Peru has an interesting corporate tax system whereby, to meet their annual corporation tax liability, companies are required to make monthly advanced payments on account calculated as 1.5% of their monthly revenue. At the end of the year, the company simply deducts these advance payments on account from their total corporation tax liability to determine the balance payable. As the deadline for businesses to pay their annual taxes in Peru for 2017 has just passed, we have decided to bring you the when and how of tax payments for both companies and individuals in Peru.
When Do Companies Need to Pay Taxes in Peru?
When doing business in Peru, all companies have to declare their income and their expenses on a monthly and yearly basis. Tax returns in Peru are to be presented to the National Customs and Tax Administration, SUNAT (La Superintendencia Nacional de Aduanas y de Administración Tributaria). The monthly deadlines and the ultimate date for the tax returns to be submitted for the year are established each year by SUNAT. The tax year for a company, according to law, is the calendar year ending on 31st December. Therefore, companies have to make 12 monthly advanced payments of income tax based on their monthly taxable income. The annual tax return must be filed within the first three months following the end of the tax year, and the final tax has to be paid, otherwise fines will be incurred.
For the monthly payments, an estimated payment calculation system has been established. In Peru the standard corporate income tax rate is 29.5% and the monthly advanced payments on account should be paid as 1.5% of their monthly revenue. This tax is based on the company’s net income, the taxable income which is composed of all income derived form a company, including capital gains. When calculating the corporation tax liability, normal business expenses may be deducted from revenue. It is important to note that these expenses must be directly related to the company’s business objective
Depending on the final digit of a tax identification number (RUC number), a different deadline for each month applies, the Peru tax schedule for 2018 is as follows:
When Do Expats Need to Pay Taxes in Peru?
All residents of Peru have to pay income tax on any money earned worldwide, however non-residents are only taxed on income earned in Peru. According to Peruvian legislation, a tax-resident is seen as a Peruvian or expat that has lived in Peru for 183 days within a 12-month period, note that the days don’t have to be consecutive. Also, this status is lost after being absent from the country at least 184 days (in total) during the previous year.
The tax year in Peru follows the calendar year and income taxes must be declared within three months of the end of the tax year. In Peru, taxable income is classed as income from either self-employment or employment. You will be fined if you do not file your tax return or you file it late.
Withholdings is part of an employee’s tax liability, which is withheld by the employer from wages or salary and paid directly to the government. Therefore, employment income is covered under the Pay-As-You-Go (PAYG) system. If an individual is taxable in respect of employment income, the employer has a PAYG withholding requirement.
Withholding obligations are applied only to resident employers. If the employer is a non-resident entity, no tax withholding obligation arises, and it is the responsibility of the employee to file and pay the corresponding taxes properly.
Up to 20% of the salary paid to its employees by a company is exempt from tax. Non-residents receive a tax rate of 30% and are taxed at a flat rate of an official tax unit known as the UIT (Unidad Impositiva Tributaria) is used to efficiently calculate tax liability.
Where Can I Find More Information About Paying Taxes in Peru in 2018?
At Biz Latin Hub we have a group of professional accountants and financial experts that are happy to help you with all the questions you may have about the Peruvian tax-system. Please contact our CEO, Craig Dempsey at [email protected] to see how we can provide you with all the information about Peruvian taxes.
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