Country Name: Peru
Currency: Peruvian Sol (PEN)
Primary Tax Authority: Superintendencia Nacional de Aduanas y de Administración Tributaria (SUNAT) – National Superintendency of Customs and Tax Administration
Key Legislation:
- Income Tax Law (Ley del Impuesto a la Renta)
- Value Added Tax Law (Ley del Impuesto General a las Ventas – IGV)
- Corporate Tax Reform Act (recent reforms aimed at increasing tax compliance and closing tax loopholes)
Fiscal Authority Allocation
Centralized Fiscal System:
Peru operates a centralized tax system. The National Superintendency of Customs and Tax Administration (SUNAT) is responsible for administering and collecting taxes, including corporate income tax (CIT), personal income tax (PIT), and value-added tax (VAT). Local governments collect property taxes and minor fees, but the majority of tax collection is centralized.
Corporate Income Tax (CIT)
Standard Rate: 29.5%
Peru levies a corporate income tax rate of 29.5% on resident companies. Non-resident companies are taxed on income sourced from Peru. CIT is applied to the net taxable income of businesses, and all expenses related to income generation are generally deductible.
Corporate Forms and Taxation:
- Limited Liability Company (Sociedad de Responsabilidad Limitada – SRL): The most common corporate form, subject to the 29.5% CIT rate.
- Corporation (Sociedad Anónima – SA): Typically used by larger businesses, taxed at the standard 29.5% rate.
- Branches of Foreign Companies: Subject to the same CIT rate, with tax applied on Peru-sourced income.
Exemptions and Incentives:
- Small Business Tax Regime: Small businesses with annual gross revenues below PEN 1,700,000 can opt for a simplified tax regime with lower CIT rates or reduced administrative requirements.
- Investment Incentives: Peru offers tax incentives for investments in infrastructure, agriculture, and renewable energy, including CIT exemptions and accelerated depreciation.
Goods and Services Tax (GST) / Value-Added Tax (VAT)
Standard Rate: 18%
Peru applies a VAT rate of 18% (IGV) to most goods and services, including imports. The VAT is levied on the sale of goods, the provision of services, and the import of goods into Peru.
Exemptions:
Exports, certain financial services, healthcare, and education services are VAT-exempt. Exports are zero-rated, allowing companies to recover VAT on input costs related to exported goods.
Personal Income Tax (PIT)
Progressive Rates:
Peru uses a progressive personal income tax system for resident individuals, with rates ranging from 8% to 30%:
- Up to 5 tax units (UIT): 8%
- 5 to 20 UIT: 14%
- 20 to 35 UIT: 17%
- 35 to 45 UIT: 20%
- Above 45 UIT: 30%
UIT (Unidad Impositiva Tributaria) is a fixed value used to determine tax brackets, deductions, and penalties. For 2023, 1 UIT is set at PEN 4,950.
Dividends:
Dividends are subject to a flat 5% withholding tax for both residents and non-residents.
Additional Mandatory Contributions
Social Security Contributions:
Employers and employees are required to contribute to Peru’s social security system, which provides pensions, healthcare, and unemployment benefits.
- Employer Contribution: 9% of gross salary for healthcare and 6.75% for pensions.
- Employee Contribution: 13% of gross salary for pension contributions (this rate applies to private pension systems, AFPs).
Withholding Taxes
- Dividends: 5%
- Interest: 4.99% to 30%, depending on the type of income and recipient.
- Royalties: 30%
Withholding taxes can be reduced under Peru’s double taxation agreements (DTAs).
Transfer Pricing Rules
Peru adheres to OECD guidelines on transfer pricing. Related-party transactions must comply with the arm’s-length principle, and companies are required to maintain detailed transfer pricing documentation for transactions exceeding certain thresholds.
Special Tax Regimes
- Amazon Region Tax Incentives: Companies operating in the Amazon region enjoy tax exemptions or reduced CIT rates to promote economic development in the region.
- Free Trade Zones (Zonas Francas): Companies operating in free trade zones benefit from CIT, VAT, and customs duty exemptions, provided they primarily export goods and services.
Other Taxes
- Real Estate Tax: Local governments collect property taxes annually, generally ranging from 0.2% to 1% of the property’s cadastral value.
- Capital Gains Tax: Capital gains from the sale of shares or other assets are taxed at 5% for residents and 30% for non-residents.
- Excise Duties: Excise taxes apply to specific products such as alcohol, tobacco, and fuel.
Double Taxation Agreements (DTAs)
Peru has signed double taxation agreements with over 10 countries, including major trading partners such as Spain, Chile, and Switzerland. These agreements help reduce withholding taxes on dividends, interest, and royalties and prevent double taxation.
Local Taxes
Local governments collect real estate taxes, vehicle taxes, and certain municipal fees. However, income tax and VAT are centrally administered by SUNAT.
Compliance and Reporting
Annual Filing:
Corporate tax returns must be filed by March 31st of the following year. Personal income tax returns are due by the same date. The tax year follows the calendar year in Peru.
Penalties for Late Filing:
Penalties for late filing or non-compliance include interest on overdue taxes and fines. The interest rate on unpaid taxes is generally set at 1.2% per month, with additional penalties for significant delays.
Recent Developments
Tax Reform:
Peru is undergoing tax reform to improve tax compliance and reduce informality. Measures include increasing the tax base by encouraging digitalization and the formalization of small businesses.
Environmental Taxes:
Peru has introduced environmental taxes to promote sustainability, including a carbon tax on fuel consumption and incentives for renewable energy investments.
Digital Services Tax:
To adapt to the growing digital economy, Peru is exploring a digital services tax aimed at taxing foreign digital platforms that provide services in the country.
Subscribe to my free newsletter for regular updates on law, taxation and business worldwide.