Artículo 1º.- Modificase el primer párrafo del artículo 7º del Decreto Legislativo Nº 821, en los términos siguientes:

"Artículo 7º.- VIGENCIA Y RENUNCIA A LA EXONERACION

Las exoneraciones contenidas en los Apéndices I y II tendrán vigencia hasta el 31 de diciembre de 1998."

Artículo 2º.- Deróganse todas las normas que se opongan a la presente ley.

Comuníquese al señor Presidente de la República para su promulgación.

En Lima, a los nueve días del mes de diciembre de mil novecientos noventa y siete.

CARLOS TORRES Y TORRES LARA

Presidente del Congreso de la República

EDITH MELLADO CESPEDES

Primera Vicepresidenta del Congreso de la República

AL SEÑOR PRESIDENTE CONSTITUCIONAL DE LA REPUBLICA

POR TANTO:

Mando se publique y cumpla.

Dado en la Casa de Gobierno, en Lima, a los doce días del mes de diciembre de mil novecientos noventa y siete.

ALBERTO FUJIMORI FUJIMORI

Presidente Constitucional de la República

ALBERTO PANDOLFI ARBULU

Presidente del Consejo de Ministros

JORGE CAMET DICKMANN

Ministro de Economía y Finanzas

14401

El PRESIDENTE DE LA REPUBLICA CONSIDERANDO

Que de conformidad con lo previsto en el Artículo 104º de la Constitución Política del Estado; mediante Ley Nº 26648, prorrogada por la Ley Nº 26679, el Congreso de la República ha delegado en el Poder Ejecutivo la facultad de legislar, entre otras, en Materia de generación de empleo, eliminando trabas a la inversión e inequidades, con énfasis en el incremento de las exportaciones y el desarrollo del mercado de capitales:

Con el voto aprobatorio del Consejo de Ministros;

Con cargo de dar cuenta al Congreso;

Ha dado el siguiente Decreto Legislativo;

Artículo 1º.- Precisase que el numeral 10 del Apéndice V del Decreto Legislativo Nº 775 - Ley del Impuesto General a las Ventas e Impuesto Selectivo al Consumo, se refería a todos los servicios que conforman el paquete turístico, tales como: servicio, de transporte, hospedaje, alimentación, mediación y/u organización, que prestan y transfieren los operadores turísticos domiciliados en favor de los operadores turísticos no domiciliados, no siendo de aplicación en estos casos lo dispuesto en el inciso d) del artículo 9º del Decreto Supremo Nº 29-94-EF. Derógase la Tercera Disposición Complementaria y Transitoria del Decreto Legislativo Nº 821.

Artículo 2º.- Las nuevas inversiones que efectúen los titulares de proyectos de inversión turística en infraestructura que constituya servicio público, serán depreciadas a razón de 10% anual, siempre que estas inversiones hubieran sido aprobadas por el organismo del sector competente, en coordinación con el MITINCI. Mediante Decreto Supremo refrendado por el Ministro de Economía y Finanzas y el Ministro de Industria, Turismo, Integración y Negociaciones Comerciales Internacionales, se dictarán las normas reglamentarias que se requieran para la aplicación del presente artículo.

Dado en la Casa de Gobierno, en Lima, a los ocho días del mes de noviembre de mil novecientos noventa y seis.

ALBERTO FUJIMORI FUJIMORI

Presidente Constitucional de la República

ALBERTO PANDOLFI ARBULU

Presidente del Consejo de Ministros y encargado de la Cartera de Economía y Finanzas

GUSTAVO CAILLAUX ZAZZALI

Ministro de Industria, Turismo, Integración y Negociaciones Comerciales Internacionales

EL PRESIDENTE DE LA REPUBLICA CONSIDERANDO:

Que de conformidad con lo previsto en el Artículo 6º de la Ley del Impuesto General a las Ventas e Impuesto Selectivo al Consumo aprobado por Decreto Legislativo Nº 821, por Decreto Supremo se modifican los servicios comprendidos en su Apéndice II;

Que, de conformidad con lo establecido en el Artículo 33º de la Ley del Impuesto General a las Ventas e Impuesto Selectivo al Consumo aprobada por Decreto Legislativo Nº 821, por Decreto Supremo se incluyen en el Apéndice V las operaciones consideradas como exportación de servicios;

Con el voto aprobatorio del Consejo de Ministros;

DECRETA:

Artículo 1º.- Incorpórase en el Apéndice II del Decreto Legislativo Nº 821, el siguiente numeral:

"9. Los servicios de hospedaje y alimentación por establecimientos de hospedaje en favor de operadores turísticos domiciliados en el país, que transfieran dichos servicios en favor de operadores turísticos del exterior para ser utilizados por personas no domiciliadas en el país":

Artículo 2º.- Incorpórese en el Apéndice V del Decreto Legislativo Nº 821, el siguiente numeral:

"10. Servicios de mediación y/u organización de servicios turísticos prestados por operadores Turísticos domiciliados en el país en favor de agencias u operadores turísticos domiciliados en el exterior".

Artículo 3º.- Lo dispuesto en el Artículo Primero será de aplicación para las transferencias de servicios que se efectúen hasta el 30 de junio de 1997.

Artículo 4º.- Mediante resolución Ministerial expedida por el Ministro de Economía y Finanzas se podrán dictar las normas que fueran necesarias para la mejor aplicación de lo dispuesto en el presente Decreto Supremo.

Artículo 5º.- El presente Decreto Supremo será refrendado por la Ministra de Industria, Turismo, Integración y Negociaciones Comerciales Internacionales y por el Ministro de economía y Finanzas.

Dado en Lima, en la Casa de Gobierno, a los diecisiete días del mes de mayo de mil novecientos noventa y seis.

ALBERTO FUJIMORI FUJIMORI

Presidente Constitucional de la República

LILLIANA CANALE NOVELLA

Ministra de Industria, Turismo, Integración y Negociaciones Comerciales Internacionales Encargada de la Cartera de Economía y Finanzas

EL PRESIDENTE DE LA REPUBLICA POR CUANTO:

El Congreso de la República por Ley Nº 26557 ha delegado en el Poder Ejecutivo la facultad de legislar sobre las normas relacionadas con impuestos, contribuciones, aportaciones y demás tributos y normas tributarias, a fin de establecer ajustes técnicos, simplificar y uniformizar los procedimientos, precisar la vigencia y cobertura de los regímenes especiales, entre otros aspectos; así como armonizar las normas relativas al delito tributario y los cambios que éstos demanden en el Código Penal y demás normas pertinentes, entre otras materias;

Con el voto aprobatorio del Consejo de Ministros;

Con cargo de dar cuenta al Congreso de la República;

Ha dado el Decreto Legislativo siguiente:

Artículo 1º.- Las empresas de servicios de establecimiento de hospedaje que inicien o amplíen sus operaciones antes del 31 de diciembre de 1998, estarán exoneradas del Impuesto Mínimo a la Renta e Impuesto Predial. Asimismo, podrán depreciar a razón de 10% anual los inmuebles de su propiedad afectados a la producción de rentas gravadas.

Mediante Decreto Supremo refrendado por el ministro de Economía y Finanzas y el Ministro de Industria, Turismo, Integración y Negociaciones Comerciales Internacionales, se definirán las características de lo que se entiende por ampliación para los fines del presente artículo.

Artículo 2º.- Para las empresas ubicadas fuera de la provincia de Lima y Callao los beneficios establecidos en el Articulo 1º tendrán una vigencia de cinco (5) años computados a partir de la fecha de inicio de sus operaciones

Tratándose de empresas ubicadas dentro de la provincia de Lima y Callao, el plazo de vigencia de dichos beneficios será de tres (3) años contados a partir deja fecha en la que inicien sus operaciones.

POR TANTO:

Mando se publique, cumpla, dando cuenta al Congreso de la República.

Dado en la Casa de Gobierno, en Lima, a los veintidós días del mes de abril de mil novecientos noventa y seis.

ALBERTO FUJIMORI FUJIMORI

Presidente Constitucional de la República

ALBERTO PANDOLFI ARBULU

Presidente del Consejo de Ministros

JORGE CAMET DICKMANN

Ministro de Economía y Finanzas

EL PRESIDENTE DE LA REPUBLICA CONSIDERANDO:

Que, el Decreto Legislativo Nº 820 ha dispuesto la exoneración del impuesto Mínimo a la Renta e Impuesto Predial a las empresas de servicios de establecimiento de hospedaje que inicien o amplíen sus operaciones hasta el 31 e diciembre de 1998;

Que, la mencionada norma establece que por Decreto Supremo refrendado por el Ministro de Economía y Finanzas y por el Ministro de Industria, Turismo, Integración y negociaciones Comerciales Internacionales, se definirán las características de lo que se entiende por ampliación para efecto de la aplicación de los beneficios tributarios;

En uso de las facultades conferidas por el inciso 8) del Artículo 118º de la Constitución Política del Perú

DECRETA:

Artículo 1º.- Para efecto de lo dispuesto en el Artículo 1º del Decreto Legislativo Nº 820, se considera empresa de servicios de establecimiento de hospedaje a las comprendidas en el Artículo 1º del Decreto Supremo Nº 012-94 ITINCI.

Artículo 2º.- Los beneficios tributarios establecidos en el Artículo 1º del Decreto Legislativo Nº 820, se aplicarán de la siguiente manera:

a) Las empresas que inicien operaciones antes del 31 de diciembre de 1998, estarán exoneradas del Impuesto Mínimo a la Renta e Impuesto Predial.

b) Las empresas que amplíen sus operaciones antes del 31 de diciembre de 1998, estarán exoneradas del impuesto Mínimo a la Renta e Impuesto Predial que corresponde a las nuevas inversiones efectuadas.

c) La tasa de depreciación del 10% anual se aplicará a los bienes inmuebles existentes al inicio de operaciones y a los que son materia de ampliación de operaciones, estando los demás bienes sujetos a lo dispuesto en el Reglamento de la Ley del Impuesto a la Renta.

Para efecto de lo establecido en el literal a) del presente artículo, no se considerarán como empresas que inician operaciones aquellas que:

i) hubieran sido constituidas por fusión o división de empresas o sociedades ya existentes; o

ii) adquieran bienes inmuebles que formen o hayan formado parte de activos fijos de empresas de servicios de establecimiento de hospedaje.

En estos casos, dichas empresas sólo gozarán de los beneficios Tributarios otorgados a las empresas que amplían operaciones, en tanto realicen las actividades consideradas como ampliación.

Artículo 3º.- Se entiende por ampliación de operaciones, a la inversión destinada a la construcción de nuevos ambientes o locales que sean utilizados para el servicio de hospedaje. Asimismo, se considera ampliación a la remodelación, restauración y cualquier otra inversión destinada a mejorar e incrementar el valor de los bienes inmuebles existentes del activo fijo de los establecimientos de hospedaje.

Artículo 4º.- En el caso de ampliación de operaciones, las nuevas inversiones serán deducibles de la base imponible de los Impuestos a que se refiere el Decreto Legislativo Nº 820, debiendo para el efecto ser registradas en cuentas del activo denominadas "Inversiones para ampliación - Decreto Legislativo Nº 820".

Artículo 5º.- El plazo de vigencia de los beneficios tributarios para las empresas que inicien o amplíen sus operaciones será de:

a) cinco (5) años, si los establecimientos de hospedaje se ubican fuera de la provincia de Lima y Callao, o

b) tres (3) años, si los establecimientos de hospedaje se ubican dentro de la provincia de Lima y Callao.

Para las empresas que inicien operaciones, el cómputo del plazo se inicia en el ejercicio en que se realice la primera prestación de servicios a título oneroso. En el caso de empresas existentes" que amplíen sus operaciones, el cómputo del plazo se inicia en el ejercicio en que se efectúan las inversiones para la ampliación de operaciones, de acuerdo a lo establecido en el Artículo 3º del presente dispositivo.

Se entenderá que las empresas se encuentran ubicadas dentro o fuera de la provincia de Lima y Callao, en función al lugar donde se realiza efectivamente la prestación del servicio de hospedaje.

Artículo 6º.- El presente Decreto Supremo será refrendado por el Ministro de Economía y Finanzas y, por la Ministra de Industria, Turismo, Integración y Negociaciones Comerciales Internacionales.

Dado en la Casa de Gobierno, en Lima, a los diez días del mes de setiembre de mil novecientos noventa y seis

ALBERTO FUJIMORI FUJIMORI

Presidente Constitucional de la República

JORGE CAMET DICKMANN

Ministro de Economía y Finanzas

LILLIANA CANALE NOVELLA

Ministra de Industria, Turismo, Integración

y Negociaciones Comerciales Internacionales

Investing in Peru

In 1990, Peru decisively changed direction, implementing an economic stabilization and financial reinsertion plan aimed at eliminating hyperinflation, recovering fiscal order, balancing macroeconomic variables and reintegrating the country to international credit flows.

The country also underwent profound structural reforms, geared at modernizing economic activity and making it more competitive, on the basis of free market and private initiative principles.

This program -among the most comprehensive and active to be implemented in Latin America- changed and clarified the rules of the game, opening the doors for the private sector to fully and equally participate in all economic activities, even those previously reserved to the State.

The reforms have two complementary purposes. The first is to develop an efficient market economy by fostering private investment and opening to foreign markets in terms of the flow of goods, services, technology and capital, to achieve sustained development.

To this end, foreign trade, all markets and foreign investment have been deregulated.

The second aim is to create a solid and competent State, geared at providing infrastructure, basic services, adequate justice administration services, internal order and national security. Within this context, the role of the State has been redefined and tax administration restructured to unleash the productive strength of private initiative.

A fundamental component of the State reform is the privatization of more than 140 State-owned companies, which gave raise to one of the most attractive assets sales program worldwide.

Due to the structural reforms which have been implemented, a strict fiscal policy and the increasing level of social peace, the Peruvian economy has experienced growing stability and production levels and has re-entered the international financial fold.

Today Peru offers investors the possibility to invest in any type of property or economic activity in one of the freest, most open and expansive economies in the world.

An economy guided by clear and stable rules, free competition and equitable treatment of all investments.

• Between 1993 and 1995 Peru was the most dynamic economy in Latin America, reaching an average annual GDP growth of 8.6%.

• From 1997 onwards, annual GDP growth is expected to reach 6% or more, boosted by heavy investments made in various sectors of the economy.

• At the end of 1996, GDP growth is expected to stand between 3% and 4.5%.

• The sectors which are expected to lead Peru's economic growth over the next five years are manufacturing, construction, fishing, agribusiness and mining.

• After years of negative growth, the oil sector is expected to develop significantly as it reaps the benefits of the numerous exploration, development and production contracts held with international companies.

• The contract for the exploration and development of the Camisea natural gas fields signed with the Mobil-Shell consortium, will act as an important stimulant of the Peruvian oil and gas sector.

• Exports up to the year 2000 will grow at a pace of not less than 25% per year, driven by mining, agribusiness and manufactured goods, and the intensive promotion of Peruvian products.

• Inflation is expected to remain between 9.5% and 11% by the end of 1996.

• For the following years, inflation is expected to continue its descent towards international levels, reaching 8% in 1997 and an average 6% from 1998 onwards.

• In 1995, fiscal revenues reached 1 3.5% of GDP, greatly due to the higher efficiency of tax authorities and a larger base of tax payers. Thanks to the strict fiscal policy imposed, a fiscal superavit of 0.5% of GDP was obtained.

• International reserves, which by the end of the eighties had fallen to negative levels, today reach US$6.8bn, thanks to the inflow of foreign investment over the last five years, mostly due to Peru's successful privatization process initiated in 1992.

• Peru has achieved significant progress on its way to re-establishing full ties with the international financial community. In this respect, in 1995 Peru reached a preliminary agreement for a future Brady-style restructuring of its external debt. The definitive agreement is expected to be subscribed by the end of 1996.

• As of April 30 1996, foreign direct investment (FDI) reached US$5.52bn, a 338% increment over US$1.26bn at the beginning of 1990. Additionally, another US$6bn in future FDI is already on stream, mainly related to investment commitments associated to privatizations.

• One of the key elements in this rapid growth of foreign investment has been the privatization process. Up to mid-May 1996, 98 state-owned assets and companies had been sold, for approximately US$4.6bn.

• At the same time, foreign investment in the Lima Stock Exchange reached US$1.6bn, after no registered investment at the beginning of 1990.

• Peruvian customers have already begun to benefit of the increase in competition resulting from the entry of foreign banks into the local market, such as lower interest rates and new products like mortgage loans, consumer credit, and credit cards.

• The subscription of the Brady-type plan will reduce Peru's country risk perception and increase confidence. These effects will have a direct impact on the cost of financing in international and domestic markets.

• Peru offers private investors clear, stable and consistent rules, in order to create adequate conditions for private enterprise.

• All sectors are open to foreign investment. No areas, including public utilities and energy, are considered strategic and consequently off-limits to foreign investment.

• Peru, as in the case of developed nations, offers all the adequate conditions and guarantees for business, investment and tourism.

• Peru is a country on the move, where the main guidelines of the economic policy implemented have gathered a widespread consensus among the population, representing the strongest guarantee of continuity in the process of structural reforms.

• Investors will find a broad range of legal forms for investment, including joint-ventures and companies with total foreign ownership.

• Peru is a country of opportunities, where the conditions are set for efficiency and higher productivity geared for the success of companies and workers in an truly competitive environment.

The following legal framework covers the ample consensus existing in Peru on what the State's participation should be in the economy, the relation between the public and private sectors and the ethical and economic values that the laws should set and develop.

The law enshrines unrestricted freedom of private enterprise and initiative, limiting the State's activity to those areas in which it is irreplaceable.

This orientation has two clear purposes. First to direct government handling to carrying out healthy macroeconomic and monetary policies for proper development of market forces. Second, to guarantee the economic rights of individuals and companies between themselves and towards the State.

This section briefly describes the most important points of four fundamental laws making up the new legal framework for investments in Peru. A complete and literal version of these laws is given in the Second part of this document.

Legislative Decree 662 sets out the basic legal framework for foreign investment in Peru. This law creates mechanisms aimed at guaranteeing foreign investors tax and legal stability, availability of foreign currency and non-discriminatory treatment, with the purpose of stimulating an adequate flow of foreign capital. Moreover, it recognises the right to free trade and industry, as well as free exportation and importation.

Present legislation permits all kinds of foreign investment without requiring prior authorization. Foreign investment should come from abroad and may be carried out in any economic activity that generates income, in the following ways:

1. Direct foreign investment.
2. Portfolio investment.
3. Investment in goods and property located within the country.

Contributions made in:

1. Convertible currency.
2. Goods (industrial plants; new, used and repaired spare parts; raw materials and intermediate products).
3. National currency with the right to remit same.
4. Debt converted into capital.
5. Reinvestment of profits.
6. Intangible technological contributions (trademarks, industrial models, technical assistance and technological know-how, patented or not).
7. Resources for joint-ventures.
8. Any other type of foreign investment contributing to the country's development.

Companies may adopt the following modalities according to Peruvian law:

1. Stock company.
2. Limited-liability corporation.
3. General partnership.
4. Simple limited partnership.
5. Joint stock partnership.
6. Joint-Venture.
7. Branches.

All economic activities are open to foreign investment with no restriction whatsoever on the participation of foreign investors.

1. Foreign investors have the same rights as nationals and enjoy equal legal status with these and with the State.
2. Foreign investors may acquire shares, participation or property rights from national investors or from the Andean sub region.
3. Foreign investors may remit in foreign currency the entire amount of their profits after deducting the corresponding taxes, as well as all their dividends which are exempted from taxes.
4. Foreign investors may remit their entire capital in foreign currency, after deducting the corresponding taxes.
5. No Government authorization is required in any case whatsoever. Remittances of foreign currency should be carried out through the banking system.
6. Access to short, medium and long term internal credit.

Peru signed the Constitutive Agreement of the World Bank's Multilateral Investment Guarantee Agency (MIGA), ratified by the Peruvian Congress on April 2, 1991.

To date, Peru has signed Investment Promotion and Protection Reciprocal Agreements with countries such as Argentina, Australia, Bolivia, Colombia, Czech Republic, People's Republic of China, Denmark, Finland, France, Germany, Great Britain, Italy, Korea, Malaysia, Netherlands, Norway, Paraguay, Portugal, Romania, Spain, Sweden, Switzerland, Thailand, and Venezuela.

Furthermore, Peru has signed the Covenant with the United States Overseas Private Investment Corporation (OPIC), ratified by the Peruvian Congress on May 14, 1993.

Peru has also signed the World Bank's International Covenant on the Settlement of Investment Disputes between States and Nationals of other States (ICSID).

The government is also interested in negotiating agreements or covenants with developed countries to avoid double taxation.

National and foreign investors enjoy the following benefits derived from legal stability relating to their investments within the country:

To this end, before investing, foreign investors may sign a stability agreement for a maximum period often (10) years.

To enjoy the above-mentioned benefits national and/or foreign investors shall comply alternatively with one or other of the following requisites:

1. To invest more than US$2,000,000 in foreign currency.
2. To invest in strong currency more than US$500,000, provided that the investment generates more than 20 permanent jobs or exportations amounting to more than US$2,000,000 during the first three years of the agreement in force.
3. To acquire more than 50% of the stock of Public Companies.

Legal stability extends to the tax system on leasing contracts provided that the value of the goods is greater than US$2,000,000. Should the value be less than US$2,000,000 but greater than US$500,000, the investment shall generate more than twenty permanent jobs or exportations for more than US$2,000,000 in the first three years following execution of the agreement.

National companies receiving foreign investments may also enjoy the right to tax stability, but exclusively referring to income tax, provided that the amount of the investment is greater than 50% of the paid up capital and reserves of the receiving company and that the investment is aimed at expansion of productive capacity or technological improvement. The tax stability agreement may also be signed when dealing with a transfer of more than 50% of the stock of a State-owned company being privatized.

The National Commission of Foreign Investment and Technology (CONITE) is the agency charged with matters relating to the signing of stability agreements and registering foreign investment.

Investments made are automatically registered in CONITE simply by filling out the corresponding forms.

Legislative Decree 757 was promulgated to consolidate the Structural Reforms of the economy. It contains provisions required for growth of private investment in all economic sectors, including the elimination of ail legal and administrative hindrances and distortions that block economic development and restrict free private initiative, leaving competition to the companies, an essential element for the successful insertion of Peru into the international community.

Aside from reducing Government's interference in economic activities and introducing an innovative system to end unnecessary measures, this Law establishes basic provisions regarding taxes and tributes, protecting investors from arbitrary changes and encouraging a development of productive investment in harmony with environmental conservation.

1. Economic freedom. The State guarantees free private initiative. The Social Market Economy develops based on free competition and free access of individuals and enterprises to economic activity, which includes production or trade of goods and supply of services.
2. Free prices: Prices in the economy are the result of free supply and demand. The only prices that may be fixed administratively are tariffs on public services.
3. Economic pluralism: Any and all companies have the right to organize in any legal corporate form. Access of investors or their companies shall not be limited to specific activities within the corporate form they adopt, with the exception of the financial system.
4. Equality of conditions: There are no reservations in favor of nor monopolies by the State in carrying out economic activities or exploitation of natural resources, except in the case of protected natural areas.
5. Property guarantee: The State may not expropriate companies nor stocks or participation in them, and guarantees private property without any limits other than those established in the Political Constitution.
6. Freedom to organize: All legal provisions fixing production modalities or indexes of productivity, or prohibiting or obliging the utilisation of inputs or technological processes and, generally, that intervene in the productive process of companies, in their type of economic activity, their installed capacity or similar economic factors have been abolished.
7. Distribution of profits: Whatever corporate form adopted, a company may freely agree on the distribution of all profits generated and the right of investors to receive the entirety of those corresponding to them, including those referred to in the present fiscal year.
8. Guarantee of non-discrimination: The State does not establish discriminatory treatment nor does it differentiate in matters of exchange, prices, tariffs or non-tariff rights among investors or the company in which they participate, on the basis of criteria relating to economic activity or geographical location.
9. Legal stability of investments: Generally the same rights and guarantees established in Legislative Decree 662 (points 1.5 and 1.6 above) are applicable.

The creation, modification and suppression of taxes, as well as the concession of exemptions and other tax services, the determination of tax burdens, of passive tax subjects, of tax collectors and tax withholding agents of the corresponding aliquots and of the basis of the levy shall be carried out by Congress Law of the Republic or through a Law delegating legislative faculties (which shall expressly determine the tax matter dealt with, the scope of the delegation and the term during which said faculties are exercised).

Using their tax levying powers, including those of delegates, Local Governments may not create taxes that contravene national laws or where the tax burden matter is subject to national imposition. Taxes, tariffs and rights created by Local Governments may not burden the entry, exit or transit of goods, merchandise, products or animals.

In order to initiate an effective process to minimise bureaucracy and alleviate investors' costs and difficulties in their relations with Public Administration, Legislative Decree 757 eliminates administrative restrictions on investment and promotes simplicity and transparency through provisions aimed at unifying, reducing the number and drastically simplifying all the administrative procedures and measures.

Moreover, a procedure may only be created through Supreme Decrees, Regional Executive Decrees or Municipal Ordinances, according to whether it deals with the Central, Regional or Local Governments.

However, any and all Public Administration entities before which procedures are taken, shall draw up a Single Text of Administrative Procedures (TUPA) to be updated by June 30 each year. Compliance may only be demanded of procedures included in the corresponding TUPA. Moreover, requests filed with different entities shall be considered automatically approved the same day they are presented, provided that they comply with the requisites of each TUPA. Furthermore, to complement same, formal paperwork has been made more flexible, incorporating confidence in the good will of the interested parties.

The State encourages rational balance between socio-economic development, protection of the environment and the sustained use of natural resources, guaranteeing investors due legal security. On their part, investors are responsible for contracting duly registered and recognised entities to carry out environmental impact studies.

The public sector has been restructured to improve public finances and services, the State's role now oriented towards essential functions: health, education, justice, security and infrastructure works.

One of the consubstantial factors of the State's reform is the privatization of about 140 public companies. The Law for the Promotion of Private Investment in State-Owned Companies (Legislative Decree 674), in force since October 26, 1991, governs the privatization of said companies and sets out procedures for their sale, liquidation, issuance of new stocks and signing of joint-venture agreements.

All public companies are subject to privatization through:

a) Transfer of all the company's stocks or assets.

b) Capital increase by contributions to the paid up capital.

c) Joint venture agreements.

d) Sale of assets.

Moreover, Law 26250, published on November 25, 1993, authorises the payment of the sales price of public companies subject to privatization, by a combination of monies in cash and eligible obligations (titles to short, medium and long term foreign debts owed by Peru, that comply with certain requisites). The corresponding percentage of each one of these means of payment shall be determined for each particular case by the of Private Investment Promotion Commission (COPRI).

The Law for the Promotion of Private Investment in Public Utility Facilities (Legislative Decree 758) in force since December 13, 1991, regulates the granting of concessions to private investors for providing services or for building and administration of public works traditionally carried out by the State, including, although not limited to, roads, public services, education and transportation.

Concessions may be granted by special public tender or by competitive overall projects. The latter method consists of private companies presenting a project to a State entity. The maximum period for granting a concession is for sixty (60) years.

Decree Law 25844 -Law on Electric Power Concessions- declares as of national interest the promotion of private investment in activities for generating, transmitting and distributing electric power. This law grants concessionaires tax, foreign exchange and administrative guaranties required to carry out these activities efficiently. Said guaranties shall appear in the respective concession contracts which are for an undetermined period.

Similar to Legislative Decrees 662 and 757, this decree guarantees investors the right to free remittance of their profits, dividends and financial resources and the right to free availability of foreign currency. On its part, the State commits itself not to modify unilaterally the guaranties granted.

Contracts for technology transfers, licences for the use of patents, trademarks and other elements of foreign copyrights, technical assistance, basic and detail engineering, administration and franchises may be signed without any prior authorization by State agencies. However, the payment of royalties requires the corresponding registration with INDECOPI, the National Institute for the Defence of Competition and for the Protection of Intellectual Property.

Payment of a foreign company's royalties may be made to its parent company.

Parties may freely negotiate contract conditions, except for restrictive clauses set out in point 3 below.

Contracts shall include, at least, clauses on the following aspects:

1. Identification of the parties, expressly mentioning their nationalities and domiciles.
2. Description of technology transfers.
3. Value assigned to each element of the contract.
4. Duration of the contract.

Contracts confer the right to remit abroad royalties or stipulated payments, in strong currency and through the banking system, after deducting corresponding taxes.

INDECOPI shall not register technology transfer contracts containing clauses prohibiting or limiting any type of exportation to Andean countries of products manufactured, according to said contracts.

No exchange controls exist in Peru. No government authorization is required to carry out exchange operations. Possession and receipt of foreign currencies is free. individuals or corporations may remit foreign currency abroad or retain it in the country. Exporters are no longer required to exchange foreign currencies they receive for importations.

Foreign currency investments by foreign investors may be exchanged for domestic currency through the banking system or deposited in said system.

Residents and non-residents in Peru may open and maintain deposits in foreign currency in the local banking system, in current accounts, savings and fixed term certificates. Similarly, individuals and companies may hold accounts in foreign currency abroad.

In order to strengthen competition in the private sector to generate stable and sustained medium and long-term employment, laws governing the labour market have been substantially liberalized. Laws have been passed to create a new regime for involuntary severance compensation, regulating temporary employment and making labour stability more flexible. Following are modalities of contracts valid for contracting personnel:

Contracts for initiating a new activity or transforming a company; contracts for specific needs; occasional contracts; emergency contracts; and intermittent contracts.

The presentation of these contracts to the Ministry of Labour is sufficient for approval.

Said contracts may be in force for a maximum period of one year and be renewed for the same period of time.

Legislative Decree 677 sets out provisions by which workers (employees and labourers) have the right to receive a proportion of the profits of the company they work for. Companies may deduct said amounts when calculating Income Tax.

Previously, workers had proportionate representation in the company's Board of Directors. Now they have minority representation in the Administration Committee charged with increasing productivity.

Legislative Decree 689, in force since December 4, 1991, governs the contracting of foreign staff by local companies. A company established in Peru may contract up to 20% of foreign workers, provided that the amount of the remuneration of same does not exceed 30% of the total salaries and wages paid by the company.

Exemptions to such limits apply to new entrepreneur activities or businesses undergoing a reorganization when contracting specialized, directing or managing personnel.

A labour contract is automatically approved by the presentation of same to the Ministry of Labor and Social Promotion. It should cover a period not greater than three (3) years, and may be renewed as often as the parties so require.

The Government has expanded and substantially liberalized operations carried out by financial institutions:

1. Interest rates and the distribution of financial resources are determined exclusively by market forces.
2. There exist no limits on foreigners participation in banking, insurance and underwriter activities.
3. insurance and underwriting may be freely contracted abroad by Peruvian residents.
4. There is freedom to determine policies and rates.
5. Foreign investors have access to local short, medium and long term credits under the same conditions as nationals.

However, a new law on the capital market strengthens the requisites for divulging and supervising securities markets. Furthermore, the operation of private pension funds is permitted.

Legislative Decree 668 dated September 14, 1991, introduced important innovations in the regulation of foreign trade, such as free importation of ail types of goods and the elimination of any prior governmental authorization, prohibition, control, public and private registration requisites and other non-tariff restrictions, both on importations and exportations and marketing of products.

Importation of goods is subject to the following taxes:

However, exportations are not subject to any taxes. Moreover, companies exporting manufactured products have the right to reimbursement of indirect taxes through a drawback mechanism. Similarly, prior authorisations and licences have been eliminated, as well as other administrative requisites regarding exportations, although a short list of goods may not be exported.

It should be noted here that the reordering and growth of foreign trade included successful measures taken to drastically reduce loading and unloading costs in ports and airports.

Legislative Decree 704, in force since December 12, 1991, governs all aspects relating to Free Zones, and granting special facilities to companies established there, particularly those aimed at exporting.

Legislation identifies four types of free zones:

These are the most important zones for foreign trade and are devoted to industrialization of goods and services for export. Benefits to investors in these zones are:

1. Exoneration from taxes and import duties on capital goods, inputs and other components used in production.
2. Faculty to contract temporary personnel through time labour contracts.
3. Freedom to keep accounting records in foreign currency denomination.

The purpose of these is to promote national and foreign tourism in some areas of Peru. The benefits are the same as those granted to Industrial Free Zones.

Their aim is exclusively commercial. They are located in border zones and in the jungle. Benefits to investors a re:

1. All products pay 1 0% customs duties.
2. These are exonerated from the General Sales Tax (value added tax) and from taxes affecting sales.
3. Accounting may be carried out in foreign currency.

These are zones that the Government may establish to develop certain areas of the country by promoting investments through granting of special benefits. in order to enjoy these benefits investors must sign an agreement with the State.

Law Decree 25977, General Fisheries Law, has eliminated all restrictions on developing fishing activities that are not founded on the needs for conservation of hydrobiological resources. The Law promotes foreign investment in the sector and establishes the procedure and requisites for obtaining licences for fishing in Peruvian waters.

Legislative Decree 708, in force since December 13, 1991, establishes rules applicable to investment in the mining sector, including:

1. Tax, administrative and free exchange stability.
2. Exemption from Income Tax.
3. Free remittance of dividends or profits.
4. No discrimination vis a vis other industries

Laws 26221, 26224 and 26225, published on August 20 and 24, 1993 respectively, abolished the State's monopoly and liberalized all provisions on investment in petroleum exploration and production activities.

Present legislation expands the exploration period to seven (7) years, permitting contractors to participate in different phases of the activity, and simplifies procedures for approval of exploration and production contracts. Moreover, these laws establish measures for reducing contractors' costs and authorise guaranties for the use of foreign currency and the remittance of profits in foreign currency.

The Law for the Promotion of investments in the Agricultural Sector (Legislative Decree 653) published on August 1, 1991, derogated the Agrarian Reform laws. New legislation relaxes the land tenure system and promotes private investment, especially through the expansion of the agricultural front through developing uncultivated lands.

Holding and ownership of agricultural land is guaranteed by the State. Agricultural industry disputes are handled according to the Civil Procedures Code and through ordinary legal procedures.

Moreover, the Law promotes the development of agroindustry, re-establishing the role of the private sector in production, trading and credits, importation and exportation of agricultural inputs. Following are some key changes:

The central aim of the structural reforms undertaken in Peru is to build up a solid and efficient State. For such purpose the role of the State in the economy has been redefined, leaving productive efforts in hands of the private initiative and deeply reorganizing the tax administration.

The Government has made important modifications to the taxation system, reducing the tax burden applied to income and to consumption and has replaced a long list of taxes by a few easily administered ones.

The purpose of tax reform is to restore public investment levels in infrastructure and public services through expansion of the tax base and the simplification of the taxative system which at present is composed of only four taxes: Income Tax, General Sales Tax (Value Added Tax), Selective Consumption Tax and Tariffs. This section offers a detailed description of these four tax groups.

Income Tax is an annual tax assessing income earned by taxpayers domiciled in the country, regardless of the nationality of individuals, the place of incorporation of business concerns or the location of the income source. This tax also assesses taxpayers not domiciled in the country, solely in respect of their Peruvian-source income.

In the case of business, the tax in reference applies to any gains or benefits originating from transactions with third parties, as well as from "inflation exposure calculated as of the close of each business year".

It is worth mentioning that as from 1994 the income accruing from dividends or any other form of distribution of the profits of companies shall not be regarded as taxable income.

The Income Tax rates are as follows:

The tax payable by a business concern is determined by applying a 30% rate on their net income.

In the case of individuals, the tax is determined by applying the following scale on their net aggregate annual income:

The tax payable by companies is determined by applying the following rates:

1. Interest from foreign credits, provided the entry of foreign currency into the country is duly substantiated and does not exceed a given annual interest rate: 1%.
2. Interest paid abroad by banking and financial companies established in Peru accruing from the use in the country of their foreign credit lines: 1%.
3. Technical services rendered by companies: 40% of the gross income.
4. Income accruing from the lease of vessels and aircraft: 10% (over a net income of 80% for vessels and 60% for aircraft).
5. Royalties: 30%.
6. Other income: 30%.

individuals must calculate their taxes by applying a 30% rate on the pension or remuneration for personal services rendered in the country, royalties and other income.

It is worth stressing that business concerns domiciled in the country, whether they obtain profits or not, are obliged to pay as Income Tax a minimum rate equivalent to 2% of the value of their net assets.

The following are not subject to this tax:

1. Productive companies (services and goods), from the moment the company is organised or established until the taxable year in which they commence operations.
2. Companies absorbed or incorporated into another company by merger during the business year in which merger takes place.
3. Entities not subject to Income Tax.
4. Companies rendering public energy, potable water and sewer services.
5. Agrarian companies, except those engaged in agribusiness and in poultry and pork breeding.
6. Companies under liquidation, provided the term thereof does not exceed 2 years.
7. The acquisition of real estate by companies supplying accommodation services, during the business year in which the acquisition is made and the ensuing year.
8. Taxpayers under the Income Tax Special Regime.

On the other hand, accommodation companies organised or expanding their operations before December 31, 1998, are exempted from the Minimum Income Tax. They can depreciate their real estate destined to generate taxable income, with a rate of 10% per year. Such exemption shall be valid for 2 years for companies establishing within the Provinces of Lima and Callao and 5 years for the rest.

Moreover, in order to determine the Minimum Income Tax base, the value of new machinery and equipment acquired by production companies must be excluded during the year in which the acquisition is made and the ensuing one, when such machinery and equipment are, at the most, 3 years old.

Banking and financial enterprises calculate their 2% Minimum Income Tax based on 50% of their net assets.

The following items, among others, are exempt from Income Tax until the year 2000:

1. Capital gains obtained from the trading of stocks and securities on the Floor of the Stock Exchange, including those obtained in Products Stock Exchanges authorised by CONASEV.
2. Compensation for length of service, as contemplated in the Law.
3. Any type of fixed or floating interest rate, in national or foreign currency, paid on deposits with national financial institutions, as well as capital increase of deposits and other charges in national currency generating adjustable Certificates of Deposit. Interest on deposits and charges made by financial or banking institutions, as well as interest accruing from bonds acquired by banking and financial entities, are not included.
4. Interest on and adjustment of principal accruing from mortgage bonds in accordance with the relevant laws.

Foreign citizens entering the country:

1. For a limited period of time with a business visa who, during their stay in the country, engage in activities not generating Peruvian-source income, must fill out a form, which will be regarded as an affidavit, and must be handed to the migration authorities upon leaving the country.
2. For a limited period of time with a business visa who, during their stay in the country, engage in activities generating Peruvian-source income, must fill out a form, which will be regarded as an affidavit, stating therein the amount of such income, and must be handed to the migration authorities upon leaving the country, along with the corresponding tax retention certificate issued by the payer of such income. Should the payer of such income fail to retain taxes for being a nondomiciled enterprise, the taxpayer shall be obliged to directly pay such taxes and attach the corresponding receipt to the affidavit in reference.
3. With a business or a non-immigrant resident visa, holding a work contract approved or submitted to the pertinent labour authorities, shall hand to the migration authorities, upon leaving the country, a letter of guaranty from their employers or the legal representatives of the latter, certifying thereby to have retained the corresponding taxes and that, in any event, they take full responsibility for any tributes due for such concept.

The value added tax levies the following:

1. Sale of chattels in the country.
2. Supply or use of services in the country.
3. Construction contracts.
4. The first sale of real estate made by the corresponding building company or its related companies .
5. Import of goods.

The general rate is 16%, which becomes 18% by application of the Municipal Promotion Tax.

The General Sales Tax paid on the acquisition or importation of goods or services, or under building contracts, shall constitute tax credit against the gross tax.

Companies exploiting natural resources are subject to a special regime for the anticipated recovery of Sales Tax.

The following transactions, among others, are not subject to the General Sales Tax:

1. Export of goods and services. The Law contains a list of operations regarded as service exports. It is worth emphasising among these consulting, technical assistance, temporary assignment of industrial property, data processing, financing, insurance and reinsurance operations, etc.
2. Transfer of used goods by individuals or enterprises not engaged in business activities.
3. Transfer of goods resulting from the reorganization or transfer of companies.
4. The amount equivalent to the CIF value, in the transference of foreign goods performed before customs clearance.
5. Royalties payable under the license contracts entered into by PERUPETRO to authorise the exploration and exploitation of hydrocarbons.
6. Building contracts executed abroad.

The General Sales Tax does not assess the following:

1. Domestic sales and the import of certain goods specified in the Law, until December 31, 1996. It is worth mentioning, among these, fish and other fishery resources, farm produce, books and certain textile fibbers.
2. Supply of the services listed in the Law, until December 31, 1996. These are passenger and cargo transportation, life insurance policies and certain credit services.
3. Industrial enterprises established in Borderline Areas or in the jungle. In these cases, the Municipal Promotion Tax is 18%.

The Selective Consumption Tax levies the following:

1. Domestic sales by producers and import of spirits, beer, cigarettes, gambling games, slot machines, mineral and carbonated water and fuels.
2. Domestic sales by the importer of the aforementioned goods.

The Selective Consumption Tax rates range between 10% and 30%, depending on the type of goods involved, excepting the rates applicable to fuels, which are higher.

The following are exempted from the Selective Consumption Tax:

1. Imports and sales of diesel or residual petroleum to concessionaire companies providing electric power services and self-generating companies until December 31, 1999. In both cases, concessionaire and self-generating companies must be authorised by Supreme Decree.
2. Imports and sales of coal and/or natural gas, until December 31, 1999.

The aforementioned tax exemptions shall remain in force until December 31, 1996.

Moreover, the income earned by banks and financial and credit institutions is not subject to this tax.

Peru has implemented an open and liberal foreign trade policy to make the domestic industry more efficient and competitive, to increase commercial flows, investment and employment and to reduce inflation. Among the more significant measures related to foreign trade, the simplification and reduction of a number of tariff levels, once in force, undoubtedly stand out.

At present, there only exist two CIF ad-valorem rates for import tariffs: 15% and 25%. 98% of imported goods are subject to the 15% tariff, while the remaining 2% are subject to the 25% tariff.

In general, raw materials, inputs and capital goods are affected by the first tariff, while consumption goods by the second one. For some selected products of the agricultural sector, tariff surtaxes of a variable extent have been established.

Despite the reduction of the average rate, the customs collection has steadily increased, due to a greater commercial flow.

The use of a sole 15% tariff is being considered in the medium term.

On the other hand, but also related to foreign trade, it is worth to mention here that a system of tax drawback to exports applicable to the tax paid by the exporter when purchasing raw materials and inputs used to manufacture goods for exportation has been implemented. This tax drawback is made effective through a Negotiable Credit Debit system.

Peru is on the move. From social chaos, hyperinflation and negative GDP growth in the late 1980s, today the country has achieved tranquillity, record growth and low inflation. This dramatic change is the result of a strong anti-terrorism policy, together with a three-pronged economic program which sought to stabilise the economy, establish an open and free market, and reintegrate the nation into the international financial market. Today, peace has returned to Peru and the economy is growing strongly. Now, Peru has:

From 1993 to 1995, Peru was Latin America's fastest growing economy with 8.9% average real GDP growth. In the same time period, average real GDP growth for Chile was 6.4%, Colombia 5.3%, Brazil 4.7% and Argentina 2.9%. Peru achieved the world's highest growth rate in 1994 at 12.9% and expects to sustain an average 6% annual GDP growth from 1997 through the end of this decade.

The implementation of an austere fiscal program together with a tighter monetary policy reduced inflation to 10.2% in 1995, the lowest in 23 years. Inflation is expected to drop to about 6% by the end of the decade.

The stock of foreign investment increased from $1.3 billion in 1990 to $11.1 billion in July 1996, fueled by Peru's strong privatization program. Peru signed the largest contract in its history in May 1996 -for $2.8 billion- with a consortium formed by Mobil and Royal Dutch Shell to develop the vast Camisea natural gas fields. New measures have been introduced in order to promote foreign investment including the recent creation of industrial, trade and export tax-free zones.

Investment and the demand for capital and intermediate goods have led to increased trade with the international community. Exports will have grown from $3.3 billion in 1990 to an expected $6.1 billion in 1996. Imports will have increased from $2.9 billion to an expected $7.5 billion along the same period.

Strong economic growth, low levels of inflation and growing foreign exchange reserves have produced a stable currency.

Net foreign reserves have grown from $0.5 billion in 1990 to a record high level of $8.5 billion in August 1996.

Peru has reintegrated itself into the international financial community to allow the free flow of capital, reschedule its debt and obtain new loan commitments through accords with the International Monetary Fund, the Inter-American Development Bank and the Paris Club as well as a Brady term-sheet agreement with commercial banks. As a result, Peru has secured over $5 billion in credit.

Economic growth, the reduction of inflation and an active anti-poverty campaign have helped foster a better standard of living for all Peruvians, particularly the nation's poorest. Over the last three years, consumption and wages have grown 22% and 29.9% respectively in real terms. More than 1.3 million jobs have been created and unemployment has been slashed from 9.9% in 1993 to 7.1% in 1995.

Social expenditure has increased from 18.6% of the national budget in 1990 to 36.5% in 1995. As a percentage of GDP, social expenditure has more than doubled, from 2.7% to 5.8%, for the same years. Public expenditure in education and health is at its highest for the last 15 years.

The fiscal deficit dropped from 6.1% of GDP in 1989 to a 2.9% surplus in 1994 and a 0.6% deficit in 1995.

Reforms and the privatization process have produced a more diversified economy which will be the basis for future economic growth. Today, Peru's GDP is fueled by agriculture, fisheries, mining, manufacturing, construction and services. As the government reduces its involvement in the economy through privatization, the increase in economic activity will spark even greater diversification. Once privatization is completed, the public sector should account for no more than 5% of GDP.

Peru's effective anti-terrorism effort, launched in 1990, has restored peace and tranquillity to the nation. The leader of the Shining Path terrorist organization has been captured as well as most top leaders in Shining Path and the MRTA. The terrorist threat has been replaced by new optimism for the future.

Peru has undergone a dramatic transformation from economic disarray and hyperinflation to achieve record high growth and low inflation. Over the last six years, Peru has opened and deregulated its economy by eliminating price controls and restrictions on capital flows, freeing the exchange rate and interest rates, liberalising trade, streamlining taxes, reducing tariffs, reforming the financial and insurance systems, renegotiating foreign debt and securing agreements to insure investments. Some of the key reforms include:

Peru has enacted a number of reforms to create one of the most favourable and liberal environments for foreign investment. The 1991 Foreign Investment Promotion Act ensures equal treatment for national and foreign investments, allows the repatriation of capital without restrictions and provides long-term tax stability for foreign investors. In addition, Peru has signed a number of international agreements to insure foreign investments against commercial and non-commercial risks, including accords with the Multilateral Investments Guarantee Agency (MIGA), Overseas Private Investment Corporation (OPIC), International Covenant on the Settlement of Investment Disputes (ICSID) and many direct bilateral agreements.

Trade policies have been liberalized to guarantee the free flow of goods and services. Tariffs have been simplified with more than 98% of imports subject to a 15% duty and the remaining 2% subject to a 25% duty.

The Andean Community (GRAN), Andean Trade Preference Agreement (ATPA), World Trade Organization (WTO), Generalised System of EU Preferences for Andean Countries (GSP-EU), Generalised System of Preferences of Japan (GSP-Japan), Generalised System of Preferences of the United States (GSP-USA) and Latin America Integration Association (ALADI).

Since 1991, Peru has launched an aggressive and broad privatization program to increase the competitiveness and efficiency of state-owned companies. From 1991 to August 1996, 100 publicly-owned businesses and assets in telecommunications, banking, mining, oil and petroleum, agriculture, shipping and several other industries have been privatized for a total of US$6.3 billion plus investment commitments amounting to US$ 3.6 billion. Approximately 50 entities will be privatized by the year 2000.

The tax system has undergone a major overhaul, streamlining taxes into four groups -income, sales, imports and municipal- and restructuring the tax administration to improve tax collection. Corporate income tax is 30%. Companies signing contracts with the government for certain investments in intensive natural resource development, and/or exploration projects, are exempted from the sales tax until related operations come on line. For individuals, the income tax is 15% to 30%. Sales tax (VAT) is 18%.

Since 1990, Peru has been negotiating its foreign debt and working to reintegrate into the international capital markets. Through agreements with the International Monetary Fund, the Inter-American Development Bank and the Paris Club, Peru has secured US$5.1 billion in credit. The government has finalized a Brady term-sheet agreement which will make it possible to reduce the country's commercial debt by approximately 50%.

Peru's foreign currency exchange regime is entirely free and possession and redemption of foreign currency is guaranteed. Exporters are not obligated to exchange foreign currency they receive for exports.

The Peruvian financial system has been substantially deregulated to enhance its competitiveness, promote growth and foster savings and diversity of services. Some of the key reforms include: freeing interest rates, lifting quotas on commercial lending, and opening banking and financial sectors to private investment and ownership. In addition, there are no barriers to foreign participation in banking, insurance and reinsurance activities. Foreign investors have access to local credit facilities under the same conditions as Peruvian nationals.

Peru has substantially liberalized its labour laws to eliminate excessively constraining regulations, strengthen competitiveness and allow companies greater flexibility. Labour relations have been completely deregulated, thus reducing state intervention in labour disputes and expanding parties' freedom to negotiate. These measures have increased labour productivity and improved relations between workers and management.

Along with the privatization of a number of state-owned companies, the public sector has been restructured to improve public services and finances by permitting private investment through concessions to private enterprise of public services or works -such as roads, education, utilities- for up to 60 years.

Peru established a private pension system which eliminates the government's previous monopoly on providing pension, disability and death benefits.