Thanks to its incredible diversity and rich culture, Peru has been drawing in millions of tourists every year in the past decade. This, in turn, has helped attract serious foreign investors and entrepreneurs, who are looking to tap into the market. Business opportunities in the land of pisco sour are very accessible to foreigners, as long as they are able to understand the intricacies of their tax obligations and requirements.
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The Importance of Understanding Peruvian Tax Obligations
It has often been said that the key to a successful business is having a good lawyer and a good accountant. Dealing smartly with your taxes is never going to be as glamorous as Fashion Week in Paris, however, if overlooked, the former could not only leave you in a serious pickle with the local tax authorities (and as a foreigner, possible deportation), but also hand you a hefty bill that could sink your business before you get properly started. It could also make the difference between a business that generates profits or one that doesn’t.
Personal Income Tax: Peruvian Citizens vs Non-Citizens
All Peruvian citizens are required to pay their income tax on the gross income found within and outside its borders; however non-citizens only pay tax on income earned within Peru. Peruvian law states that a tax-resident is seen as a Peruvian or expat if he/she has stayed in Peru for 183 days in one-year duration. One should note that it is not mandatory for the days to be consecutive. This could be important when deciding where to declare residency.
The most basic tax in Peru is the personal income tax. The Peruvian tax year, unlike many other countries, is in line with the calendar year, and one has to declare income taxes within the last three months of the end of the year (imagine having to face Christmas shopping and your personal tax statement in the same month). In Peru, taxable income is classified as either self-employment or employment, and the country follows a progressive taxation principle on personal income. The taxing process is coordinated by the local tax authority called SUNAT.
Peruvian Corporate Tax
Corporation tax is presently set at 30%; nevertheless, luxury goods can be subjected to a tax as high as 118%. At the other end of the spectrum, corporation tax within the Amazon region is set at 10%, with the aim of encouraging the localization of companies; with small companies being provided a subsidized tax plan often set as low as 2.5%.
Work with Biz Latin Hub to do business in Peru
Depending on your line of business, Peru taxes can be highly challenging or straightforward. Any business decisions made without fully understanding the tax obligations could make the difference between success and failure. If you are interested in doing business in Peru, Biz Latin Hub can ensure that you make the right choices so that you can focus on your core business activities. Contact us now, for more information.