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Rebuilding through Works for Taxes

Patrick Allemant's picture
Published: 11/04/17 - Country: Peru

In our opinion, the announcement made by the Government to promote the mechanism of Works for Taxes for the reconstruction of the affected areas, is a good initiative. However, the State should analyze the ability of companies to use their own resources for rebuilding those areas since, unfortunately, all sectors and especially the productive ones are being damaged by the closure of roads, the fall of several railroads and bridges, and by the constant pouring rains.

For example, in the mining sector, minerals cannot be transported by rail or road so the extracted ore must remain in the deposits. Therefore, the mining companies need to use their resources to cover their own expenses. The same happens in the agricultural export sector where the plantations have been affected by the floods and the constant rains, causing, in many cases, the loss of whole crops.

These are just two clear examples of what this deplorable natural disaster is causing to the national productive system.

That is why we think that the State should consider the possibility of giving a greater benefit to the sectors that have not been so affected (or why not, to the affected ones also) so that they can allocate their resources to the reconstruction of the devastated cities and towns.

We believe that this can be done temporarily, for example, through an Emergency Decree (extraordinary or exceptional measure, applicable when the national interest so requires), under which additional benefits complementary to the current scheme of Works for Taxes are established to encourage bigger companies to use this system and help the government to rebuild the country.

An emergency decree that, as we have stated, is to be applied in case of emergencies and temporarily, could include the following measures:

  • identifying vital projects (land communication, water and drainage systems, schools, housing, etc.) within the affected areas and whose implementation must be carried out as a matter of urgency;
  • establishing, for an extraordinary period of 6 months or for a maximum period of one year, a reduction of one percentage point on the corporate tax to the companies wishing to use the works for taxes mechanism, or
  • increasing the interest rate on the Regional or Local Public Investment Certificates (CIPRL) (to 7% or 8%);

We believe that these temporary measures could encourage a greater number of private companies, including those directly affected by natural disaster, to consider allocating their own resources to help rebuild our country in a short time.

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Patrick Allemant's picture

Specialist in subjects of Corporate Law and Land Transport. With extensive knowledge in contractual and administrative matters, trained with postgraduate courses in international trade negotiations and contracting.

He was Director General of Land Circulation of the Ministry of Transport and Communications for a period of three and a half years. Having actively participated in the solution of conflicts of national interest. During his administration he was in charge of the design of policies of transport and land transit and of the elaboration of norms of regulation of the service of public transport, of the interprovincial service of passengers and of transport of goods.

He was president of the Committee of Authorities of Transit and Transit Terrestrial of the Andean Community, representative of the MTC before the National Commission for the Promotion of the Use of Natural Gas and titular member of the Supervisory Council of the System of Control of Natural Gas Vehicle Charge-CNG in charge of the promotion, diffusion and development of the markets Of industrial, automotive and residential natural gas.