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Home - Tax regime in Peru

Tax regime in Peru

In the Peruvian tax regime, the most relevant applicable taxes, are the following:

 

INCOME TAX

Is a tax levied on the income from all sources obtained by conducting business activities, carried out by individuals, legal entities, or established companies in Peru.

Peruvian legislation contains four types of tax regimes that companies may utilize:

  • New Simplified Single Regime (NRUS)
  • Special Income Regime (RER)
  • MSE Tax Regime (RMT)
  • General Income Tax Regime (REG)

Considering the conditions in which the business is formed and the desired future economic benefits, entrepreneurs are free to take advantage of any of the regimes, provided they comply with the conditions and requirements established for each one of them.

 

NEW SIMPLIFIED SINGLE SYSTEM (NRUS)

This system allows small taxpayers to pay their taxes through a single monthly payment instead of paying various taxes, which is calculated according to the amount of income and purchases of the company.

Taxes Covered:

  • This system includes the Income Tax (IT), the General Sales Tax (GST) and the Municipal Promotion Tax (MPT).
  • Subjects eligible for this tax regime:

The subjects eligible for the NRUS are natural persons and undivided inheritance domiciled in the country, who exclusively earn income from carrying out business activities, such as convenience stores, bazaars, small restaurants, among others. Natural persons dedicated to crafty and/or skilled work such as electricians, gardeners, painters, and others are eligible as well.

Requirements to qualify for the NRUS:

–  Gross income or purchases may not exceed S/. 96,000.00 soles in each financial year, or S/. 8,000.00 soles per month, unless they are subject to the special category.

–  Business activities must be performed in a single location or productive headquarters, whether owned or under some other form of possession.

–  The value of the fixed assets, with the exception of the property or vehicles required for the development of the business, must not exceed S/. 70,000.00 Soles.

–  The taxpayers who qualify within the special category, are those who only dedicate themselves to the sale of goods such as fruits, vegetables, legumes, roots, seeds, among others, and/or, are dedicated exclusively to the cultivation of agricultural products and to their sale in their natural state.

Approval of the NRUS:

Approval will be given at the time of registration in the Taxpayer’s Unique Registry (RUC). In the case of taxpayers that come from the general, special, or MSE system, the change of the system will take effect from the period in which such change is made.

Categorization and rates:

Subjects that opt-in for the NRUS must be placed in one of the categories established for this regime, according to the level of income:

CATEGORY GROSS INCOME OR PURCHASES MONTHLY TAXES IN SOLES
1 UP TO  S/. 5,000 MONTHLY 20
2 MORE THAN S/. 5,000 UP TO      S/. 8,000 MONTHLY 50
Special UP TO S/ 60,000.00 ANNUALLY 0

 

Taxpayers under this regime are not obligated to submit monthly or annual returns.

Payment vouchers that can be issued:

Taxpayers under this regime may only issue sales vouchers and tickets that do not generate credit, expenses, or costs for tax purposes. Not complying will cause immediate inclusion to the MSE system or General system, as it corresponds. Said inclusion will begin to operate from the month of issuance of the first unauthorized voucher.

However, for purchases made, they must demand invoices, tickets issued by cash registers, or authorized documents, as applicable.

Accounting Books and Records:

The subjects of this system are not obligated to keep accounting books or records.

SPECIAL INCOME REGIME (RER)

In this tax regime included are people with businesses and legal entities that obtain income from trade and/or industry activities.

Taxes Covered:

  • Income Tax (IR)

Unlike the previous regime, the GST and MPT are not included in this regime, which is why, in addition to the payment made for the IR, payment must be made for GST and MPT. The latter is paid together with the GST.

Subjects eligible for this tax system:

Natural persons, conjugal societies/partnerships, undivided inheritance and legal entities domiciled in the country where they developed their trade and/or industry may be eligible, which is understood to include the sale of the goods they acquire, produce, or manufacture, as well as the resources that they extract, including breeding and cultivation.

Exclusions:

Subjects that perform the following activities are excluded from this system:

–  Activities that are classified as construction contracts according to the rules of the General Sales Tax, even if they are not taxed with the aforementioned tax.

–   Cargo transportation services of merchandise with vehicles that have a load capacity greater than, or equal to, 2 metric tons, or national or international passenger land transport.

–   Organization of public shows.

–  Notaries, auctioneers, and/or commission agents; broker agents of products, stock exchange and/or special operators that carry out activities in the Commodity Exchange Market; customs agents, intermediaries and/or insurance agents.

–   Owners of casinos, slot machines, or others of a similar nature.

–   Owners of travel agencies, marketing or advertising companies.

–  Subjects that perform activities to commercialize liquid fuels and other products derived from hydrocarbons, in accordance with the Regulation for the Commercialization of Liquid Fuels and other products derived from hydrocarbons.

–   Sale of real estate.

–   Providers of customs services, warehouses and storage terminals.

–  Medical, dental, or veterinary practitioners; legal accounting, bookkeeping and auditing, and tax consulting; architecture and engineering and related technical consulting activities; computer programming, computer consulting, and related activities; information services activities, editing of computer programs, online software, and repair of computers and computer equipment; and business and management advisory activities. All according to the revision of the International Standard Industrial Classification – CIIU applicable in Peru.

–   Obtain income from a foreign source

Requirements to qualify for the RER:

–   The amount of the net annual income as well as the purchases, must not exceed S/. 525,000.00.

–  The value of the fixed assets, with the exception of the properties and vehicles, must not exceed S/. 126,000.00.

–  Having no more than 10 people as part of the staff. In the case there is more than one work shift, there must not be more than 10 people per shift.

Approval of the RER:

Approval will take place at the time of registration in the RUC. In the case of companies that come from the general or MSE system, they may change systems only in the month of January of the year in which they wish to make such a change, while those that come from the NRUS may make the change in any month of the year.

Payment and Declaration:

The applicable rate in order to determine the income tax is equivalent to 1.5% of the net monthly income.

The payment for the aforementioned tax has a full payment nature. Therefore, there is no obligation to submit an annual declaration for the regularization of the tax. However, there is an obligation to submit an annual sworn statement corresponding to the inventory made on the last day of the year prior to the presentation, in the forms, terms, and conditions indicated by the administration.

Payment vouchers that can be issued:

Taxpayers under this system may issue invoices, sales receipts, and other payment vouchers allowed by the Payment Vouchers Regulation based on the activities carried out by the company.

Accounting Books and Records:

Taxpayers under this system must keep a purchases record and a sales and income record.

MSE TAX SYSTEM (RMT)

Taxes Covered:

  • Income Tax(IR)

The GST and MPT are also not included in this system, so, in addition to the payment made by the IT, the payment for GST must be made.

Subjects eligible for this tax regime:

Individuals and legal entities, conjugal partnership, undivided inheritance, professional associations and similar associations that earn third-category income whose net income does not exceed 1,700 Tax Units (UIT) in the taxable year can be eligible.

Exclusions:

Subjects that are excluded from this regime:

–  Those who are directly or indirectly linked to capital with other natural persons or legal entities whose joint net annual income exceeds 1,700 UIT.

–   Subsidiaries, affiliate, branches, agencies, or other permanent establishments in the country of companies incorporated abroad.

–  Those who in the previous year have earned a net annual income over 1,700 UIT.

Approval of the RMT:

Approval will be given at the time of registration in the RUC. In the case of companies that come from the general system, they can only change their system in January, provided that in the previous year they did not fall into any of the aforementioned exclusion scenarios. The subjects of the NRUS or Special system may be changed during any month of the year.

Payment and Declaration:

The income tax payment will be calculated by applying 1% on the first 300 UIT, and 1.5% on the excess of the said amount, up to 1700 UIT, or the rate resulting from dividing the tax of the previous year by the total of net income for the same fiscal year, whichever is greater. Newly established companies must apply the first rate described, that is, 1.5% of the monthly income.

Taxpayers must submit monthly returns. Also, they must present an annual sworn declaration for the regularization of the tax, which will include all the income obtained in the given year, the corresponding deductions, as well as the credits and tax benefits to which the taxpayer is entitled.

The cumulative progressive rates to determine the annual tax are: 10% for the first 15 UIT of net income and 29.5% for the excess of said income.

In order to determine the net income on which the income tax will be calculated, all the expenses that are necessary to produce the income or to maintain its source of production will be deducted from the annual gross income, with special treatments under certain circumstances, provided they are not expressly prohibited. On the other hand, if there are tax losses, these can also be deducted from the net income.

Payment vouchers that can be issued:

Taxpayers under this regime may issue payment vouchers that give right to the use of the tax credit, as well as the other payment vouchers regulated in the Regulation of Payment Vouchers, according to the activities that the taxpayer carries out.

Accounting Books and Records:

The subjects who do not exceed the 300 UIT of annual income must keep the sales register, purchase records, and daily books as indicated in the Simplified system, and subjects who exceed that amount are required to keep the books as indicated in the General system.

GENERAL INCOME TAX SYSTEM (REG)

This system can accommodate the subjects who perform any type of business activity, there being no restriction whatsoever.

Taxes included:

  • Income Tax (IT)

As in the Special system and MYPE system, in this system, the GST and MPT are not included either, so, in addition to the payment made by the IT, the payment for GST and MPT must be made.

Subjects eligible for this tax system:

Natural persons, legal entities, conjugal partnerships, undivided inheritance, professional associations and those domiciled in the country that obtain third-category income may be eligible.

Approval of REG:

Approval will be given at the time of registration in the RUC. In the case of companies that come from the other systems, they can be changed during any month of the year.

Payment and Declaration

The payments on account will be equivalent to 1.5% of the net monthly income, or to the amount resulting from multiplying the net income obtained in the month by the coefficient resulting from dividing the tax of the previous year by the total net income of the same year, whichever is greater.

Taxpayers must submit monthly returns for the above-mentioned income tax payments, and an annual tax return, which will include all the income obtained in the given year, the corresponding deductions, tax losses, if any, under any of the regimes provided above, as well as the credits and tax benefits enjoyed by the taxpayer.

In order to determine the payable income tax, a rate of 29.5% on net taxable income is applied.

Payment vouchers that can be issued:

Taxpayers under this system may issue payment vouchers that give right to the use of the tax credit, as well as the other payment vouchers regulated in the Regulation of Payment Vouchers.

Accounting Books and Records

Taxpayers must keep, according to the gross income from the previous year, the following books:

  • Up to 300 UIT: must keep a purchase, sales, and simplified record books;
  • Between 300 to 500 UIT: must keep a daily book and ledger, purchase and sales records, and income registry;
  • Between 500 to 1700 UIT: must have an inventory and balance book, daily book and ledger, purchase and sales records;
  • more than 1700 UIT: must keep complete accounting, which includes cash and bank book, inventory and balance book, daily book, ledger, purchase, sales, and income registry, as well as a withholding book, registration of fixed assets, registration of costs, registration of permanent inventory in physical units, and permanent valued inventory register, provided that the taxpayer is obligated to take them.

GENERAL SALES TAX: (GST)

The General Sales Tax – GST, taxes the sale of goods in Peru, the provision or use of services in Peru, construction contracts, the first sale of real estate made by the builders of the estate, and the importation of goods.

The tax base of the GST is calculated in practical terms, by the difference between the value of the operations included in the scope of application of the tax made by the taxpayer, and the value of its acquisitions.

The applicable rate is 16%, plus a 2% rate corresponding to the municipal promotion tax, which is governed by the provisions applicable to the GST, resulting in a total rate of 18%.

TEMPORARY TAX ON NET ASSETS (ITAN)

This tax is levied on the value of the company’s net assets, as reflected in its balance sheets as of December 31 of the previous year.

Subjects of the tax

Third category income taxpayers that are included in the general income tax system are subject to this tax.

Applicable rate

After making the corresponding deductions, the rate of 0.4% will be applied for the excess of the first S/. 1,000,000.00

Payment and Declaration

The tax return shall be presented within the first twelve business days of the month of April of the year to which the payment corresponds and may be made in two forms of payment: (i) in full payment at the time of submitting the corresponding statement; or (ii) fractionated up to 9 successive monthly installments

Taxpayers have the possibility to consider the ITAN payments as a credit against monthly payments of the Income tax from March to December of the fiscal year for which the tax was paid, and; against the regularization payment of the income tax for the fiscal year to which it corresponds. If at the end of the fiscal year the ITAN paid is higher than the annual income tax, taxpayers have the possibility of requesting the return of said excess.

SELECTIVE CONSUMPTION TAX (SCT)

The Selective Consumption Tax is an indirect tax that, unlike the GST, only taxes certain goods.

Among its purposes are the discouragement to consume products that generate negative impact in the individual, social, and environmental order, such as: alcoholic beverages, cigarettes, and fuels; as well as mitigate the burden of GST by requiring greater tax burden to those consumers who objectively demonstrate a greater ability to pay for the acquisition of sumptuous or luxury goods, such as the acquisition of new motor vehicles, bottled water, energy drinks, among others.

The Selective Consumption Tax taxes the sale in the country at the producer level and the importation of certain goods; the sale in the country by the importer of certain goods; and gambling and betting, such as lotteries, bingo, raffles, and horse races.

Depending on the nature of the good, the tax is determined on the basis of different systems: value, specifically, for the kind of goods; and the value according to the price of sale to the public.

FINANCIAL TRANSACTION TAX ( FTT)

The tax on financial transactions applies, among others, to any transfer, movement, debit, or credit made in bank accounts of individuals and companies in the Peruvian banking system. It also applies to the acquisition of certified checks, bank certificates, and other similar instruments without the need to use the funds deposited in a local bank account.

The tax rate is 0.005% of the value of the banking operations, and the tax must be withheld by the corresponding local bank.

OTHERS

Capital Gains

Capital gains are profits that come from the selling of goods that are not destined to be commercialized and are treated as ordinary income. Capital gains are considered a third-category income which has a tax rate of 30%.

Dividends

The legal entities that agree on the distribution of dividends or any other form of profit sharing, will retain an amount equivalent to 5% of them, except when the sharing is made in favour of a domiciled natural person.

The indicated retention will be effective on the date of the distribution agreement, or when the dividends and other forms of distributed profits are made available, in cash or in kind, whichever occurs first.

Interest

The interest paid by a domiciled subject to a non-domiciled legal entity is generally subject to a withholding tax of 30%.

The interest paid to foreign banks or unrelated foreign lenders may be reduced to a rate of 4.99% when the following conditions are met: In the case of cash loans, the foreign currency is credited to the country; and that the credit does not accrue an annual interest when refuting higher than the prevailing preferential rate in the place from which it comes, plus 3 points.

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