Peru - Eura · Taxes in America • 215 Peru 1. Income tax Income tax is levied on net income, assessed yearly and paid monthly. The tax year starts on January 1 each year and ends

Taxes in America • 213

Peru

Capital city: Lima

Aera: 1,285,220 km2

Population: 29,200,000

Language: Spanish

Politicalsystem: Presidential

republic

GDP/capita 2015:

USD 6,027

Currency: Peruvian Sol (PEN)

ISO Code: PER

Telephone code: +55

Nationalday: 28 July

214 • Taxes in America


Peru

1. Income tax Income tax is levied on net income, assessed yearly and paid monthly. The tax yearstartsonJanuary1eachyearandendsonDecember31,withoutexception.As a general rule, sworn income tax returns for companies, branches and indivi-dualsshouldbefiledbeforeMarch31thefollowingyear;thespecificdeadlinefor each taxpayer will depend on the last digit of their Single Taxpayer’s Register (RUC)number.Inthecaseofnon-domiciledpersons,theyarenotrequiredtofileanannualswornreturn.Thelawidentifiesthefollowingtaxpayers:

1.1 Juridical Persons or Companies

Companies incorporated in Peru are liable to Category Three Income tax on their world-source income. Non-domiciled companies, their branches established in PeruandpermanentestablishmentsareonlysubjecttotaxontheirPeru-sourceincome.

Income tax for domiciled companies is 30% and is levied on net income, which is determinedbydeductingtheexpensesincurredingeneratingincomeormain-taining the source of income.

Dividends received from other domiciled companies are not liable to tax. Divi-dends received from non-domiciled companies are taxed at 30%. Ingeneral,subjecttocertainrequirementsandconditions,thedeductionofin-terest, insurancepolicies, extraordinary losses, collectionexpenses, deprecia-tionandpre-operationalexpenses,authorizedreserves,write-offsandreservesforuncollectabledebts, reservesforsocialbenefits,retirementpensions,em-ployeebonusesandgratuities,amongothers,isallowed.

Expensesincurredabroadaredeductibleprovidedtheyarenecessaryandaresupportedbytherespectivereceiptsofpaymentissuedabroad.

Expensesnotallowedasdeductionsinclude,amongothers,personalexpenses,assumedincometax(exceptinthecaseofinterest),taxandadministrativefines,donationsandreservesorcontingenciesnotallowedbylaw.

In the case of carry-over of losses, domiciled companies may choose one of the two following systems:


• lossescanbecarriedoverforfourconsecutiveyears,startingfromthefirstyear following the year in which the loss was generated

• lossescanbecarriedover indefinitely,butapplyingadeductionceilingof50% of net income in each tax year.

The carry-back of losses to tax years prior to the one in which the losses were incurredisnotallowed,noristhedeductionofnetlossesincurredabroad.

On the other hand, it should be noted that domiciled companies are under the obligationtomakepaymentsonaccountofincometax.Theamountpayableisthelargeramountobtainedfromacomparisonofthemonthlyquotasusingthefollowing methods:

• percentagemethod:Apply1.5%tothemonth’stotalnetincome;• ratiomethod:Divide the tax calculated for theprevious tax yearby total

netincomeforthesameyearandapplytheresultingratiotothemonth’snetincome.ForthemonthsofJanuaryandFebruary,theratiodeterminedbased on tax calculated and net income corresponding to the preceding tax year is used.

However,suspensionoftheobligationtomakesaidpaymentsonaccountmayberequestedincertaincircumstances.

In cases where payments on account are more than the assessed tax on the occa-sioninquestion,thesurplusmaybecarriedoverasacreditagainstsubsequentpaymentsonaccountandregularizationtaxorberefundedtothetaxpayer.

1.2 Natural Persons or Individuals

AccordingtoPeru’staxregime,PeruviancitizensdomiciledinPeruareliabletotax on their world-source income, regardless of where that income was gene-rated, the country in which it was paid or the currency in which it was received. For non-domiciled individuals, on the other hand, only Peru-source income is taxable in Peru.

Inthecaseofdomiciledindividuals,categoryfourandfiveincometax,inotherwords income tax on income from an personal work (independent and de-pendent,respectively),aswellasforeign-sourceincome,isassessedbyapplyingacumulativeprogressiverate,asdetailedbelow:


BracketCumulative Progressive

RateUp to 27 Taxable Units UIT 15%Any excess over 27 UIT and up to 54 UIT 21%More than 54 UIT 30%

A nontaxable minimum of 7 Taxable Units (UIT) is established for salaries, wages andanyothertypeofremunerationderivedfromdependentor independentwork(incomecategoriesfourandfive).Inaddition,adeductionof20%onreve-nuesderivedfromindependentworkandthedeductionofdonationsandtheFinancialTransactionsTaxarealsoallowed.Thedeductionofanyotherexpensesis not allowed.

Incomeobtainedbydomiciledindividualsfromtherenting,sublettingandtrans-ferofgoods(firstcategoryincome),aswellasanyotherunearnedincome(se-condcategoryincome),aretaxedataneffectiverateof5%onthegrossincome.Dividends distributed by companies incorporated or established in Peru and re-ceivedbyindividualsaretaxedatthecertificaterateof4.1%.

1.3 Non-domiciled individuals

Individuals who are not domiciled in Peru are liable to tax only on their Peru-source income.

Generally, the following are considered to be Peru-source income:

• incomefrompropertiesandtherightsrelatingtothesame,includinginco-methefromtransferoftheirtitleandpossessionwhenthepropertiesarelocatedinPeruvianterritory;

• income from possessions or rights, including income from their transfer, whentheyarelocatedphysicallyorusedforeconomicpurposesinPeru;

• royalties,whenthepossessionsorrightsareusedforeconomicpurposesinPeruorwhentheyarepaidbyapersondomiciledinPeru;

• interest when the capital is located or used for economic purposes in the countryorwhenthepayerisapersondomiciledinPeru;

• dividendsdistributedbyentitiesdomiciledinPeru;• individual,commercialandbusinessactivitiesandpersonalworkcarriedout

inPeru;• thetransferorredemptionofmovablesecurities(shares,equityinterests,

bonds,etc.)whentheyhavebeenissuedbyentitiesformedorestablishedinPeru;

• technicalassistanceanddigitalservicesusedforeconomicpurposesinPeru;• theproceedsobtainedbynon-domiciledpersonsfromderivativefinancial

instrumentscontractedwithdomiciledpersonswhoseunderlyingentityre-

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fers to the exchange rate between local currency and a foreign currency, providedthetermoftheinstrumentsislessthan60calendardays;

• theproceedsfromtheindirecttransferofsharesorrepresentativeequityinvestments in companies domiciled in Peru, provided they comply with cer-tainrequirements.

In the case of non-domiciled individuals, income tax from dependent work is 30%,withoutdeductions.

Incomegeneratedbyindependentworkissubjecttoaneffectiverateof24%.Without precluding the aforesaid, income obtained in their country of origin by non-domiciled individuals who enter Peru temporarily for the purpose of carryingoutanyoftheactivitieslistedbelowisnotconsideredPeru-sourcein-come.Thoseactivitiesare:

• actspriortomakingforeigninvestmentsorconductingbusinessofanytype;• acts intended to supervise or control the investment or business (gathering

dataorinformation,conductinginterviewswithpersonsinthepublicorpri-vatesector,amongotherthings);

• acts associated with the hiring of local personnel.

1.4 Non-domiciled entities

Inthecaseofincomeobtainedbynon-domiciledentities,awithholdingtaxisapplied, the rate of which depends on the type of income as detailed in the fol-lowing table:

Ratesofwithholdingtaxbytypeofincomeapplicabletonon-domiciledentities


Type of Income RateDividendsandotherformsofprofitdistribution,aswellastheremittanceofthebranch’sprofits

4.10%

Interestpaidtoanon-domiciledperson,providedcertainrequirementsare metInterest paid to related companies abroad 30.00%Technical assistance services used for economic purposes in PeruDigital services used for economic purposes in Peru 30.00%Digital services used for economic purposes in Peru 30.00%Capitalgains fromthetransferofmovablesecuritiesthroughtheLimaStock Exchange, including:Transfer or redemption of shares, bonds or other securities issued bycompanies incorporated in Peru

5.00%

Indirect transfer of shares in Peruvian companiesCapital gains from the transferofmovable securitiesoutside the LimaStock Exchange, including:Transfer or redemption of shares, bonds or other securities issued bycompanies incorporated in Peru

30.00%

Indirect transfer of shares in Peruvian companiesOtherincomefrombusinessactivitiesconductedinPeruvianterritory 30.00%

Incomefromactivitiescarriedoutbyanon-domiciledentitypartlyinPeruandpartly abroad, including income obtained by its branches or permanent esta-blishments,isliabletotheeffectiveincometaxratesindicatedinthefollowingtable:

Activities Net Peru-source Income (% of Gross Income)

Effective Income Tax

Rate (%)Air transport 1 0.3Maritimetransport 2 0.6Chartering of ships 80 8.0Chartingofaircraft 60 6.0Supply of containers for transport 15 4.5Container demurrage 80 24.0Insurance 7 2.1Internationalnewsagencies 10 3.0Distributionofmotionpictures 20 6.0Transferoftelevisionbroadcastingrights 20 6.0Telecommunicationservices 5 1.5

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Double taxation agreements

Todate,Peruhassignedandratifieddoubletaxationagreementswiththefol-lowingcountries:Brazil,Chile,CanadaandPortugal.Thesetreatiesestablishcre-ditasthemethodforavoidingdoubletaxation.Inaddition,Peruisamemberofthe Andean Community, along with Colombia, Ecuador and Bolivia, as a result ofwhichDecision578onavoidingdoubletaxationbetweenthosecountriesap-plies.UnliketheOECDModel,Decision578givesprioritytotaxationatsourceandusestheexemptionmethod.

ItshouldbenotedthatPeruhassigneddoubletaxationagreementswithSouthKorea,Switzerland,SpainandMexicothatarependingratification.ItisalsoinnegotiationswithJapan,Qatar,theArabEmirates,Holland,Italy,France,Swedenand the United Kingdom.

Transfer Pricing

The transfer pricing rules are based on the arm’s length principle, as interpreted bytheOrganisationforEconomicCo-operationandDevelopment(OECD),andshould be considered only for income tax purposes. In Peru these rules are ap-pliednotonlytotransactionsbetweenrelatedpartiesbutalsototransactionswithcompaniesdomiciledintaxhavens.Note,however,thatadjustingthevalueagreedbythepartieswillonlybeadmissiblewhenataxlosshasbeengenerated.Thepricesof transactionssubject to transferpricingruleswillbedeterminedusinganyoftheinternationallyacceptedmethods,towhichendconsiderationshallbegiventothemethodthatismostappropriateforreflectingtheeconomicrealityoftheoperation.

Taxpayersthattakepartininternationaltransactionsinvolvingtwoormoreju-risdictionsmayenterintoAdvancePricingAgreements(APA)withtheTaxAu-thority,whichcanbeunilateralorbilateral; the latterareonly foroperationswith residents in countrieswithwhichPeruhasdouble taxationagreements.APAscanalsobeenteredintofortransactionsbetweenrelatedcompaniesdo-miciled in Peru.

OnJanuary1,2013,certainspecificparameterswereincorporatedthatshouldbetakenintoaccountfordeterminingthemarketvalueinthespecificcaseofoperationsinvolvingtheimportingandexportingofcertaingoodsinwhichaninternationalintermediaryintervenesthatisnottheeffectiveconsigneeofthegoodsinquestionorinoperationsconductedfrom,toorthroughtaxhavens.

Countries with low or no taxation

CompaniesdomiciledinPerumaynotdeductexpensesfromoperationsconduc-


tedwithpersonsorentitiesresidentincountriesorterritorieswithlowornotaxationforthepurposesofassessingincometax,norwilltheybeentitledtooff-setlossesgeneratedbythoseoperationsagainstforeign-sourceincome,exceptinoperationsof the following types: (i) credit; (ii) insuranceand reinsurance;(iii)transferofuseofshipsoraircraft;(iv)transportfromPerutodestinationsabroadandviceversa;(v)tollspaidtotransitthePanamaCanal.

Operationsfrom,toorthroughtaxhavensshallalsocomplywiththetransferpricing rules.

Interest paid by domiciled companies to a non-domiciled individual for credit operationsfrom,toorthroughataxhaven,ontheotherhand,issubjecttoawithholdingtaxof30%.Finally,derivativefinancialinstrumentscontractedwithentitiesdomiciledintaxhavensshallbedeemedtobespeculative,inwhichcaselossesmayonlybeoffsetagainstgainsofthesamekind.

Tax Credit

TaxesactuallypaidabroadmaybeoffsetagainstPeruvian income taxeven ifthereisnodoubletaxationagreementandprovidedtheyarenotmorethantheamount obtained by applying the taxpayer’s average rate to income obtained abroad.

Offsettingataxcreditnotappliedinagiventaxyeartothesubsequentorpre-vioustaxyearsisnotallowed;normayitberefunded.

2. Other taxes

2.1 Temporary net assets tax (ITAN)

TemporaryNetAssetsTax(ITAN)isequivalentto0.4%ofthetotalvalueofnetassets over S/. 1,000,000 assessed as at December 31 of the previous tax year. Companiesinthepre-operationsstageareexcludedfromthistax.ITANisacre-dit against income tax and, if it has not been applied in full by the end of the tax year,arefundmayberequested.

Nevertheless, in order to avoid double taxation problems, subsidiaries andbranchesofforeigncompaniesmaychoosetooffsetthecreditforincometaxpaid in Peru against ITAN. In that way, taxpayers can claim income tax paid in Peru as a foreign credit in their countries of origin instead of a tax on assets.

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2.2 Financial transfer and means of payment tax (ITF)

A tax of 0.005% is the general tax on deposits into and withdrawals from ac-countsinfinancialinstitutionsinPeru.

Any payment made that exceeds the sum of S/.3,500 or US$1,000 must be made bymeansofoneoftheso-called“MeansofPayment,”whichincludedepositsinaccounts,drafts,transfersoffunds,paymentorders,debitorcreditcardsissuedinPeru,and“non-negotiable”checks.

Theconsequenceofnotusingsaidmeansofpaymentisthatthecostorexpenseassociatedwiththepaymentinquestionisnotallowableforincometaxpurpo-ses.Moreover,theGeneralSalesTaxpaidwhenacquiringthegoodsorservicesinquestionmaynotbetakenasataxcredit.

3 General sales tax (IGV): taxable base and application

IGV is levied on the sale of goods, provision and use of services and the ins-tallationofpropertyinthecountryatarateof18%(includinga2%MunicipalDevelopment Tax).

The General Sales Tax Act follows the debit/credit system, by virtue of which IGV onsalesisoffsetagainstIGVpaidonpurchases.IGVisnotappliedasacreditinanyparticularmonth;itcanbeappliedtothefollowingmonthsuntilithasbeenusedup.Thiscreditdoesnotlapsenordoesitbecomeinvalidbyprescription.Reorganizationsofbusinessesarenotsubjecttothistax.

Early IGV Refund Regime

Individualsorcompaniesthataredevelopingprojectsthatareinthepre-opera-tionalstage(whichmustbetwoormoreyears)mayrequesttheearlyrefundingofIGVpriortothestartupofcommercialoperationsandbeforeobtainingtheMinisterialResolutionfromthesectorcorrespondingtotheprojectthatistobedeveloped.Tothatend,anapplicationshouldbemadetoProInversiónforanIn-vestment Contract to be signed with the Peruvian Government. The investment thatmustbemadeduringthepre-operationalstageshallnotbelessthanUS$5million, unless it is an investment in the agrarian sector, which is exempt from thisrequirement.


Final refund of IGV

ThefollowingmayobtainfinalrefundofIGV:

• companies and individuals who are holders of mining concessions and • investors who have signed license or service contracts referred to in the

OrganicHydrocarbonsLaw.Toobtainafinalrefundthebeneficiaryshouldbeintheexplorationphaseinbothcases.Inthecaseofholdersofminingconcessions,theymustalsosignanexplorationinvestmentcontract.

Exporting of goods

TheGeneralSalesTaxActdefinestheexportingofgoodsasthesaleofmoveablegoodsperformedbyapersonorentitydomiciledinPerufortheaccountofano-therpersonorentitywhoisnotdomiciled,regardlessofwhetherthetransferoccursabroadorinPeru,providedsaidgoodsarefinallyprocessedthroughcus-toms as exports.

If thetransferofownershipoccurs inPeruprior toshipment,classificationoftheoperationasexportingofgoodsisconditionaluponthegoodsbeingshippedwithin a period of no more than 60 calendar days from the date of issue of the respectivepaymentreceipt.

When documents issued by a customs warehouse such as the one referred to in the General Customs Act or by a General Storage Warehouse regulated by the Superintendency of Banks, Insurance and Pension Fund Administrators (SBS) thatguaranteesthepurchaserthedisposalofsaidgoods,theconditionwillbethat the shipment be made within a period of no more than 240 calendar days from the date on which the warehouse issues the document.

If the periods have elapsed without the shipment having been made, it will be understood that theoperationhas been conducted in Peruvian territory andthatitissubjecttoorexoneratedfromIGV,asthecasemaybe.

Exporting of services

OperationsconsideredservicesexportsarethosecontainedinAppendixVoftheGeneralSalesTaxAct,onconditionthattheyareprovidedonapaymentbasis,theexportisdomiciled,theuserisnon-domiciled,andtheuse,exploitationorutilizationoftheservicesbythenon-domiciledpartyoccursabroad.

These services include, among others, consultancy and technical assistance ser-vices, the leasingofmoveableproperty, advertising services, dataprocessingservices, applicationof computerand similarprograms,personnelplacement

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andsupplyservices,creditfacilityservices,financingoperations,insuranceandreinsurance, certain telecommunications services, tourism services, and bu-siness support services. Also included are accounting, treasury, technologicalsupport, computeror logistics services, contactcenter, laboratoryandsimilarservices.

Selective Consumption Tax

Thisisaconsumptiontaxonspecificgoods,suchasfuels,cigars,cigarettes,beer,liquor,andsoftdrinks,amongothers.Itisappliedusingoneofthreesystems:

• thespecificsystem,whichinvolvesafixedamountinnuevossolesperunitofmeasurement;

• thevaluesystem,whichisappliedbasedonapercentageonthesalesprice;or;

• the retail sales price system, which is applied on the basis of a percentage on the suggested retail price.

Independent workers

The legislation in Peru is paternalistic, in otherwords it protects theworker.There are two types of worker in the public and private sectors: those who are onthepayrollandthosewhosubmittheirinvoicesforprofessionalfees;thelat-ter are independent workers, in other words workers who are not on the payroll. Theseworkers,besidesissuingreceiptsfortheirfees,areundertheobligationtokeeptheir registerofprofessional revenues.The lawrequiresthat theydonot depend on their client, do not have working hours, and issue a report of the work done. These workers, provided they earn more than S/.25,000 and haveobtainedanexonerationfromSUNAT(NationalCustomsandTaxAdminis-trationSuperintendency),willhave10%leviedontheexcessforeveryreceiptthey issue, which must be paid monthly and will be considered as a payment on account of their annual income tax.

4. Social securityAmongthetaxesleviedinPeruarecontributions.Thesearetaxesforwhichaserviceisreceivedinexchange.Inthiscaseallremunerations,definedaseve-rythingtheworkerreceivesthatisfreelydisposable,fixedandpermanent,aresubjecttoSocialSecurity–Health(Essalud)contributions.

Thepersonundertheobligationtopaythiscontributionisthepartywhoistheemployer, in other words the company.


The main items in remunerations subject to Essalud contributions are: pie-ce-workcommissions;occasionalcommissionspaid toworkers;overtime;pu-blicholidaysandrestdaysworked;salesbonuses;paidvacationtimenottaken;remunerationsinkind;familyallowance;allowancesgrantedonaregularbasis,etc.

Thepercentageofthiscontributionis9%.FormPDT601isfiledandpaideachmonth.

National Pension System

AtthetimeofissuingthisreportPeruhastwosystems,namely:NationalSocialSecurityOffice(ONF)andPrivatePensionFundAdministrator(AFP).Thesetwosystemsareinchargeofcollectingthesecontributionsfromworkersbasedonmonthly remunerations.Thepercentagesare13%for theONPand13.5%forthe AFP.

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Peru - Eura · Taxes in America • 215 Peru 1. Income tax Income tax is levied on net income, assessed yearly and paid monthly. The tax year starts on January 1 each year and ends

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