Countries › Peru › Guide › 2. Macro and country context › Regions, the mining canon and decentralization in Peru: who gets the money and why it matters for projects

Regions, the mining canon and decentralization in Peru: who gets the money and why it matters for projects

Last verified: 2026-10-28 · Status: Changing

Peru is a unitary State that has transferred powers and money to elected regional governments and provincial and district municipalities, which have their own budgets and can set local fees. Areas that produce natural resources receive a share of the State's income from them as canon: half of the income and rents the State obtains from mining becomes mining canon and is split 10, 25, 40 and 25 percent between the producing district, the producing province, the rest of the department's municipalities and the regional government. The 2027 Budget Bill estimates S/ 21,420 million (about US$6.2 billion) in canon, royalties and related transfers and S/ 14,629 million in the municipal compensation fund, which makes regional and local governments key counterparties for mining, energy and infrastructure projects.

USD figures use S/ 3.452 per US dollar, the banking system selling rate published by the Superintendencia de Banca, Seguros y AFP for 27 October 2026 (BCRP series PD04640PD). Conversions are for orientation only.

Key facts

Share of State income from mining that forms mining canon	50 %Ley Nº 27506 art. 9, as of 2026-10-28 · in force
Canon share for the producing district municipality	10 %Ley Nº 27506 art. 5.2 a), as of 2026-10-28 · in force
Canon share for municipalities of the producing province	25 %Ley Nº 27506 art. 5.2 b), as of 2026-10-28 · in force
Canon share for municipalities of the producing department	40 %Ley Nº 27506 art. 5.2 c), as of 2026-10-28 · in force
Canon share for the regional government	25 %Ley Nº 27506 art. 5.2 d), as of 2026-10-28 · in force
Canon, royalties and participations, 2027 Budget Bill estimate	21420000000 PENProyecto de Ley de Presupuesto 2027, as of 2026-08-30 · pending
Mining canon, 2027 Budget Bill estimate	8708000000 PENProyecto de Ley de Presupuesto 2027, as of 2026-08-30 · pending
FONCOMUN, 2027 Budget Bill estimate	14629000000 PENProyecto de Ley de Presupuesto 2027, as of 2026-08-30 · pending
FONCOR (regional compensation fund), 2027 Budget Bill estimate	8696000000 PENProyecto de Ley de Presupuesto 2027, as of 2026-08-30 · pending
Increase in the IPM yield feeding FONCOMUN, 2026 to 2029	2 percentage pointsLey Nº 32387 art. 2, as of 2025-06-16 · in force
Term of regional governors, mayors and councils	4 yearsConstitución art. 191 and art. 194, as of 2026-10-28 · in force
Share of valid votes a regional ticket needs to avoid a runoff	30 %JNE agreement on the 2026 regional runoff, as of 2026-10-10 · in force
Regional runoff date	2026-12-06 dateJNE agreement of 10 October 2026, as of 2026-10-10 · in force

The rule

1. Decentralization is a permanent and mandatory State policy, carried out in stages with a transfer of powers and resources from the national government to regional and local governments. Regional governments have political, economic and administrative autonomy in their areas. Their governor and vice governor and regional council are elected for four years; mayors and councillors of provincial and district municipalities are also elected for four years. Regional governors must attend the Chamber of Deputies when it summons them.Constitución Política del Perú de 1993, art. 188, art. 191 and art. 194; art. 191 as amended by Ley Nº 31988, Art. 188, art. 191 and art. 194, 1993-12-30 official text · verified 2026-10-28 · changed: Regional and municipal elections were held on 4 October 2026. The JNE set 6 December 2026 for a regional runoff wherever no ticket obtained at least 30 percent of valid votes.

2. Regional governments promote regional development and investment and are competent to approve their budgets, grant authorisations, licences and rights over services in their charge, and promote and regulate activities in agriculture, fishing, industry, trade, tourism, energy, mining, roads, communications, education, health and environment under the law. Their revenue includes transfers in the annual Budget Law, taxes created by law in their favour, the redistributive Regional Compensation Fund (FONCOR), canon and borrowing. Municipalities plan urban and rural development, including zoning, and can create, amend and remove contributions, fees, excise charges, licences and municipal rights by ordinance; their revenue includes the Municipal Compensation Fund (FONCOMUN) and canon.Constitución Política del Perú de 1993, Art. 192, art. 193, art. 195 and art. 196, 1993-12-30 official text · verified 2026-10-28

3. The areas where natural resources are exploited are entitled, under law, to an adequate share of the total income and rents the State obtains from that exploitation, as canon. Regional and local governments can create, amend and remove contributions and fees within limits set by law, but taxes themselves are created only by law. A special tax regime for one zone needs an express law approved by two thirds of the legal members of each chamber.Constitución Política del Perú de 1993, art. 74 and art. 77; art. 79 as amended by Ley Nº 31988, Art. 74, art. 77 and art. 79, 1993-12-30 official text · verified 2026-10-28

4. Mining canon is 50 percent of the total income and rents the State obtains from mining, metallic and non metallic. Canon is distributed among regional and local governments using MEF distribution indices based on population and unmet basic needs: 10 percent to the municipality or municipalities where the resource is exploited; 25 percent to the district and provincial municipalities of the producing province; 40 percent to the municipalities of the producing department or departments; and 25 percent to the regional governments where the resource is exploited. All of it comes from the canon generated in the region where the resources are located.Ley Nº 27506, Ley de Canon (published 10 July 2001), art. 9 as amended by Ley Nº 28077 art. 5 and art. 5.2 as amended by Ley Nº 28322 art. 2 (MEF consolidated copy), Art. 5.2 and art. 9, 2001-07-10 official text · verified 2026-10-28

5. Mining concession holders must file each year with the Ministry of Energy and Mines a sworn statement of the sale value of concentrate or equivalent for each concession (metallic) or of the mining component (non metallic), which is required to distribute the mining canon among areas. For fiscal year 2025 the deadline was 31 March 2026, filed electronically on the MINEM Extranet using the form approved by Resolución Ministerial Nº 077-2019-MEM/DM.
Cost to do it: No fee is stated in the MINEM notice; the cost is internal compliance time.Reglamento de la Ley de Canon, Decreto Supremo Nº 005-2002-EF as amended by Decreto Supremo Nº 080-2019-EF; MINEM notice of 5 March 2026, Sworn statement for canon distribution, 2026-03-05 official text · verified 2026-10-28

6. The 2027 Budget Bill estimates S/ 21,420 million in canon, overcanon, royalties, customs revenue shares and other participations (S/ 1,847 million national, S/ 4,736 million regional and S/ 14,838 million local). Within it, mining canon is estimated at S/ 8,708 million, gas canon at S/ 1,902 million, the Camisea fund (FOCAM) at S/ 377 million, oil canon and overcanon at S/ 673 million, hydro canon at S/ 324 million, fishing canon at S/ 104 million and mining royalties at S/ 2,923 million. FONCOMUN is estimated at S/ 14,629 million and FONCOR at S/ 8,696 million. The MEF stresses these amounts are only indicative and move with tax collection, commodity prices and the exchange rate.
Cost to do it: Mining canon estimate S/ 8,708 million, about US$2,523 million.
Example: S/ 8,708 million / About US$2.5 billionProyecto de Ley de Presupuesto del Sector Público para el Año Fiscal 2027, MEF statement of reasons, Section 1.5.1.2, sources by level of government, 2026-08-30 official text · verified 2026-10-28 · changed: Pending: estimates in the 2027 Budget Bill, which Congress must approve by 30 November 2026.

7. Ley Nº 32387 raises the yield of the Municipal Promotion Tax (IPM) that feeds FONCOMUN by 0.5 percentage points a year in 2026, 2027, 2028 and 2029, up to 2 points in total. To receive the increase a municipality must have at least two of its three planning instruments (local development plan, institutional strategic plan and operating plan) approved and aligned with national plans, with a technical opinion from CEPLAN. The extra money may be used only for public investment projects that close infrastructure gaps (and exceptionally transfers to populated centre municipalities), never for current spending. The law also imposes a five year moratorium on creating new populated centre municipalities.Ley Nº 32387, law promoting fiscal decentralization by strengthening FONCOMUN, published 16 June 2025, Art. 2, art. 3 and art. 4; Second and Third Final Complementary Provisions, 2025-06-16 official text · verified 2026-10-28 · changed: From 1 January 2026 the IPM share feeding FONCOMUN rises by 0.5 points a year until 2029.

Recipient	Share of canon	Share of State income and rents from mining
Producing district municipality or municipalities	10%	5%
Municipalities of the producing province	25%	12.5%
Municipalities of the producing department	40%	20%
Regional government	25%	12.5%
Total canon	100%	50%

How mining canon is split (Ley Nº 27506 art. 5.2 and art. 9).

Source	S/ million	US$ million
Canon, overcanon, royalties, customs and other participations	21,420	6,205
of which mining canon	8,708	2,523
of which mining royalties	2,923	847
of which gas canon	1,902	551
FONCOMUN (municipal fund)	14,629	4,238
FONCOR (regional fund)	8,696	2,519

Transfers to subnational governments in the 2027 Budget Bill, S/ million (MEF estimates, indicative). USD at S/ 3.452.

Worked example

Where a mine's taxes go. If the State obtains S/ 100 million (about US$29 million) of income and rents from mining in a region, S/ 50 million (about US$14.5 million) becomes mining canon: S/ 5 million to the producing district, S/ 12.5 million to the municipalities of the producing province, S/ 20 million to the municipalities of the department and S/ 12.5 million to the regional government (Ley Nº 27506 art. 5.2 and art. 9). The other S/ 50 million stays with the national Treasury.
Price swings reach local budgets. Copper and gold export values rose sharply in 2026 on prices; the MEF warns that canon estimates move with commodity prices and the exchange rate, so local investment budgets in mining regions can rise or fall sharply from year to year.

Step by step

1. Identify every level of government with a stake in your project: the district and province municipalities and the regional government both receive canon and grant local permits and licences.
2. Check the regional runoff on 6 December 2026 and the new authorities' plans where your project sits; see /calendar/.
3. If you hold mining concessions, file the yearly canon sworn statement with MINEM by its deadline (31 March 2026 for fiscal year 2025).
4. Before relying on local investment commitments, check the municipality's FONCOMUN and canon receipts and whether it meets the Ley Nº 32387 planning conditions for the extra FONCOMUN money.
5. Read the sector and regulation sections for permits; this page covers only the fiscal and political framework.

Common traps

Expecting new FONCOMUN money to fund operating costs. The increase under Ley Nº 32387 can only pay for investment projects, never current spending.
Dealing only with the national government. Regional and municipal governments are autonomous and set local fees and zoning, so national approvals alone do not settle local permits.
Assuming a local fee is a tax. Municipalities can set contributions and fees by ordinance, but only a law can create a tax (Constitution art. 74).
Using old canon splits. The 10, 25, 40 and 25 percent split comes from the 2003 and 2004 amendments; older sources show the original 2001 percentages.

Sources

← Peru's population, regions and labor market: where people live and workForeign investment in Peru: open entry, ProInversión registration, legal stability agreements, early VAT recovery and restricted sectors →

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