Peru's Economy and Finance Minister Alfredo Thorne on Tuesday projected the execution of S/1.5 billion (about US$461.39 million) in infrastructure projects this year through Works for Taxes mechanism.
From said sum, S/1 billion (about US$307.5 million) would be allocated to reconstruction of disaster-stricken areas following "Coastal El Niño" phenomenon.
"This year, we expect to reach close to S/1.5 billion with Works for Taxes [ventures]. National Government execution will account for a large part, whereas the remainder will be covered by reconstruction," he affirmed.
In this sense, Thorne underlined amounts invested through the said mechanism can now be charged not only to ordinary resources (mostly tax-related), but also to disaster funds.
"The Ministry manages a S/1-billion fund for public projects, maintenance works and Works for Taxes. If there is enough demand for Works for Taxes, it can be used and later charged to the disaster fund," he pointed out.
"This allows for great flexibility, so that the private sector can join the reconstruction process over the next three years. The business sector will enjoy the same flexibility to undertake works," he added.
Works for Taxes
Works for Taxes (Law No 29230) is an income tax payment mode that allows companies to pay part of their tax bill by investing in public works, thus eliminating government institutions' need to mobilize public funds.
The mechanism took off in the second half of 2016, after the National Government was also allowed to execute works under this modality and beneficiary sectors were expanded.
Remarks were made during "Work for Taxes towards Reconstruction" forum, where participants presented the project portfolio to reconstruct infrastructure damaged and destroyed by recent torrential rains, floods and landslides.
The event also featured Prime Minister Fernando Zavala and ProInversion Executive Director Alvaro Quijandria.