Corporate - Deductions

Last reviewed - 09 January 2024

Acceptable payment methods

Obligations that are fulfilled through cash payments equal to or exceeding PEN 2,000 or USD 500 must be made via bank account deposits, wire transfers, payment orders, credit cards, non-negotiable cheques, or other means of payment provided by entities of the Peruvian financial system. In transactions with subjects that are qualified by the tax administration as subjects with ‘low‘ or ’very low‘ level of compliance, means of payment must be used starting at PEN 600 or USD 150. Failure to use one of these payment methods when such an obligation exists will result in the disallowance of deductions for any expenses or costs for income tax purposes and the disallowance of a credit for the corresponding VAT.

Payments shall be considered as valid payments for tax purposes if they are made directly to the creditor, supplier of the goods, or provider of services. Payments made to a third party shall be valid as long as they are previously communicated to the tax administration. 

As of 2023, payments made through financial institutions that are residents in tax havens shall not be considered as valid payments.

Expenses derived from transactions entered into with entities resident in tax havens

Certain expenses are not tax-deductible, including expenses incurred with respect to transactions with (i) entities resident in tax havens on the list attached to the PITL regulations, (ii) PEs located in tax havens, or (iii) entities that generate revenues or income through tax havens.

Nonetheless, expenses incurred from the following transactions are excluded from the above-mentioned limitations, provided the consideration paid falls within market value:

  • Interest on loans.
  • Insurance premiums.
  • Leases of aircraft or ships.
  • Maritime freight.
  • Fees for passing through the Panama Canal.


Assets may be depreciated for tax purposes via the straight-line method, capped at the following rates, but without exceeding the amount of the financial depreciation:

Assets Depreciation rate (%)
Cattle (both labour and reproduction) and fishing nets 25
Vehicles (except trains) and any kind of ovens 20
Machines and equipment used for mining, oil and construction activities, excluding furniture, household, and office goods 20
Equipment for data processing 25
Machines and equipment acquired as of 1 January 1991 10
Other fixed assets 10

Buildings must be subject to a flat 5% depreciation rate, regardless of the financial depreciation.

Due to recent government dispositions, as from fiscal year 2023, buildings and constructions will be subject to a flat 33.33% depreciation rate, provided that the following requirements are met: (i) the construction has to be initiated as from 1 January 2023, and (ii) until 31 December 2024, the construction had a work progress of at least 80%.

Furthermore, hybrid or electric land transportation vehicles (except trains), acquired in fiscal years 2023 and 2024, used for the production of taxable income, may be subject to a 50% depreciation rate.

Due to the State of Emergency, the Legislative Decree No. 1488 also established a special and temporary depreciation regime for buildings and constructions, and other type of assets, provided that they met certain conditions. 

Amortisation of intangible assets

The amortisation of property rights, trademarks, patents, and manufacturing procedures, as well as other similar intangible assets, are not deductible for income tax purposes. However, the price paid for intangible assets of a limited duration, at the taxpayer's choice, may be considered as an expense and applied to the results in a single year or amortised proportionally over a ten-year term.

The Peruvian tax administration, prior to an opinion from the corresponding technical organism, is permitted to determine the real value of those intangible assets for tax purposes when the price does not reflect the real one.

Organisational and start-up expenses

Organisation expenses, pre-operating expenses (including initial operations and further expansion of operations), and interest accrued during the pre-operating period may be expensed in the first period of operation or amortised using the straight-line method over a maximum of ten years. However, once a company has elected to recover start-up costs via the straight-line method, it may revoke such election only upon receiving approval of the tax authorities.

Interest expenses

In general terms, interest on loans and related expenses are deductible, provided they are related to the acquisition of goods or services incurred, or to be incurred, in order to obtain or produce taxable income or to maintain the source of such income.

In the case of loans entered into between related and non-related parties, the amount of interest to be deducted is limited to interest from indebtedness not exceeding 30% of the tax EBITDA of the previous fiscal year (see Thin capitalisation in the Group taxation section).

Bad debts

Write-offs of bad debts and equitable provisions are deductible, provided that the accounts to which they belong are determined. For the provisions of bad debts, it is necessary that:

  • there is a debt due and the taxpayer can provide evidence of the financial difficulties of the debtor that could foresee a risk in the collection of the debt, and
  • the provision is registered separately in the inventory and balance book at the fiscal year closing. In this sense, a generic bad debt provision will not be deductible in the assessment of the net taxable income, nor will bad debts whose terms have not yet elapsed.

Bear in mind that the following debts are not considered bad debts:

  • Debts incurred between related parties.
  • Debts guaranteed by banks or financial companies by means of rights over real property, money deposits, or purchase-sale agreements with reservation of right of legal ownership.
  • Debts that have been subject to renewal or express extension.

Charitable contributions

Donations made to entities of the public sector, except companies, and to non-profit associations with certain purposes are deductible, provided that the receiver of the donation is duly qualified by the tax administration.

The deduction will be limited to 10% of the net income of the donor and only during the fiscal year in which it is granted (carryforward of the donation is disallowed). This means that if the donor does not obtain taxable income in the fiscal year in which the donation is made, no deduction will be available.

In addition, companies can deduct the expenses for the food they donate. This donation requires the food to no longer have commercial value and be apt for human consumption. The deduction cannot exceed 1.5% of the total sales that the donor makes.

Profit sharing

Entities with more than 20 employees, provided they obtain taxable income during the fiscal year, must distribute a percentage (5%, 8%, or 10% depending on the industry) of their profits (the basis is the tax profit of the fiscal year) among their employees. The amount of distribution for each employee depends on the effective working days during the year and annual remuneration.

Employee’s retributions and health insurance premiums

Employee’s retributions paid during a fiscal year may be deducted in such year, provided the payments are made by the employer before the term to file its annual income tax return expires. Likewise, health insurance premiums for employees, their spouses, and children are deductible.

For fiscal years 2024 and 2025, employers that contract employees that are between 18 years and 29 years old can obtain an additional deduction equivalent to 50% of their retribution, provided certain requirements are met.

Vehicle expenses deductions

Vehicle expenses may be deducted, provided the vehicles are essential to a company’s business activities and are continually used for such purpose. There is a limitation on the tax deductibility of car expenses used for administrative of representation purposes, depending on the amount of income generated by the company. The number of company cars assigned to directors, managers, and representatives of a company may not exceed five under any circumstances.

Fines and penalties

Fines and penalties are not deductible for income tax purposes.


Other taxes assessable on properties and activities generating taxable income are deductible for income tax purposes.

Net operating losses (NOLs)

Tax losses may be offset according to either of the following systems:

  • Against net income generated within the following four fiscal years after the year in which the loss is incurred. Any losses that are not offset within such period may not be carried forward to any future year (system A).
  • Against 50% of the net income generated in the following fiscal years after the year in which the loss was generated. Under this system, there is no time limitation for carrying forward the losses (system B).

After choosing one of the aforementioned systems, the taxpayer will not be able to change the system until the accumulated tax losses from prior fiscal years are exhausted. Losses will not be carried back to years prior to the year in which the loss is generated.

Due to recent government dispositions, by exception, taxpayers that register tax losses in fiscal year 2020 and opted to apply system A will be able to offset such tax losses within the following five fiscal years after the year in which the loss is incurred (fiscal year 2021). However, any losses that are not offset within such period may not be carried forward to any future year.

Payments to foreign affiliates

Payments in favour of non-domiciled beneficiaries may be deducted as a cost or expense in the fiscal year in which they correspond to the extent that they have been effectively paid or credited within the term established to file the annual tax return (for the year in which they were incurred). Expenses that are not deducted in the fiscal year to which they correspond will be deductible in the fiscal year in which they are effectively paid, even if they have been registered in a previous fiscal year.

Expenses derived from transactions entered into with subjects without operational capacity

As a general rule, invoices issued by subjects without operational capacity do not grant tax credit or any other right or benefit derived from VAT or support costs or expenses for income tax purposes.

A subject without operational capacity is the one who appears as the issuer of the invoice, but does not have the economic, financial, material, human, and/or other resources, or these are not suitable, to carry out the operations indicated in the invoice.