Individual income tax in Peru is determined by the domicile rather than by residence (see the Residence section for more information on determination of domicile). Domiciled individuals are subject to income tax on their worldwide income, whereas non-domiciled individuals are only taxed on their Peruvian-source income.
Personal income tax rates
Income tax on labour income and foreign income generated by domiciled individuals is imposed on a scale of brackets, as shown below:
|Bracket||Reference in tax units *||Tax rate (%)|
|First||Up to 5||8|
|Second||5 to 20||14|
|Third||20 to 35||17|
|Fourth||35 to 45||20|
* For 2021, a tax unit is equivalent to 4,400 Peruvian soles (PEN). The first seven tax units are exempted from tax, and, provided that certain requirements are met, individuals may deduct three additional tax units on expenses related to the lease of immovable property, independent professional services, hotels, and restaurants, among others.
Income tax on non-domiciled employees is imposed at a flat rate of 30% on their gross Peruvian-source income. No deductions or credits apply to non-domiciled individuals.
Capital gains derived from the sale of stocks by domiciled individuals are subject to an effective 5% income tax rate. Likewise, income from leases is subject to an effective 5% income tax rate.
When there is no withholding obligation, income tax must be paid upon the filing of the annual income tax return.