At Work in Lima

Tax system in Lima

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Domiciled individuals or professionals who receive income from employment are entitled to a total deduction equivalent to seven tax units from their gross income. Therefore, capital income incurs a taxation rate of 6.25%, while income tax rates range up to 30%, as follows: (1 UIT = 4,200 PEN = US $1,275)

  • For the first 7 UIT: 0.
  • Up to 5 UIT: 8%
  • Greater than 5 UIT and up to 20 UIT: 14%
  • Greater than 20 UIT and up to 35 UIT: 17%
  • Greater than 35 UIT and up to 45 UIT: 20%
  • Greater than 45 UIT: 30%

Individuals who receive both employment and professional income can only deduct the fixed amount once. On the other hand, domiciled individuals with income other than remuneration are entitled to certain deductions in accordance with the type of income obtained:

  • In the case of rentals, they can deduct 20% of the income.
  • In the case of royalty payments, they can deduct 20% of gross royalties received.
  • Independent professionals can deduct 20% of gross revenues, up to a limit of 24 tax units, plus an annual amount of seven tax units.
  • Employees and independent professionals will be allowed to deduct three additional tax units for expenses such as mortgage interest, rent paid to a landlord, social security paid for housekeepers, and some expenses paid to independent professional services, provided that certain requirements are met.

Deductions will be applied through the annual tax return resulting in tax refund for the individual.

From January 1st, 2019 and onwards, individuals will not be able to expense mortgage interest anymore. Employees and independent professionals will be allowed to deduct 30% of all expenses paid to independent professional services (except those derived from performing directorial services, trustees, agents, among others).

You can visit webpage to get more details about you tax in as an expat and/or domiciled.

Individual Taxes in Peru

As a self-employed person you will have to pay income tax under the self-assessment system, and regarding the income produced by commercial and industrial activities. Self-assessment means that you are responsible for making your own assessment of tax due.

In this 3rd category, a 29.50% income tax is applied to net revenues.

EsSalud Social Insurance Fund

As soon as you get your Social Security number and you find a job for the first time, you will be able to benefit from the Peruvian social and pension system, by paying a 9% monthly tax (automatically reduced from your salary)

The social insurance payments include:

  • Jobseeker's Benefit
  • Illness Benefit
  • Maternity Benefit
  • Adoptive Benefit
  • Health and Safety Benefit
  • Invalidity Pension
  • Widow's/Widower's Contributory Pension
  • State Pension
  • Carer's Benefit

All details are available on "At Work" section on EasyExpat.

VAT in Perú

The standard VAT rate for Perú is 18%, which is made up of 16% VAT plus a municipal tax (Impuesto de Promoción Municipal) of 2%. Exports are subject to a zero VAT rate.

Exempt supplies include: agriculture, education, basic foodstuffs, low-value new residential buildings, financial services, public transport, public post, international freight transport, livestock, gambling, and live events.

Certain supplies are liable to withholding VAT of 4%, 10% or 12%. These include outsourcing services.

Taxpayers must split the VAT withheld and remit it to a special VAT account with the national bank. Balances held on this account may be used to settle future liabilities or reclaimed after three months.

Small businesses may apply for a flat-rate VAT procedure, whereby they are set a fixed about of VAT due based on the size of their monthly turnover.

Impuesto Selectivo al Consumo (ISC): It applies to the import and sale of cigarettes and alcoholic drinks at rates of 125% and 20% respectively, mineral and sparkling water, luxury items, fuel, and gambling activities (casinos and betting).

Update 7/05/2019


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