The Lima Stock Exchange said Monday in a press statement it was suspending its planned integration with the Chilean and Colombian exchanges until capital gains taxes in Peru are standardized to 5%.
The integration of the three exchanges was due to be completed in January 2011, but the statement said that due to “internal legal tax matters” the project would be suspended until a law standardizing Peruvian capital gains taxes is passed.
A spokeswoman for Peru’s Congress said Congress was closed, but that the law standardizing capital gains taxes could be passed before the end of the month by the Congressional Permanent Commission, if the commission decided it was “a priority”.
No one from the Permanent Congressional Commission was immediately available for comment.
In another statement, Lima Stock Exchange President Roberto Holye said because the law on capital gains taxes had not yet been approved there was a “grave risk” to the integration of the Lima stock exchange with those of Chile and Colombia.
Holye said the failure to pass the law standardizing capital gains taxes “generates a series of gaps and problems” that could diminish the integration project and mar its competitiveness.
Peru’s capital gains taxes currently range between 5% and 30%, depending on the status of the investor. Earlier this month Finance Minister, Ismael Benavides, said he was working to have the capital gains tax standardized at 5%.
Tests on merging the Peruvian, Colombian and Chilean stock market systems into the Integrated Latin American Market, or MILA, began in late November and direct share trading has been expected to begin at the end of January.
The MILA is slated to become the largest exchange in the region in terms number of companies listed, and the second largest by market capitalization after Brazil’s exchange. (Sophie Kevany / Dow Jones Newswires)