TKEG Expat™ (Test) Peru Corporate Tax Guide

In Peru, the general rate of VAT is 18%, consisting of 16% VAT itself and a 2% municipal promotion tax. VAT applies to a variety of operations, including the sale of goods and services within the country, construction contracts, and the import of goods. Vendors are typically subject to VAT on all transactions, although some exemptions apply, such as the export of goods and certain services. Peru’s VAT system is credit/debit based, where input VAT can be offset against output VAT, creating a system that helps businesses balance their tax obligations. The export of goods from Peru is not subject to VAT, and exporters can often recover VAT credits through refunds. For micro and small companies, particularly those in the hospitality and food sectors, the VAT rate is reduced to 10% until December 2024.

Peru imposes an excise tax on the sale of specific goods, including fuel, alcohol, cigarettes, and vehicles. Since 2018, excise tax has also extended to gambling and betting activities. The tax rates are designed to reflect the social and environmental impact of certain goods. For instance, beverages containing 20% or more alcohol have a tax rate of 40%, while sugary drinks are taxed at a rate of 25%. This higher rate is part of a government strategy aimed at mitigating negative health outcomes associated with the consumption of these products.

The corporate income tax rate in Peru is set at 29.5%. Businesses must file their corporate tax returns by the first week of April each year, corresponding to the fiscal period's end. Estimated tax payments are required in 12 monthly installments throughout the year to spread out the tax burden. The final tax payment must also be completed within the first week of April. The CIT system in Peru allows corporations to pay taxes in advance, ensuring that financial obligations are met consistently throughout the fiscal year.

Peru's personal income tax rate is 30%, and taxpayers must submit their returns between the last week of March and the first week of April each year. The exact deadline is determined by the taxpayer’s ID number. Personal income tax is primarily withheld by employers on a monthly basis from wages. Therefore, employees typically fulfill their tax obligations through regular payroll deductions, simplifying the process for individual taxpayers.

Peru applies capital gains tax at different rates for individuals and corporations. Corporations are subject to capital gains tax at the same rate as the corporate income tax (29.5%). For individuals, capital gains are taxed at a lower rate of 5%. This tax applies to profits earned from the sale of certain assets, although exemptions and other provisions may exist depending on the nature of the transaction and the taxpayer’s status in Peru.