Tax returns and compliance
Termination of residence
Economic employer approach
Types of taxable compensation
Salary earned from working abroad
Taxation of investment income and capital gains
Additional capital gains tax (CGT) issues and exceptions
General deductions from income
Tax reimbursement methods
Calculation of estimates/prepayments/withholding
Relief for foreign taxes
General tax credits
Sample tax calculation
All tax information is summarized by Grellaud y Luque, Abogados, based on the Peruvian Income Tax Law.
When are tax returns due? That is, what is the tax return due date?
Tax returns have to be presented between the first three months of the following Peruvian tax year. Due dates are established each year by the Peruvian Tax Administration (SUNAT).
What is the tax year-end?
What are the compliance requirements for tax returns in Peru?
Resident taxpayers are required to pay income tax on their worldwide income.
Married couples generally file tax returns as separate individuals. However, they can elect to file a joint return.
Income of children is reported on either the tax return of the parent who has the major income, the referred joint return of the parents, or the income tax return of the parent appointed by a judge.
Non-residents are required to pay income tax only on their Peruvian-source income.
What are the current income tax rates for residents and non-residents in Peru?
Tax unit value for 2009 was PEN3,550. Tax unit value for 2010 and 2011 is PEN3,600.
Income tax table for 2011
Taxable income bracket
|Total tax on income below bracket||Tax rate on income in bracket|
|From PEN||To PEN||PEN||Percent|
|0||27 tax units||14,580||15|
|27 tax units||54 tax units||20,412||21|
|54 tax units||Over||30|
It is applied a flat rate of 30 percent over income.
For the purposes of taxation, how is an individual defined as a resident of Peru?
A resident is defined as someone who has spent 183 days in Peru within any 12-month period. Also, this status is lost after being absent from the country at least 184 days (in total) during the previous year.
A change in the tax treatment applies at the start of the following Peruvian tax year.
Is there, a de minimus number of days rule when it comes to residency start and end date? For example, a taxpayer can’t come back to the host country for more than 10 days after their assignment is over and they repatriate.
No, there is not.
Every day (or parts) of physical stay in the country is taken into account in order to determine the total stay of the individual, including the day of arrival and departure.
The absence period include neither the day of departure nor the day of return to the country.
What if the assignee enters the country before their assignment begins?
Such additional stay will be added to the assignment period and the result will be the total stay of the individual.
Are there any tax compliance requirements when leaving Peru?
Before leaving Peru, a foreign (resident or non-resident) employee must provide an Income and Withholdings Certificate to the Peruvian tax authorities at the immigration desk. This should show the details of income received, taxed, withheld, and/or paid in Peru.
What if the assignee comes back for a trip after residency has terminated?
Such stay will be taken into account to determine the tax residency status for the following tax year.
Do the immigration authorities in Peru provide information to the local taxation authorities regarding when a person enters or leaves Peru?
Will an assignee have a filing requirement in the host country after they leave the country and repatriate?
No. The filing requirements must be completed before departure, as it is required by the migratory authorities.
Do the taxation authorities in Peru adopt the economic employer approach to interpreting Article 15 of the OECD treaty? If no, are the taxation authorities in Peru considering the adoption of this interpretation of economic employer in the future?
If an employee is assigned to Peru and gets paid by his/her employer abroad, the host country employer will not be considered an economic employer. It is the liability of the employee to comply with the tax filing and payment.
Are there a de minimus number of days before the local taxation authorities will apply the economic employer approach? If yes, what is the de minimus number of days?
What categories are subject to income tax in general situations?
The following categories of income are subject to income tax:
Are there any areas of income that are exempt from taxation in Peru? If so, please provide a general definition of these areas.
The following categories of income are exempt from tax.
Rewards related to employment are taxed. Other kinds of prizes are not.
Such expenses covered by the company (employer) are not considered as additional income of the employee provided that they are mainly used for work or business purposes.
In order to be considered as tax exempt by the tax authority, the assumption of such expenses by the employer must be included in the employment contract agreed with the employee and approved by the Peruvian labor authority.
Such expenses (home leave, arrival, and return tickets) must also be included in the employment contract agreed with the employee and approved by the Peruvian labor authority.
Such expenses must also be included in the employment contract agreed with the employee and approved by the Peruvian labor authority.
Are there any concessions made for expatriates in Peru?
Is salary earned from working abroad taxed in Peru? If so, how?
Salary earned due to work rendered abroad is deemed foreign source income by the Peruvian income tax law.
Peruvian residents are taxed on their worldwide income, which includes Peruvian-source and foreign-source income. Progressive bracket system applies.
Non-residents are only taxed on their Peruvian-source income. Therefore, non resident’s salary earned abroad is not taxed in Peru.
Are investment income and capital gains taxed in Peru? If so, how?
Dividends tax rate is 4.1 percent, which is withheld by the company.
Other income related to capital are applied a 20 percent deduction to the gross income to obtain the net income. Then, a tax rate of 6.25 percent is applied in order to obtain the income tax due related to capital income.
Peruvian-source dividends perceived by a natural person are taxed with a rate of 4.1 percent. Foreign-source income is applied a 30 percent flat rate.
Interests perceived due to bank savings are tax exempt until 31 December 2011.
Rental income is taxed with a minimum amount of 6 percent of the value of the property. For that purpose, a monthly prepayment shall be performed at a 6.25 percent of the net income perceived in the corresponding month (where the net income is the gross income less its 20 percent).
|Other (if applicable)||N/A||N/A||N/A|
Foreign-source losses are not taken into account for Peruvian Income tax purposes.
There is no gift tax.
Are there additional capital gains tax (CGT) issues in Peru? If so, please discuss?
From the fiscal year 2010 on, the income resulting from sales of stock performed by an individual is applied a tax exemption equivalent to 5 tax units, until 31 December 2011. The portion of the income which exceeds the 5 tax units is subject to income tax, being allowed a deduction of 20 percent over the gross income and a tax rate of 6.25 percent to determine the corresponding income tax due. Capital gains from stock sales will not be considered business income even if the individual performs several stock sales within the fiscal year.
Are there capital gains tax exceptions in Peru? If so, please discuss?
What are the general deductions from income allowed in Peru?
Resident taxpayers may take a fixed deduction of 7 tax units (UIT) per year against income from employment or independent services.
Peruvian-source rental income is allowed a 20 percent deduction over the gross income.
Income related to capital is allowed a 20 percent deduction over the gross income (not including income from dividends, which is not allowed a deduction and is applied a tax rate of 4.1 percent over the gross income).
What are the tax reimbursement methods generally used by employers in Peru?
In case the tax withheld by the Peruvian employer exceeded the amount of the income tax due, the employee should solicit the proper reimbursement to the employer. As those withholdings were already paid to the tax authorities, the employer is allowed to compensate the said reimbursement by choosing one of the following options.
The reimbursement can be compensated with the withholdings performed to other employees. If it is not possible:
When are estimates/prepayments/withholding of tax due in Peru? For example: monthly, annually, both, and so on.
Is there any Relief for Foreign Taxes in Peru? For example, a foreign tax credit (FTC) system, double taxation treaties, and so on?
A credit for income tax paid abroad is allowed for tax effectively paid abroad due to income deemed foreign source by the Peruvian income tax law. A formula is applied in order to obtain the tax credit in Peru (taxpayer average rate).
Such credit is only available for tax resident individuals.
There are double taxation treaties in force with Bolivia, Brazil, Canada, Chile, Colombia, and Ecuador.
What are the general tax credits that may be claimed in Peru? Please list below.
This calculation assumes a married taxpayer resident in Peru with two children whose three-year assignment begins 1 January 2010 and ends 31 December 2012. The taxpayer’s base salary is USD100,000 and the calculation covers three years.
|Moving expense reimbursement||20,000||0||20,000|
|Interest income from non-local sources||6,000||6,000||6,000|
Exchange rate used for calculation: USD1.00 = PEN2.75. The current exchange rate fluctuates within PEN2.70 to PEN2.82.
Calculation of taxable income
|Days in Peru during year||365||365||366|
|Earned income subject to income tax||Non-resident||Resident||Resident|
|Net housing allowance||33,000||33,000||33,000|
|Moving expense reimbursement||55,000||0||55,000|
|Total earned income||222,750||181,500||222,750|
|Deductions: 7 tax units||0||25,200||25,200|
|Total taxable income||222,750||172,800||214,050|
Tax unit value for 2011: S/3,600.
Calculation of tax liability
|Taxable income as above||222,750||172,800||214,050|
|Peruvian tax thereon||66,825||30,456||40,887|
|Domestic tax rebates (dependent spouse rebate)||0||0||0|
|Foreign tax credits||0||0||0|
|Total Peruvian tax||66,825||30,456||40,887|
1Certain tax authorities adopt an "economic employer" approach to interpreting Article 15 of the OECD model treaty which deals with the Dependent Services Article. In summary, this means that if an employee is assigned to work for an entity in the host country for a period of less than 183 days in the fiscal year (or, a calendar year of a 12-month period), the employee remains employed by the home country employer but the employee’s salary and costs are recharged to the host entity, then the host country tax authority will treat the host entity as being the "economic employer" and therefore the employer for the purposes of interpreting Article 15. In this case, Article 15 relief would be denied and the employee would be subject to tax in the host country.
2For example, an employee can be physically present in the country for up to 60 days before the tax authorities will apply the ‘economic employer’ approach.
3Sample calculation generated by KPMG, the Peruvian member firm of KPMG International, based on the Peruvian Income Tax Rates Act.
© 2016 Grellaud y Luque, Abogados S.C.R.L., a Peru partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.