement is greatest (table 10.1).today, data on the underlying indicators over time helpTable 10.1 The ease of enforcing contracts in Peru over timeBy Doing Business report year Indicator DB2004 DB2005 DB2006 DB2007 DB2008 DB2009 DB2010 DB2011 DB2012Rank .. .. .. .. .. .. .. 110 111Time (days) 549 549 549 468 468 468 428 428 428Cost (% of claim) 35.7 35.7 35.7 35.7 35.7 35.7 35.7 35.7 35.7Procedures (number) 42 42 42 41 41 41 41 41 41Note: n.a. = not applicable (the economy was not included in Doing Business for that year). DB2012 rankings reflect changes tothe methodology.Source: Doing Business database.
    • Doing Business 2012 Peru 87ENFORCING CONTRACTSEqually helpful may be the benchmarks provided by for Peru on ways to improve the efficiency of contractthe economies that today have the best performance enforcement. And changes in regional averages canregionally or globally on the number of steps, time or show where Peru is keeping up—and where it is fallingcost required to enforce a contract through the courts behind.(figure 10.2). These economies may provide a modelFigure 10.2 Has enforcing contracts become easier over time?Procedures (number)Time (days)
    • Doing Business 2012 Peru 88ENFORCING CONTRACTSCost (% of claim)Note: The economy with the best performance regionally on each indicator, and the economy with the best performanceglobally, are included as benchmarks. In some cases 2 or more economies share the top regional or global ranking on anindicator.Source: Doing Business database.
    • Doing Business 2012 Peru 89ENFORCING CONTRACTSEconomies in all regions have improved contract often work on reducing backlogs by introducingenforcement in recent years. A judiciary can be periodic reviews to clear inactive cases from the docketimproved in different ways. Higher-income economies and by making procedures faster. What reformstend to look for ways to enhance efficiency by making it easier (or more difficult) to enforce contractsintroducing new technology. Lower-income economies has Doing Business recorded in Peru (table 10.2)?Table 10.2 How has Peru made enforcing contracts easier—or not?By Doing Business report year DB Year Reform DB2012 No reform. DB2011 No reform. The government eased contract enforcement by introducing deadlines for filing evidence and contesting enforcement DB2010 procedures. In addition, electronic judicial notices are permissible in lieu of publication in the official gazette. DB2009 No reform.Note: For information on reforms in earlier years (back to DB2005), see the Doing Business reportsfor these years, available at http://www.doingbusiness.org.Source: Doing Business database.
    • Doing Business 2012 Peru 90ENFORCING CONTRACTSWhat are the details?The indicators reported here for Peru are based on a codes of civil procedure and other court regulations, asset of specific procedural steps required to resolve a well as through surveys completed by local litigationstandardized commercial dispute through the courts lawyers (and, in a quarter of the economies covered by(see the section in this chapter on what the indicators Doing Business, by judges as well). The procedures forcover). These procedures, and the time and cost of resolving a commercial lawsuit, and the associatedcompleting them, are identified through study of the time and cost, are listed in the summary below.Summary of procedures for enforcing a contract in Peru—and the time and cost Latin America & Indicator Peru OECD high income CaribbeanTime (days) 428 707.78 518.03Filing and service 82Trial and judgment 171Enforcement of judgment 175Cost (% of claim) 35.7 31.21 19.71Attorney cost (% of claim) 30Court cost (% of claim) 4.7Enforcement Cost (% of claim) 1Procedures (number) 41 40.03 31.42Source: Doing Business database.
    • Doing Business 2012 Peru 91RESOLVING INSOLVENCYA robust bankruptcy system functions as a filter, WHAT THE RESOLVING INSOLVENCYensuring the survival of economically efficientcompanies and reallocating the resources of INDICATORS MEASUREinefficient ones. Fast and cheap insolvencyproceedings result in the speedy return of Time required to recover debt (years)businesses to normal operation and increase Measured in calendar yearsreturns to creditors. By improving the expectationsof creditors and debtors about the outcome of Appeals and requests for extension areinsolvency proceedings, well-functioning includedinsolvency systems can facilitate access to finance, Cost required to recover debt (% of debtor’ssave more viable businesses and thereby improve estate)growth and sustainability in the economy overall. Measured as percentage of estate valueWhat do the indicators cover? Court feesDoing Business studies the time, cost and outcome Fees of insolvency administratorsof insolvency proceedings involving domesticentities. It does not measure insolvency Lawyers’ feesproceedings of individuals and financial Assessors’ and auctioneers’ feesinstitutions. The data are derived from survey Other related feesresponses by local insolvency practitioners andverified through a study of laws and regulations as Recovery rate for creditors (cents on thewell as public information on bankruptcy systems. dollar)The ranking on the ease of resolving insolvency is Measures the cents on the dollar recoveredbased on the recovery rate, which is recorded as by creditorscents on the dollar recouped by creditors through Present value of debt recoveredreorganization, liquidation or debt enforcement(foreclosure) proceedings. The recovery rate is a Official costs of the insolvency proceedings are deductedfunction of time, cost and other factors, such aslending rate and the likelihood of the company Depreciation of furniture is taken intocontinuing to operate. accountTo make the data comparable across economies, Outcome for the business (survival or not)Doing Business uses several assumptions about the affects the maximum value that can bebusiness and the case. It assumes that the recoveredcompany:  Is a domestically owned, limited liability company operating a hotel.  Has 201 employees, 1 main secured creditor  Operates in the economy’s largest business and 50 unsecured creditors. city.  Has a higher value as a going concern—and the efficient outcome is either reorganization or sale as a going concern, not piecemeal liquidation.
    • Doing Business 2012 Peru 92RESOLVING INSOLVENCYWhere does the economy stand today?Speed, low costs and continuation of viable businesses Globally, Peru stands at 100 in the ranking of 183characterize the top-performing economies. How economies on the ease of resolving insolvency (figureefficient are insolvency proceedings in Peru? 11.1). The rankings for comparator economies and theAccording to data collected by Doing Business, regional average ranking provide other usefulresolving insolvency takes 3.1 years on average and benchmarks for assessing the efficiency of insolvencycosts 7% of the debtor’s estate. The average recovery proceedings in Peru.rate is 28.0 cents on the dollar.Figure 11.1 How Peru and comparator economies rank on the ease of resolving insolvencySource: Doing Business database.
    • Doing Business 2012 Peru 93RESOLVING INSOLVENCYWhat are the changes over time?While the most recent Doing Business data reflect the changed—and where it has not (table 11.1). That canefficiency of insolvency proceedings in Peru today, help identify where the potential for improvement isdata over time show where the efficiency has greatest.Table 11.1 The ease of resolving insolvency in Peru over timeBy Doing Business report year Indicator DB2004 DB2005 DB2006 DB2007 DB2008 DB2009 DB2010 DB2011 DB2012Rank .. .. .. .. .. .. .. 102 100Time (years) 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1Cost (% of estate) 7 7 7 7 7 7 7 7 7 Recovery rate (cents on 31.0 31.6 31.3 24.4 24.7 25.4 25.4 27.2 28.0the dollar)Note: n.a. = not applicable (the economy was not included in Doing Business for that year). DB2012 rankings reflect changes tothe methodology. ―No practice‖ indicates that in each of the previous 5 years the economy had no cases involving a judicialreorganization, judicial liquidation or debt enforcement procedure (foreclosure). This means that creditors are unlikely to recovertheir money through a formal legal process (in or out of court). The recovery rate for ―no practice‖ economies is 0.Source: Doing Business database.
    • Doing Business 2012 Peru 94RESOLVING INSOLVENCYEqually helpful may be the benchmarks provided by ways to improve the efficiency of insolvencythe economies that today have the best performance proceedings. And changes in regional averages canregionally or globally on the time or cost of insolvency show where Peru is keeping up—and where it is fallingproceedings or on the recovery rate (figure 11.2). behind.These economies may provide a model for Peru onFigure 11.2 Has resolving insolvency become easier over time?Time (years)Cost (% of estate)
    • Doing Business 2012 Peru 95RESOLVING INSOLVENCYRecovery rate (cents on the dollar)Note: The economy with the best performance regionally on each indicator, and the economy with the best performanceglobally, are included as benchmarks. In some cases 2 or more economies share the top regional or global ranking on anindicator. In cases where no data are displayed above for the economy, this indicates that the economy has received a“no practice” mark; see the data notes for details.Source: Doing Business database.
    • Doing Business 2012 Peru 96RESOLVING INSOLVENCYA well-balanced bankruptcy system distinguishes change. Many recent reforms of bankruptcy laws havecompanies that are financially distressed but been aimed at helping more of the viable businesseseconomically viable from inefficient companies that survive. What insolvency reforms has Doing Businessshould be liquidated. But in some insolvency systems recorded in Peru (table 11.2)?even viable businesses are liquidated. This is starting toTable 11.2 How has Peru made resolving insolvency easier—or not?By Doing Business report year DB Year Reform DB2012 No reform. DB2011 No reform. DB2010 No reform. DB2009 No reform.Note: For information on reforms in earlier years (back to DB2005), see the Doing Business reportsfor these years, available at http://www.doingbusiness.org.Source: Doing Business database.
    • Doing Business 2012 Peru 97DATA NOTESThe indicators presented and analyzed in DoingBusiness measure business regulation and the ECONOMY CHARACTERISTICSprotection of property rights—and their effect onbusinesses, especially small and medium-size domesticfirms. First, the indicators document the complexity of Gross national income (GNI) per capitaregulation, such as the number of procedures to start abusiness or to register and transfer commercial Doing Business 2012 reports 2010 income per capitaproperty. Second, they gauge the time and cost of as published in the World Bank’s World Developmentachieving a regulatory goal or complying with Indicators 2011. Income is calculated using the Atlas method (current US$). For cost indicators expressedregulation, such as the time and cost to enforce a as a percentage of income per capita, 2010 GNI incontract, go through bankruptcy or trade across U.S. dollars is used as the denominator. Data wereborders. Third, they measure the extent of legal not available from the World Bank for Afghanistan;protections of property, for example, the protections Australia; The Bahamas; Bahrain; Brunei Darussalam;of investors against looting by company directors or Canada; Cyprus; Djibouti; the Islamic Republic ofthe range of assets that can be used as collateral Iran; Kuwait; New Zealand; Oman; Puerto Ricoaccording to secured transactions laws. Fourth, a set of (territory of the United States); Qatar; Saudi Arabia;indicators documents the tax burden on businesses. Suriname; Taiwan, China; the United Arab Emirates;Finally, a set of data covers different aspects of West Bank and Gaza; and the Republic of Yemen. Inemployment regulation. these cases GDP or GNP per capita data and growth rates from the International Monetary Fund’s WorldThe data for all sets of indicators in Doing Business Economic Outlook database and the Economist 32012 are for June 2011. Intelligence Unit were used. Region and income groupMethodology Doing Business uses the World Bank regional and income group classifications, available atThe Doing Business data are collected in a http://www.worldbank.org/data/countryclass. Thestandardized way. To start, the Doing Business team, World Bank does not assign regional classificationswith academic advisers, designs a questionnaire. The to high-income economies. For the purpose of thequestionnaire uses a simple business case to ensure Doing Business report, high-income OECDcomparability across economies and over time—with economies are assigned the ―regional‖ classificationassumptions about the legal form of the business, its OECD high income. Figures and tables presentingsize, its location and the nature of its operations. regional averages include economies from allQuestionnaires are administered through more than income groups (low, lower middle, upper middle9,028 local experts, including lawyers, business and high income).consultants, accountants, freight forwarders, Populationgovernment officials and other professionals routinelyadministering or advising on legal and regulatory Doing Business 2012 reports midyear 2010 population statistics as published in Worldrequirements. These experts have several rounds of Development Indicators 2011.interaction with the Doing Business team, involvingconference calls, written correspondence and visits bythe team. For Doing Business 2012 team members The Doing Business methodology offers severalvisited 40 economies to verify data and recruit advantages. It is transparent, using factual informationrespondents. The data from questionnaires are about what laws and regulations say and allowingsubjected to numerous rounds of verification, leading multiple interactions with local respondents to clarifyto revisions or expansions of the information collected. potential misinterpretations of questions. Having representative samples of respondents is not an issue;3 The data for paying taxes refer to January – December 2010.
    • Doing Business 2012 Peru 98Doing Business is not a statistical survey, and the texts entrepreneurs reported in the World Bank Enterpriseof the relevant laws and regulations are collected and Surveys or other perception surveys.answers checked for accuracy. The methodology isinexpensive and easily replicable, so data can becollected in a large sample of economies. Because Subnational Doing Business indicatorsstandard assumptions are used in the data collection, This year Doing Business published a subnational studycomparisons and benchmarks are valid across for the Philippines and a regional report for Southeasteconomies. Finally, the data not only highlight the Europe covering 7 economies (Albania, Bosnia andextent of specific regulatory obstacles to business but Herzegovina, Kosovo, the former Yugoslav Republic ofalso identify their source and point to what might be Macedonia, Moldova, Montenegro and Serbia) and 22reformed. cities. It also published a city profile for Juba, in theInformation on the methodology for each Doing Republic of South Sudan.Business topic can be found on the Doing Business The subnational studies point to differences inwebsite at http://www.doingbusiness.org/methodology/. business regulation and its implementation—as well as in the pace of regulatory reform—across cities in the same economy. For several economies subnationalLimits to what is measured studies are now periodically updated to measureThe Doing Business methodology has 5 limitations that change over time or to expand geographic coverageshould be considered when interpreting the data. First, to additional cities. This year that is the case for thethe collected data refer to businesses in the economy’s subnational studies in the Philippines; the regionallargest business city and may not be representative of report in Southeast Europe; the ongoing studies inregulation in other parts of the economy. To address Italy, Kenya and the United Arab Emirates; and thethis limitation, subnational Doing Business indicators projects implemented jointly with local think tanks inwere created (see the section on subnational Doing Indonesia, Mexico and the Russian Federation.Business indicators). Second, the data often focus on a Besides the subnational Doing Business indicators,specific business form—generally a limited liability Doing Business conducted a pilot study this year oncompany (or its legal equivalent) of a specified size— the second largest city in 3 large economies to assessand may not be representative of the regulation on within-country variations. The study collected data forother businesses, for example, sole proprietorships. Rio de Janeiro in addition to São Paulo in Brazil, forThird, transactions described in a standardized case Beijing in addition to Shanghai in China and for St.scenario refer to a specific set of issues and may not Petersburg in addition to Moscow in Russia.represent the full set of issues a business encounters.Fourth, the measures of time involve an element ofjudgment by the expert respondents. When sources Changes in what is measuredindicate different estimates, the time indicatorsreported in Doing Business represent the median The methodology for 3 of the Doing Business topicsvalues of several responses given under the was updated this year—getting credit, dealing withassumptions of the standardized case. construction permits and paying taxes.Finally, the methodology assumes that a business has First, for getting credit, the scoring of one of the 10full information on what is required and does not components of the strength of legal rights index waswaste time when completing procedures. In practice, amended to recognize additional protections ofcompleting a procedure may take longer if the secured creditors and borrowers. Previously thebusiness lacks information or is unable to follow up highest score of 1 was assigned if secured creditorspromptly. Alternatively, the business may choose to were not subject to an automatic stay or moratoriumdisregard some burdensome procedures. For both on enforcement procedures when a debtor entered areasons the time delays reported in Doing Business court-supervised reorganization procedure. Now the2012 would differ from the recollection of highest score of 1 is also assigned if the law provides secured creditors with grounds for relief from an
    • Doing Business 2012 Peru 99automatic stay or moratorium (for example, if the regulatory environment for local entrepreneurs in eachmovable property is in danger) or sets a time limit for economy has changed over time.the automatic stay. Ease of doing businessSecond, because the ease of doing business index now The ease of doing business index ranks economiesincludes the getting electricity indicators, procedures, from 1 to 183. For each economy the ranking istime and cost related to obtaining an electricity calculated as the simple average of the percentileconnection were removed from the dealing with rankings on each of the 10 topics included in the indexconstruction permits indicators. in Doing Business 2012: starting a business, dealingThird, a threshold has been introduced for the total tax with construction permits, registering property, gettingrate for the purpose of calculating the ranking on the credit, protecting investors, paying taxes, tradingease of paying taxes. All economies with a total tax across borders, enforcing contracts, resolvingrate below the threshold (which will be calculated and insolvency and, new this year, getting electricity. Theadjusted on a yearly basis) will now receive the same employing workers indicators are not included in thisranking on the total tax rate indicator. The threshold is year’s aggregate ease of doing business ranking. Innot based on any underlying theory. Instead, it is addition to this year’s ranking, Doing Business presentsmeant to emphasize the purpose of the indicator: to a comparable ranking for the previous year, adjustedhighlight economies where the tax burden on business for any changes in methodology as well as additions of 4is high relative to the tax burden in other economies. economies or topics.Giving the same ranking to all economies whose total Construction of the ease of doing business indextax rate is below the threshold avoids awardingeconomies in the scoring for having an unusually low Here is one example of how the ease of doing businesstotal tax rate, often for reasons unrelated to index is constructed. In the Republic of Korea it takes 5government policies toward enterprises. For example, procedures, 7 days and 14.6% of annual income pereconomies that are very small or that are rich in capita in fees to open a business. There is no minimumnatural resources do not need to levy broad-based capital required. On these 4 indicators Korea ranks in th th rdtaxes. the 18 , 14 , 53 and 0 percentiles. So on average st Korea ranks in the 21 percentile on the ease of th starting a business. It ranks in the 12 percentile onData challenges and revisions th getting credit, 25 percentile on paying taxes, 8 th th percentile on enforcing contracts, 7 percentile onMost laws and regulations underlying the Doing resolving insolvency and so on. Higher rankingsBusiness data are available on the Doing Business indicate simpler regulation and stronger protection ofwebsite at http://www.doingbusiness.org. All the property rights. The simple average of Korea’ssample questionnaires and the details underlying the st percentile rankings on all topics is 21 . When allindicators are also published on the website. Questions economies are ordered by their average percentileon the methodology and challenges to data can be rankings, Korea stands at 8 in the aggregate rankingsubmitted through the website’s ―Ask a Question‖ on the ease of doing business.function at http://www.doingbusiness.org. More complex aggregation methods—such as principal components and unobserved components—Ease of doing business and distance tofrontier 4 In case of revisions to the methodology or corrections to the underlying data, the data are back-calculated to provide aThis year’s report presents results for 2 aggregate comparable time series since the year the relevant economy or topicmeasures: the aggregate ranking on the ease of doing was first included in the data set. The time series is available on thebusiness and a new measure, the ―distance to frontier.‖ Doing Business website (http://www.doingbusiness.org). The DoingWhile the ease of doing business ranking compares Business report publishes yearly rankings for the year of publication as well as the previous year to shed light on year-to-yeareconomies with one another at a point in time, the developments. Six topics and more than 50 economies have beendistance to frontier measure shows how much the added since the inception of the project. Earlier rankings on the ease of doing business are therefore not comparable.
    • Doing Business 2012 Peru 100yield a ranking nearly identical to the simple average Consider the example of Canada. It stands at 12 in the 5used by Doing Business. Thus, Doing Business uses aggregate ranking on the ease of doing business. Itsthe simplest method: weighting all topics equally and, ranking is 3 on both starting a business and resolvingwithin each topic, giving equal weight to each of the insolvency, and 5 on protecting investors. But its 6topic components. ranking is only 59 on enforcing contracts, 42 on trading across borders and 156 on getting electricity.If an economy has no laws or regulations covering aspecific area—for example, insolvency—it receives a Variation in performance across the indicator sets is―no practice‖ mark. Similarly, an economy receives a not at all unusual. It reflects differences in the degree―no practice‖ or ―not possible‖ mark if regulation exists of priority that government authorities give tobut is never used in practice or if a competing particular areas of business regulation reform and theregulation prohibits such practice. Either way, a ―no ability of different government agencies to deliverpractice‖ mark puts the economy at the bottom of the tangible results in their area of responsibility.ranking on the relevant indicator. Economies that improved the most across 3 or moreThe ease of doing business index is limited in scope. It Doing Business topics in 2010/11does not account for an economy’s proximity to large Doing Business 2012 uses a simple method to calculatemarkets, the quality of its infrastructure services (other which economies improved the most in the ease ofthan services related to trading across borders and doing business. First, it selects the economies that ingetting electricity), the strength of its financial system, 2010/11 implemented regulatory reforms making itthe security of property from theft and looting, its easier to do business in 3 or more of the 10 topicsmacroeconomic conditions or the strength of 7 included in this year’s ease of doing business ranking.underlying institutions. Thirty economies meet this criterion: Armenia, BurkinaVariability of economies’ rankings across topics Faso, Burundi, Cape Verde, the Central African Republic, Chile, Colombia, the Democratic Republic ofEach indicator set measures a different aspect of the Congo, Côte dIvoire, The Gambia, Georgia, Korea,business regulatory environment. The rankings of an Latvia, Liberia, FYR Macedonia, Mexico, Moldova,economy can vary, sometimes significantly, across Montenegro, Morocco, Nicaragua, Oman, Peru, Russia,indicator sets. The average correlation coefficient São Tomé and Príncipe, Senegal, Sierra Leone,between the 10 indicator sets included in the Slovenia, the Solomon Islands, South Africa andaggregate ranking is 0.36, and the coefficients Ukraine. Second, Doing Business ranks thesebetween any 2 sets of indicators range from 0.17 economies on the increase in their ranking on the ease(between protecting investors and getting electricity) of doing business from the previous year usingto 0.57 (between starting a business and protecting comparable rankings.investors). These correlations suggest that economiesrarely score universally well or universally badly on the Selecting the economies that implemented regulatoryindicators. reforms in at least 3 topics and improved the most in the aggregate ranking is intended to highlight economies with ongoing, broad-based reform programs.5 See Simeon Djankov, Darshini Manraj, Caralee McLiesh and RitaRamalho, ―Doing Business Indicators: Why Aggregate, and How to Distance to frontier measureDo It‖ (World Bank, Washington, DC, 2005). Principal components This year’s report introduces a new measure toand unobserved components methods yield a ranking nearlyidentical to that from the simple average method because both illustrate how the regulatory environment for localthese methods assign roughly equal weights to the topics, since the businesses in each economy has changed over time.pairwise correlations among indicators do not differ much. An The distance to frontier measure illustrates thealternative to the simple average method is to give different weights distance of an economy to the ―frontier‖ and showsto the topics, depending on which are considered of more or lessimportance in the context of a specific economy.6 7 A technical note on the different aggregation and weighting Doing Business reforms making it more difficult to do business aremethods is available on the Doing Business website subtracted from the total number of those making it easier to do(http://www.doingbusiness.org). business.
    • Doing Business 2012 Peru 101 the extent to which the economy has closed this gap The difference between an economy’s distance toover time. The frontier is a score derived from the most frontier score in 2005 and its score in 2011 illustratesefficient practice or highest score achieved on each of the extent to which the economy has closed the gap tothe component indicators in 9 Doing Business indicator the frontier over time.sets (excluding the employing workers and getting The maximum (max) and minimum (min) observedelectricity indicators) by any economy since 2005. In values are computed for the 174 economies includedstarting a business, for example, New Zealand has in the Doing Business sample since 2005 and for allachieved the highest performance on the time (1 day), years (from 2005 to 2011). The year 2005 was chosenCanada and New Zealand on the number of as the baseline for the economy sample because it wasprocedures required (1), Denmark and Slovenia on the the first year in which data were available for thecost (0% of income per capita) and Australia on the majority of economies (a total of 174) and for all 9paid-in minimum capital requirement (0% of income indicator sets included in the measure. To mitigate theper capita). effects of extreme outliers in the distributions of theCalculating the distance to frontier for each economy rescaled data (very few economies need 694 days toinvolves 2 main steps. First, individual indicator scores complete the procedures to start a business, but many thare normalized to a common unit. To do so, each of need 9 days), the maximum (max) is defined as the 95the 32 component indicators y is rescaled to (y − percentile of the pooled data for all economies and allmin)/(max − min), with the minimum value (min) years for each indicator.representing the frontier—the highest performance on Take Colombia, which has a score of 0.21 on thethat indicator across all economies since 2005. Second, distance to frontier measure for 2011. This scorefor each economy the scores obtained for individual indicates that the economy is 21 percentage pointsindicators are aggregated through simple averaging away from the frontier constructed from the bestinto one distance to frontier score. An economy’s performances across all economies and all years.distance to the frontier is indicated on a scale from 0 Colombia was further from the frontier in 2005, with ato 100, where 0 represents the frontier and 100 the score of 0.43. The difference between the scores showslowest performance. an improvement over time.
    • Doing Business 2012 Peru 102RESOURCES ON THE DOING BUSINESS WEBSITECurrent features Doing Business reformsNews on the Doing Business project Short summaries of DB2012 business regulationhttp://www.doingbusiness.org reforms, lists of reforms since DB2008 and a ranking simulation toolRankings http://www.doingbusiness.org/reforms/How economies rank—from 1 to 183http://www.doingbusiness.org/rankings/ Historical data Customized data sets since DB2004Reports http://www.doingbusiness.org/custom-query/Access to Doing Business reports as well assubnational and regional reports, reform case Law librarystudies and customized economy and regional Online collection of business laws andprofiles regulations relating to business and genderhttp://www.doingbusiness.org/reports/ issues http://www.doingbusiness.org/law-library/Methodology http://wbl.worldbank.org/The methodologies and research papersunderlying Doing Business Contributorshttp://www.doingbusiness.org/methodology/ More than 9,000 specialists in 183 economies who participate in Doing BusinessResearch http://www.doingbusiness.org/contributors/doing-Abstracts of papers on Doing Business topics business/and related policy issueshttp://www.doingbusiness.org/research/
    • Doing Business 2012 Peru 103