Emerging Markets Rates and Currencies Handbook

Pension funds have limits on FX trading: 0.75% of AUM (Asset Under Management) daily and 1.75% of AUM for last 5 days. These limits apply to spot and forward transactions. Resident Restrictions: Local regulatory limits for FX exposure There are some macro-prudential regulations limiting FX exposure for banks and pension funds. These limits can affect FX trading for professional players. Banks’ FX net positioning should be between -10% (net short) of equity and +10% (net long) of equity. Also, the Central Bank imposed weekly limits and overall short forward portfolio for derivatives trading, linked to excess reserve requirements. Pension funds have limits on FX trading: 0.75% of AUM (Asset Under Management) daily and 1.75% of AUM for last 5 days. These limits apply to spot and forward transactions. License Requirements No supporting documentation is required for trading FX Spot and Forwards. Requirements to open a foreign currency account It is fairly easy for a company to open a USD account in Peru. Requirements will include all legal documentation about the entity and the entities’ powers of attorney to be duly registered in the Peruvian public registers and presented to the bank. Deal Management Rollover: Possible. Unwinding: Possible. Not very common, net settled. Early Maturity: Possible. Gross settled. Documentation Requirements There are no restrictions on the ownership of foreign currency denominated bank accounts and no volume limits on foreign currency remittance. Additionally, no supporting documentation is required for spot transactions. Clients usually have to sign a master agreement in order to trade local forwards while for derivatives, a signed ISDA master agreement is required (Local contract ASBANC). For local forwards with tenors shorter than 1 year, master agreements can be exempted. Trade Flows Exporters and importers are free to trade on the open market and are not required to channel transactions through the Central Bank. Capital Flow and FDI No local law documentation requirements. Citibank del Peru S.A. Avenida Canaval y Moreyra 480, Piso 3 San Isidro, Lima 15047 Peru FX Sales Contact: +51 1 215 -2233 Tax Summary – Peru Peru Country Tax Deductibility and Considerations Inter-Co Debt Offshore Bank Loans Offshore Local Borrowing Derivatives Equities W/H Tax • 30% WHT • 4.99% WHT if borrower is a local bank • 4.99% WHT if rate < L+7%, the excess with 30% • 30% WHT if related party collateralized • No WHT • 30% WHT on any positive settlement received on a PEN FXrelated contract from a non- resident counterparty if the term of the contract is less • W/H Tax on dividends: • Undistributed profits as of December 31, 2014: 4.1% • Profit 2015/2016: 6.8%