Peru was heavily indebted, and political in-fighting was again on the rise. Peru embarked on a railroad-building program that helped but also bankrupted the country. In 1879, Peru entered the War of the Pacific which lasted until 1884. Bolivia invoked its alliance with Peru against Chile. The Peruvian Government tried to mediate the dispute by sending a diplomatic team to negotiate with the Chilean government, but the committee concluded that war was inevitable. Chile declared war on 5 April 1879. Almost five years of war ended with the loss of the department of Tarapacá and the provinces of Tacna and Arica,
Taxation in Peru also for investments in manufacturing industries located in the jungles, in designated tax-free zones and in borderline areas of the country. Furthermore, companies involved in certain economic sectors may be subject to special or reduced income tax rates (i.e. companies involved in agriculture, animal husbandry and similar activities are entitled to a 15% rate). Peru also has an income tax for individuals. Peruvian citizens domiciled in Peru are subject to taxation on their worldwide income. Individuals not domiciled in Peru are only taxed in this country on their Peruvian sourced income. Foreigners residing or staying in Peru for more than