Peru Bets on 25-Year Tax Holidays to Build Private Zones

FTZ News: In late April, Peru’s government quietly published a decree that could change how the country competes for capital. Private investors may now design and run their own special economic zones, enjoying a corporate tax rate of zero for the first five years and a maximum of 15 percent by year 25. The policy is Peru’s clearest attempt yet to move beyond mining dependence and the single Chinese-built megaport that has dominated recent headlines.

A Long Dependence on Minerals

Peru has long lived with a structural contradiction. Minerals still dominate exports, while successive governments talk about diversification. China remains the largest trading partner, and the port of Chancay—opened in November 2024 with heavy Chinese financing—has become the most visible symbol of that relationship. By mid-2026 the port had already generated more than $3.65 billion in two-way trade, handled roughly 500,000 TEUs, cut average shipping times to Asia to about 23 days, and reduced logistics costs by around 20 percent. Yet officials recognize that a modern deep-water port alone cannot create higher-value industries. The new Private Special Economic Zones, known as ZEEPs, are meant to supply the missing industrial and logistics clusters around such infrastructure.

How the Incentives Work

Under Supreme Decree No. 005-2026-MINCETUR, private companies can propose zones subject to technical approval. The tax schedule is the centerpiece: zero percent corporate income tax for the first five years, then a gradual rise that caps at 15 percent in year 25—approximately half the standard national rate. Eligible activities include manufacturing, logistics, technology, and export-oriented services. Mining and hydrocarbons are deliberately excluded. The design is more flexible than traditional state-run free zones found elsewhere in the region. Colombia operates more than 100 free zones and has recorded billions in exports from them. Uruguay, with far fewer zones, has raised their contribution to roughly 6.7 percent of GDP. Peru has chosen a private-led model with long but conditional incentives, hoping to attract firms that bring technology and supply-chain links rather than simply seeking temporary tax relief.

Risks and Regional Stakes

Implementation will test the government’s capacity. Success requires transparent approvals, reliable energy, skilled labor, and environmental oversight. Without those elements, the zones risk becoming isolated enclaves with limited connection to the domestic economy. Critics note that tax incentives alone rarely transform production structures. Still, the timing is deliberate. Global supply chains continue to shift under geopolitical pressure, and South American countries are racing to redefine their roles. With its Pacific location, existing trade agreements, and now a new private-zone instrument, Peru has improved its competitive position. Whether the policy produces real clusters of manufacturing and logistics, or simply joins the region’s long list of underused incentive regimes, will depend on execution in the years ahead./.