Government Efforts to Mitigate Effect of Shutdown on Companies

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The State of Emergency declared in Peru in order to halt the spread of the coronavirus COVID-19 has delivered a blow to the Peruvian economy as production grinds to a halt, and workers are forced to quarantine in their homes. Both employers and workers have been affected.

In order to mitigate the impact, the Peruvian Government has passed Urgent Decree #033-2020. We have summarized the initiatives here:

 

 

  • Access to CTS (Compensation for Time of Service) Funds: Workers can request to withdraw up to S./ 2,400 from their CTS account. The request can be made remotely, and the funds will be deposited into the account indicated by the worker.
  • Temporary Suspension of Contributions to the Private Pension System (SPP): Employers are not required to withhold pension contributions for the month of April, which would have been collected in May.
  • Disability Insurance (Seguridad de invalidez y sobrevivencia colectivo): During the suspension of contributions to the private pension fund (SPP), employers are still obliged to declare and pay disability insurance.
  • Subsidy for Workers in the Private Sector: Employers can apply to receive a subsidy of 35% on gross salaries paid to workers earning S./1,500 or less under the following circumstances: a) The worker is of the fifth category (quinta categoria) b) the worker is registered in the sworn PDT 601 declaration (DeclaraciĆ³n Jurada del PDT 601) of the electronic payroll (Planilla Electronica) corresponding to the period January 2020 and presented up to February 29, 2020, and whose employment period according to the T-Register (T-Registro) does not indicate an end prior do March 15, 2020.

 

Those who will not receive the subsidy: a) employers who owe the State civil reparation for cases of corruption and related crimes, b) employers who had tributary debt greater than 5 UITs up to December 31st, 2019, c) employers who are undergoing insolvency proceedings.

 

Thanks to RGB Avocats for providing supporting information for this article.

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