Peru country tax guide

The Peruvian tax administration, known as the “Superintendencia Nacional de Aduanas y de Administración Tributaria – SUNAT”, uses the Spanish language, which is one of the official languages of Peru. 

Peruvian companies are subject to Corporate Income Tax (CIT) on the worldwide taxable income. Branches and permanent establishments of foreign entities that are located in Peru and non-resident entities are taxed on income from Peruvian sources only.

The standard CIT rate is 29.5%.

Corporate wealth tax

There is no corporate wealth tax in Peru.

Specific tax regime for dividends

There’s a dividend tax rate of 5% on distributions of profits from companies to their respective non-resident and individual shareholders. This tax is to be withheld by the distributing company. Nevertheless, dividends distributed to other Peruvian companies are not subject to any taxes.

Specific tax regime for interest

Tax rate for lenders

For interest paid to foreign corporation lenders, the tax rate is reduced to 4.99% if all of the following conditions are satisfied:

• For loans in cash, the entrance into Peru of the foreign currency must be duly accredited.
• The loan is used for business purposes in Peru.
• The interest rate does not exceed the London Interbank Offered Rate (LIBOR) plus seven points.
• The parties involved must not qualify as related parties for tax purposes. The participation of a foreign bank is not primarily intended to cover a transaction between related parties (back-to back loans).

If the loan does not comply with any of these requirements, a tax rate of 30% would be applicable.

In general, interest derived from bonds and other debt instruments is also subject to a withholding tax rate of 4.99%. Interest earned on bonds issued by the government is exempt from tax.

Tax Deductibility

On the other hand, Peruvian tax law provides for various limitations to the tax deductibility of interest expenses:

• The expenses must fulfil the causality principle(“Principio de Causalidad”).
• Limitations on the deductibility of net interest expenses

Net interest expenses of the current fiscal year are deductible up to 30% of the tax EBITDA from the previous fiscal year. For this purposes, Tax EBITDA is considered to be as the subject to CIT plus losses, net interest expenses, amortisation and depreciation. This applies for loans with both associated and non related companies.

Excess net interest expenses can be carried up to four years forward under certain conditions.

Capital gains

Capital gains are taxed as ordinary income. However, capital gains derived from the sale of stock issued by a Peruvian company through the Lima Stock Exchange are taxed at a 5% rate, provided that the seller is a non-domiciled party.

An exemption has been granted as of January 2019 until December 2022 for the sale of shares performed through the Lima Stock Exchange as long as these requirements are met:

• No more than 10% interest is transferred.
• The stock has market presence.

Indirect transfer of Peruvian shares is also subject to income tax in Peru, provided certain requirements are met.

Exemptions

The following are permanently exempt from the CIT:

• The Administrative Office.
• Legally established foundations created for one of the following purposes: cultural, superior investigations, welfare, social and hospitalary assistance, and social benefits for company servers.
• Mutual aid entities.
• Rural communities.
• Native communities.

The following are temporally exempt from the CIT:

• Religious societies or institutions.
• Legally established foundations and non-profit associations, created for one of the following purposes: charity, social assistance, education, cultural, scientific, artistic, literary, sports, political, union, and/or housing, among others.
• Industries located in borderline areas of the country (Zofratacna), for carrying out activities authorized in said area.

Sectors subject to a reduce tax rate

Various significant tax incentives are available for investments in the following:

• Certain agricultural activities: For 2021 and 2022, the income of individuals and entities under the agricultural regime will be subject to a 15% tax rate.
• Industries located in the jungle: The income generated by the activities allowed under the jungle regime 2 will be subject to a 10% tax rate.

Work related income of Peruvian tax residents are subject to a 8% to 30% tax rate depending on the global amount of their incomes.

Salaries and remuneration received by non-residents for services provided in Peru are taxed at a flat rate of 30%. Non-residents are allowed to a deduction equivalent to 20% of gross income received as remuneration for services as an independent professional. As a result, they are subject to an effective withholding tax rate of 24%.

In the case of married couples under the community of property regime (“Sociedad de gananciales”) the income produced by common goods will be attributed, equally, to each of the spouses. However, they may choose to attribute them to only one of the spouses, for the purposes of filing and paying as a conjugal community.

There is no personal wealth tax in Peru.

Expatriates CAN

Nationals of member countries of CAN4, who qualified as non-residents and work in Peru, have the right to deduce the seven tax units from their work incomes and are subject to a progressive scale accumulated (8% to 30%), from the first day of their stay in the country.

Foreign Investors

Peru offers stability of income tax regime applicable to dividends obtained by foreign investors, when certain requirements are fulfilled. 

Dividends

For both residents and non-residents there is a 5% tax rate on the total amount of received profit.

Interest

For residents, there is a 5% tax rate on the total amount of interests. For non-residents, the interests received would be subject to a tax rate of 4.99% or 30%, depending on the fulfilment of certain requirements.

Capital gains

For resident individuals, capital gains are subject to a 6.25% tax rate minus a deduction of 20% rate. As a result, they are subject to an effective withholding tax rate of 5%.

For non-resident individuals, capital gains are subject to specific taxation depending on their source:

• apital gains derived from real estate sales are subject to definitive payment equal to 5% of the sale value.
• Capital gains derived from both direct and indirect sales of shares issued by Peruvian entities are subject to a tax rate of 5% if the Peruvian shares are listed and traded on the Peruvian Stock Exchange Market. Otherwise, they’re subject to a 30% tax rate on their gross income.
• Capital gains derived through investment funds, trust funds, or pension funds are taxed at an effective rate of 5%.

However, some exceptions may apply:

• For capital gains on foreign shares, the tax treatment varies depending on the residence status on the individual and the exchange market on which the shares are traded.
• Gains derived from sales of personal property are not considered capital gains.
• If the sale of shares is made on the Peruvian Stock Exchange Market and if the shares meet specific requirements, the capital can be exempted from tax.

There is no gift and inheritance tax in Peru.

Peru does not deliver golden visa.

There is no specific regime /residence permit for HNWI delivered by the Peruvian authorities. 

The Peruvian citizen’s passport is enough to travel within the European Union.

Foreign private trusts and foreign private foundations for tax purposes are treated as non-resident taxpayers. 

For Peruvian tax purposes, Fideicomisos and Investment Funds incorporated in Peru are considered as look through entities (transparent investment vehicles). The tax rate will depend on the type of income generated.

No, these vehicles are not subject to a disadvantageous tax regime.