Value-added tax (VAT)
The general rate of VAT is 18% (16% of VAT itself plus 2% of municipal promotion tax). VAT is applicable to the following operations:
- Sale of goods within the country.
- Rendering or first use of services within the country.
- Construction contracts.
- The first sale of real estate made by constructors.
- Import of goods.
For all transactions, the vendor is subject to VAT, except in the case of importation of goods or services rendered abroad, but economically used within Peru, for which VAT is self-assessed by the importers and users, respectively.
The VAT law follows a debit/credit system, and input VAT may be offset by output VAT. Should excess input VAT be obtained in a particular month, it shall offset output VAT obtained during the following months, until it is exhausted.
The export of movable goods (including the sale of goods in the international zone of ports and airports) is not subject to VAT, nor is the exportation of the services that meet concurrently with the four requirements that the VAT law states. Thus, VAT paid upon the acquisition of goods, rendering of services, construction agreements, and the importation of goods related to exported goods or services creates a positive VAT export balance.
The positive balance may offset output VAT, income tax, or any other outstanding tax debt in favour of the central government. If the positive balance is not completely offset, as the amount of the aforementioned tax obligations is insufficient, the taxpayer may apply for a refund.
Tax Obligatory Payment System (SPOT)
The SPOT is applicable to the sale of certain goods and the rendering of services subject to Peruvian VAT. The main purpose of the SPOT is to generate funds to enable the payment of tax obligations by the VAT payer.
According to the SPOT, all the sales of goods listed in the appendices of the Resolution that are levied with VAT will be subject to withholding, applying the rates established for each kind of good (1.5%, 4%, 10%, or 15%).
Any service subject to VAT, except expressly excluded, will be subject to the SPOT with a withholding rate of 10%. The following services are subject to a withholding rate of 12%: (i) labor intermediation, (ii) maintenance and repair of movable goods, (iii) other corporate services, and (iv) other services levied with VAT. The purchaser or service recipient must withhold a percentage of the transaction price and deposit such amount within the seller’s or service provider’s State Bank (Banco de la Nación) account. It is important to note that the right of the purchaser or user of the service to offset input VAT related to such goods and services may be exercised only after the deposit with the State Bank has been executed.
The amount deposited is applied towards the payment of the seller’s or service provider’s Peruvian tax obligations (not just VAT). If after three consecutive months such amount is not used, the seller or service provider may request a refund or use the amount to pay withholdings applicable to purchasers or services recipients.
Customs duties applied to imports are linked to their classification under the Customs Tariff, given by NANDINA subheading that is determined by the information provided by the importer (through the invoice and other complementary information), as well as the physical recognition by the Customs Officer at the time of customs clearance.
As such, the taxes required are:
- Ad valorem customs duty (rates of 0%, 4%, 6%, and 11%, as the case may be).
- VAT (16%).
- Municipal promotion tax (2%).
Other taxes that may apply, depending on the equipment, include the following:
- Selective consumption tax.
- Specific duties.
- Antidumping and compensatory.
- VAT perception.
There are no restrictions on imports and exports, although there is a limited list of products that cannot be imported or exported. Exports are not subject to any taxes. The importation of most capital goods is subject to the 0% rate.
The government is empowered to grant duty exemptions under certain circumstances and also to temporarily suspend the assessment of duties on certain products. Customs duties are imposed on an ad valorem basis (the carriage, insurance, and freight [CIF] value of the imported goods). Goods are classified for customs duty purposes under the Harmonized System.
Pursuant to the drawback regime, an exporter may apply for a refund of customs duties paid upon: (i) the importation of goods contained in exported goods or (ii) the importation of goods that are consumed during the production of exported goods.
The refund rate is currently 4% of the freight on board (FOB) value of the exported good, provided such amount does not exceed 50% of the good’s production cost. The refund will proceed for each type of good exported and for the first 20 million United States dollars (USD) worth of goods exported per year (the excess will not be subject to refund).
For such purposes, the beneficiaries of the drawback regime are the manufacturer/exporter companies whose cost of production has been increased by the customs duties paid upon the importation of: (i) raw material, (ii) intermediate products, or (iii) pieces incorporated or consumed in the production of exported goods. Note that fuel or any other energy source used to generate heat or energy for purposes of obtaining the exported good is not considered as raw material.
The sale of specific goods, including fuel, cigarettes, beer, liquor, and vehicles, is subject to excise tax. Since September 2018, gambling and betting, such as casino games, slot machines, lotteries, bingo, raffles, draws, and equestrian events are subject to excise tax.
Excise tax rates, and the manner on which the tax is applied, depend on the type of goods or services.
Since May 2018, the tax rate for the aforementioned products has increased, based on the argument that their production has the highest negative incidence on health and on the environment. For example, liquors with 20% or more alcohol have a new tax rate of 40%. In addition, sugary drinks, such as soda, with 6 grams or more per 100 millilitres are subject to a rate of 25%.
Real estate property tax
The real estate property tax is levied on the value of urban and rural real estate property. Individuals and legal entities owning the referred real estate properties are considered taxpayers for such purposes. The taxable base is calculated taking into account the value of all the properties owned in a specific local district, as reflected in the internal records of the corresponding local authorities.
The tax is calculated and paid on an annual basis applying the following progressive cumulative scale:
|Real estate’s value||Real estate property tax rate (%)|
|Up to 15 tax units||0.2|
|For the excess of 15 tax units and up to 60 tax units||0.6|
|Over 60 tax units||1.0|
Real estate transfer tax
The real estate transfer tax is levied on all transfers of urban and rural real estate property. The taxpayer is the purchaser of the property. The taxable base is equivalent to the consideration agreed upon by the parties to the transaction, provided it is higher than the property’s value (in the relevant year for purposes of the real estate property tax) as reflected in the internal records of the corresponding local authorities.
The tax rate is 3% and must be borne exclusively by the buyer, regardless of whatever the parties agree. The first ten tax units (approximately USD 13,031) should be deducted from the consideration agreed upon by the parties, and the taxpayer should apply the tax rate to the resulting amount.
There are no stamp taxes in Peru.
Payroll taxes in Peru are only those characterised as social security contributions (see below).
Social security contributions
Employers shall make monthly health contribution payments equal to 9% of the compensation paid to employees.
Employees shall be affiliated either to the National Health System (EsSalud) or the Private Health System (EPS), according to what option they choose. In the latter, a portion (25%) of the amount paid to the EPS may be used by the employer as a credit to be offset against EsSalud contributions.
Insurance for high-risk work
Employees who perform high-risk activities established in Law 26790, such as mineral extraction and iron and steel smelting, among others, must have a complementary insurance for high-risk work, which provides coverage such as health care, temporary or permanent disability pensions, and burial expenses relating to work accidents or professional diseases. This insurance is compulsory and must be paid for by the employer.
Pension funds contributions
Employers shall apply monthly withholdings for pension funds contributions equal to 13% of the remuneration received by the employee in cases where the employee is affiliated with the National Pension System (ONP) or approximately 12.4% in cases where the employee is affiliated with the Private Pension System (AFP). In this last case, 10% corresponds to the personal pension account and almost 2.4% to insurance and commissions for managing the fund.
Regarding the termination of employment of foreign individuals who leave the country, their pension funds in an AFP may be wired to an account of the employee in a foreign bank (the aforementioned 10%).
Financial transactions tax (FTT)
FTT is applied at a rate of 0.005% on all debits and/or credits on bank accounts held by the taxpayers.
The following operations, among others, are exempted from the FTT:
- Operations made between accounts of the same holder.
- Credits to bank accounts for payment of salaries.
- Credits and debits to bank accounts of diplomatic representations and international organisations recognised in Peru.
Payments of FTT are deductible as expenses for income tax purposes.
Temporary net assets tax (TNAT)
Companies subject to income tax are obligated to pay TNAT, except for companies that are in preoperative stages or that commenced business on 1 January of the fiscal year in which TNAT must be paid.
The taxable basis is the value of the assets set forth in the taxpayer’s balance sheet as of 31 December of the year prior to that of the tax payment, adjusted for deductions and amortisations accepted by the Peruvian law.
The amount of TNAT is determined by applying the following rates on the taxable basis:
- Up to 1 million Peruvian soles (PEN): 0%.
- Excess of PEN 1 million: 0.4%.
The amount paid for TNAT may be credited against the taxpayer’s income tax. If not totally used, the remaining TNAT may be refunded by the tax administration.
Special taxation on mining industry
The new mining royalty (NMR) regime, special mining tax (SMT), and special mining contribution (SMC) are economic considerations paid to the Peruvian government for the exploitation of mineral resources. The NMR applies to metallic and non-metallic mineral resources, while the SMT and SMC only apply to metallic mineral resources.
The SMC is only applicable to mining companies with projects with tax stability agreements in force. Such companies have voluntarily entered into agreements with the Peruvian government with the purpose of paying this contribution. This special contribution is determined for each stability agreement entered into.
In all three cases, the tax basis is the operating profit of the company, and the special rates and considerations are explained below:
|New mining royalty (NMR)||Special mining tax (SMT)||Special mining contribution (SMC)|
|Concept||No tax stability||No tax stability||With tax stability|
|Regime||Previous mining royalty modified||New||New|
|Cumulative progressive scale based on operating margin||1% to 12%||2% to 8.4%||4% to 13.2%|
|Minimum payment||1% of the sales revenue||N/A||N/A|
The amounts paid will be deductible for income tax purposes as long as they are actually paid during the fiscal year.
Energy and Mining Investment Regulatory Agency (OSINERGMIN) contribution
The basis for calculating the OSINERGMIN contribution is the monthly invoicing of activities directly related to OSINERGMIN’s regulatory scope (mining activities), after deducting the VAT. The applicable rate is 0.14% in 2020.
Agency for Environmental Assessment and Enforcement (OEFA) contribution
The basis for calculating the OEFA contribution is the monthly invoicing of activities directly related to OEFA’s regulatory scope (mining activities), after deducting the VAT. The applicable rate is 0.10% in 2020.