Tax System in Peru

This document describes the principal taxes which apply to investors and the enterprises in which they participate. Taxes herein detailed are collected by the Central Administration.


1.  Income Tax
2.  General Sales Tax
3.  Excise Tax
4.  Customs Duties


1.1  General Regime
The Income Tax is applied annually to every income earned by domiciled or non-domiciled taxpayers, regardless of nationality, the place of incorporation, or location of the income source. Non-domiciled taxpayers are subject to income tax only with respect to their Peruvian-source income.

In the case of corporations, income tax applies to any gains or profits derived from transactions with third parties, as well as from the exposure to inflation calculated at the end of each financial year.

Income of irregular associations, consortia, partnerships and any contract of entrepreneurial collaboration shall keep bookkeeping independent from their partners or contracting parties.

For purposes of the income tax, taxable incomes are classified in categories as follows:

a.     First: Incomes earned from real estate properties leasing, subleasing and transfer of goods.

b.     Second: Other capital incomes (interests, royalties, etc.)

c.     Third: Income from commerce, industry and other activities as provided by law.

d.     Fourth: Incomes derived from personal independent services.

e.     Fifth: Incomes earned from personal dependent work.

1.1.1. Income Tax Rates:

The tax rates are as follows:

Tax payable by corporate bodies, partnerships and joint ventures on third-category income: 30% of net income.

b. Tax payable by individuals: 15% rate on annual aggregate net income (including earnings of first, second, fourth and fifth income categories). A 30% rate applies to income in  excess of 54 UIT (1).

Credits authorized by law shall be deducted from the tax calculated.

The tax payable by corporations shall be determined applying the following schedule:

a. Interest coming from external credits: 1%, whenever they fulfill the following requirements:

·       The loans cash will be proved with the entrance of the currency to the country

·       The credit does not yield annual interest on the balance due superior to the preferential rate in the market where it comes from, plus 3 points.

The interests from external credits destined to financing imports are included, whenever they fulfill the legal provisions in force.

b. Interest paid abroad by banking and financial companies established in Peru, derived from their foreign lines of credit used in the country: 1%

c. Income earned by leasing of ships and aircrafts: 10%

d. Royalties: 30%

e. Other incomes, including interests derived from external credits that do not fulfill anyone of the requirements established in item a), and the interests paid abroad by  companies of the country for credits granted by a foreign company with which is economically linked, except for that of  item b): 30 %

Individuals shall calculate their tax applying a 30% rate on pension benefits or remunerations for personal services rendered in the country, royalties and other incomes.

1.1.2. Nontaxable incomes
Nontaxable incomes are:

a. Dividends and any other kind of profit distribution. Those persons who receive dividends or profits from other companies shall not include them when determining their taxable income.

b. Self-issued shares corresponding to the re-expression of capital that results from adjustment for inflation.

1.2. Principal exemptions

The following items are exempt from Income Tax until the year 2000:

a. Capital gains derived from:

a.1. The sale of securities registered with the Public Register of the Stock Exchange through negotiation mechanisms to which the Law of Securities Market referred.

a.2. Sale of securities at the Commodity Exchange authorized by CONASEV.

a.3. Redemption of registered and bearer securities, representative of debts issued

through public offering in corformity with the Law of Securities Market, by corporate bodies, Investment Funds or Trusteed Patrimony, formed or established in the country.

a.4. Redemption of Mutual Investment Funds in Securities certificates and representative securities of participation of Trustee Patrimony of Awarding Title Institutions issued through public offering under the Law of Securities Market.

b. Any type of fixed or floating interest rate in national or foreign currency, paid on deposit, under the General Law of Banking, Financing and Insurance Institutions, as well as interest accrued on deposits and investments in national or foreign currency originating Adjustable Certificates of Deposits. Any type of fixed or floating interest rate in national or foreign currency, as well as capital gains or  capital readjustment as set forth in the Civil Code, paid to holders of registered or bearer securities, representative of debts issued by Invetment Funds, Trustee Patrimony of Awarding Titles Institutions and corporate bodies, incorporated or to be incorporated in the country, provided that those are marketed through public offering, under Law of Securities Market. Likewise, any type of fixed or floating  interest, in national or foreign currency, and capital increase, coming from Mortgage Certificates and Titles of Marketability Mortgage Credit, as well as Endorseable Mortgage Certificates to which the Law of Securities Market refers.

Every profit earned from voluntary contributions with no previsional purpose is also herein included. Interests and capital adjustment, earned from Financial System companies authorized to operate by the Superintendency of Banking and  Insurances for any of the concepts referred to herein, are not herein included.

c. Interest derived from development credits granted directly or through financial suppliers or intermediates, by international entities or foreign government institutions.

d. Royalties for technical, economical, financial or any other kind of advisory services rendered from abroad by government entities or international agencies.

e. Income from real estate owned by international entities and used as headquarters.

f. Wages earned, in the course of their duties in the country, by officers and employees so considered within the corporate structure of foreign governments, official institutions and international agencies, provided the articles of agreements  so established.

g. Income resulting from the difference between the updated value of premium or shares paid by the insured and the amounts given by the insurance companies to the insured at the end of the term established in the contracts of life insurance and benefits or participations in lifeinsurance of the insured.

h. Compensation for lenght of service established by Law.

i. Interest and capital readjustment obtained from mortgage bills in accordance with applicable legislation.

j. The companies that are established or set up in the Centers of Export, Transformation, Industry, Commercialization and Services (CETICOS) of Ilo, Matarani and Tacna, and Paita until December 31, 2004, which annual operations correspond in not less than 92% to the export of goods produced, will be exempt from the Income Tax up to December 31, 2012.

k. Interests earned or paid by cooperatives of saving and credti for operations made with their associates.

1.3 Entry of Foreign citizens into the country:

Foreign citizens shall fulfill the following rules:

a.  A foreigner who enters Peru temporarily with business visa and does not engage in activities which generate income from any Peruvian source must fill out an affidavit to hand to immigration authorities upon leaving the country.

b.  A foreigner who enters Peru temporarily with a with business visa and engages in activities which generate income from Peruvian sources must fill out an affidavit to hand to immigration authorities upon leaving the country, which states that his or her taxes have been paid, or that any tax liability that may be attributable to said person shall be assumed by the entity or person signing the affidavit if it were to be  necessary. In case the income payers failed to retain the corresponding tax, because it is a non-domiciled corporation, it is obliged to pay directly and shall attach the corresponding receipt to the aforementioned affidavit.

c.  A foreigner with business or non-immigrant resident visa and a labor contract approved or submitted to the labor authorities must deliver to the immigration authorities upon leaving the country a letter of guarantee issued by his or her employer or legal representative, certifying the retention of the applicable taxes and assuming the responsibility for any income taxes that may be owing.

Income obtained in the country of origin of a foreign citizen, who is not domiciled in Peru and who enters Peru temporarily to carry out activities prior to the execution of foreign investments or any other kind of business;

including the supervision or control of the investment such as collection of data or

information, meetings with persons of the public or private sectors; and the execution of agreements or similar acts is not considered to be Peruvian-source income.

1.4. Contractual Benefits
By means of the subscription of Law Stability Agreements the titleholders will be granted the following benefits for a ten-year period:

1.4.1. To the investors:
Stability of the Income Tax Regime effective at the moment of the subscription of the agreement, for the proportion corresponding to dividends and any other form of distribution of profits.

1.4.2. To the companies:
Stability of the Income Tax Regime effective at the moment of the subscription of the agreement.

1.5. Income Tax in the Amazon Region 2,3
1.5.1.     The taxpayers located in the Amazon region, mainly engaged in the following activities:

agrofarming, acquaculture, fishing, tourism; manufacturing activities related to the processing, transformation and commercialization of primary products derived  from the before mentioned activities and forestry transformation, provided those products are produced in that zone; and, activities of forestry extraction, shall apply for purposes of Third Category Income Tax, a 10% (ten per cent) rate.

1.5.2     As exception, the taxpayers located in the departments of Loreto, Madre de Dios and the districts of Iparia and Masisea of the province of Coronel Portillo and provinces of Atalaya and Purus of the department of Ucayali, mainly engaged in the activities detailed in the foregoing paragraph, shall apply for the Third Category  Income Tax purposes, a 5% (five per cent) rate.

1.5.3.     The taxpayers of the Amazon Region who are mainly engaged in agrarian activities and/or transformation or processing of products considered as native and/alternate culture in such zone, shall be exempt from the Income Tax.

For pusposes of the stated in the foregoing paragraph, products considered as native and/or alternate culture are yucca, soja, arracacha, uncucha, urena, palmito, pijuayo palmito, pijuayo, aguaje, anona, caimito, carambola, cocona, guanabano, guayabo, marañon, pomarosa, taperiba, tangerine, grapefruit, zapote, cami camu, cat's claw, annatto tree, rubber, pineapple, sesame seed, chestnut, jute and great mullein. In the case of oil palm, coffee and cacao, the exemption shall be applicable only to the agrarian production. Transformation or processing companies of those products shall apply a 10% (ten per cent) rate as Income Tax, provided they are located in the zone indicated in item 1.5.,; or, a 5% (five per cent) rate if they are located in the zone indicated in item 1.5.2.

1.5.4.     Companies engaged in commerce activities in the Amazone Region that reinvest a minimum of 30% (thirty per cent) of their net income in the Investments Projects 4 may apply for purposes of the Third Category Income Tax, a 10% (ten per cent). As exception, those located in the departments of Loreto, Madre de Dios and the districts of Iparia and Masisea of the province of Coronel Portillo and the provinces of  Atalaya and Purus of the department of Ucayali, shall apply a 5% (five per cent) rate.

This tax applies to the following:

a.         Domestic sale of goods and chattels

b.         Domestic rendering or use of services

c.         Construction contracts.

d.         The first sale of real estate property made by its constructor, and the further sale made by enterprises economically linked with the constructor, whenever the real  estate has been acquired directly from those enterprises economically linked with the constructor.

e. Importation of goods.

The general rate is 18%, which includes a 2% Municipal Promotion Tax.

The General Sales Tax stated in the Invoice that supports the acquisition of goods, services or construction contracts, or the GST paid for the importation of goods, may be taken as tax credit against the Gross Tax.

2.1. Non-Affected items:
The General Sales Tax does not apply to the following:

a.     Export of services as established by law.

b.     Leasing and any other form of cession for the use of real estate, provided that the income generated is qualified as First or Second Category Income to which sales tax applies.

c.     Transfer of used goods made by individuals or corporate entities not engaged in business.

d.     Transfer of goods as part of a business transfer.

e.  The amount equivalent to the CIF value in the transfer of goods from abroad carried out before the importation into our country.

f.     Importation of:

Goods or transfer of goods made free-of-charge in favor of entities and agencies of the public sector, except public companies; as well as, to religious organizations.

Personal goods and household furniture imported free from customs duties in accordance with legal provisions and up to the amount and term established therein, vehicles are excluded.

Goods acquired with donations from abroad, provided they are destined to public works projects in accordance with bilateral technical cooperation agreements between the Peruvian Government and other States or Governmental International Entities with bilateral or multilateral funds.

g.     Gambling and bets, such as lotteries, bingo, raffle, slot machines and other electronic machines, casinos and horse race events.

h.     Awarding at exclusive title to each contracting party of goods obtained from the execution of contracts of business collaboration that do not keep independent bookkeeping,

base on the contractual proportion, provided they submit the SUNAT (National Superintendency of Tax Administration) the information required.

i.   The allotment of funds, goods, services and construction contracts carried out by the contracting parties of associations, consortia, joint ventures or any other form of contract of business collaboration, which do not carry independent accounting, for the execution of business or common work derived from an obligation expressed in the contract, provided the requirements and conditions established by SUNAT are fulfilled.

j.   The competence of the operator of contracts of business collaboration, which do not carry independent accounting of the common goods, tangible or intangible, services and construction contracts, acquired for the execution of business or common work, subject matter of the contract, in the proportion corresponding to each contracting party, in accordance with that established by the Regulations.

2.2. Anticipated Recovery System:
The Anticipated Recovery System of the General Sales Tax consists on the refund of the tax paid in the imports and/or domestic acquisitions of capital assets carried out by individuals or corporate bodies engaged in productive activities of goods and services destined to be exported or which sale is burdened with the GST provided they have not even started their commercial activities.

The refund will be made by means of Negotiable Notes of Credit against the fiscal credit generated in the imports and/or domestic acquisitions of capital assets that had not been depleted during the 6 months following the date in which their capital goods were registered in the acquisition registry.

The minimum amount that shall be accumulated to request the refund shall be equivalent to 4 UIT in force at the moment of the application.

The regulations of the System establishes the types of machinery and equipment included therein, which should be registered as fixed assets of the company.

The following do not enjoy the present system:

a.     Taxpayers that are formed by the merge or split of companies that have started productive activity.

b.     Taxpayers that merge absorbing companies that have started productive activity.

On the other hand, companies that subscribe contracts with the State, under sectoral laws for the development, exploration and/or exploitation of natural resources, and those that conclude concession contracts with the State for

the development of infrastructure works and public utilities are entitled to enjoy the Anticipated Recovery System of GST, related to imports and domestic acquisition of goods, services and construction contracts required for the execution of the project matter of the contract. Companies that fulfill the requirements 5 to enjoy this benefit shall be qualified by means of Supreme Resolution.

It is worth to mention that in these cases, the minimum amount that will be accumulated to request the refund will be 36 UIT.

The companies that have the referred Supreme Resolution shall be entittled to include in the Law Stability Agreements the stability of the anticipated recovery system, according to the norms in force at the date of subscription of the respective stability agreements.

2.3. Exemptions:

2.3.1. The following items are exempt from the General Sales Tax:

a. Operations listed in Appendix I and II of the law in force until December 31, 2000. Taxpayers who carry out activities listed in Appendix i may waive once those exemptions, and decide the payment of the tax corresponding to the total of such activities. Said payment shall be considered as tax credit, as from the date on which the renouncement becomes effective.

b. Those taxpayers whose line of business is the exclusive execution of exempt operations referred to in the foregoing item, when they sell goods acquired or produced to be used exclusively in said exempt operations.

c. Industrial enterprises located on the Peruvian border or in the jungle zones, as well as financial institutions in closing process, up to December 31, 2000.

d. Companies established in the Region composed of the departments of Loreto, Ucayali, San Martin, Amazonas and madre de Dios. (6)

e. Companies that are incoporated or set up in the Centers of Export, Transformation, Industry, Commercialization and Services (CETICOS) of Ilo, Matarani and Tacna, and Paita until December 31, 2004, which annual operations correspond in not less than 92% to the export of goods produced, shall be exempt up to December 31, 2012.

f. Lodge and food services by lodge companies to touristic operators domiciled in the country, which transfer said services to touristic operators abroad to be used by persons non-domiciled in the country; in force up to 31.12.2003

2.3.2.     Are exempt from the Tax, the taxpayers located in the Amazon 2 region for the execution of the following operations:

a. Sale of goods made in the zone for inner consumption.

b. Importation of goods destined to be used in the same zone.

c. Services rendered in that zone.

d. Construction contracts or the first sale of real estates made by the constructors in the zone

The taxpayers shall apply the General Sales Tax to all their operations made out of the scope indicated in the foregoing paragraph, under the general regulations of the mentioned tax. Sale of natural gas, oil and by-products made by the companies located in the departments of Loreto, Ucayali and Madre de Dios, provided those products are used in such departmants.

The excise tax is levied upon:

a. Domestic sale at producer level and importation of goods listed in Appendix III and IV of the Law.

b. Domestic sale made by the importer of goods listed in Appendix III and IV of the Law.

c.Gambling and bets, such as lotteries, bingos, raffles, and horse races.

3.1. Rates:
The Excise Tax Rate runs between 2% and 118%, according to the type of good or service detailed in Appendix III and IV of the Law.

The rates applicable to gambling and bets are:

a.            Lotteries, bingo and raffles........................ 10%
b.            Horse races....................................... 2%

3.2.     Principal Exemptions: 7
a. Importation or sale of diesesl or residual oil to generation companies and companies concessionaires of distribution of electricity up to December 31, 2003, provided those companies are duly authorized by Supreme Decree.

b. Companies incorporated or established in the CETICOS of Ilo, Matarani and Tacna, and Paita up to December 31, 2004, and which annual operations correspond to not less than 92% to export of goods produced, shall be exempt up to December 31, 2012.

c. Sale of natural gas, oil and by-products made by the companies located in the departmants of Loreto, Ucayali and Madre de Dios, provided those products are used in such departments.

The customs duties applied to the importation of supplies and/or products are:

a.  Ad-valorem duties: Two rates:1 2% and 20% of CIF values listed in the Peruvian Schedule of Customs Duties.

b. Overrates:

b.1.  Temporary additional overrate: 5% and 10% Ad-Valorem CIF.























The Overrate only applies 352 Tarif items (5,1% of total items) and aims at temporarily protect national agricultrue production, specifically:

Meat and eatable leavings, milk and dairy products, potatoes, onion, garlic, fresh and refrigerated legumes, fruits, bark of citrous-trees and melon, tea, sausages, meat based foods and canned meat, legumes- and vegetables- based food, confectionary and cacao products, natural honey, durum wheat, cooked and frozen green peas and beans. Malt and extract of malt, black beer, wine of fresh grapes, other fermented beverages, ethylic alcohol not denaturalized with less than 80%, durum yellow wheat, sorgum, sugar cane and sugar beet.

4.1.       Promotional mechanisms in productive sectors:

·         Industry: Installments of customs duties on capital goods importation;

·         Agroindustrial: The State assumes customs duties on importation on inputs and capital goods (seeds, equipment of technical irrigation, etc.)


It is worth to mention that as part of its commercial policy, Peru has subscribed bilateral agreements within the ALADI framework. Those agreements establish tax reliefs for a list of products that can be periodically reviewed.

Within the subregional context, Peru has been reincorporated as full member country to the Andean Community of Nations (Bolivia, Colombia, Ecuador, Peru and Venezuela). The objective of this Community is the promotion of a balanced  development of its members through the integration and economic cooperation with a view to gradual development of a common market. That Common Market is planned to be established the year 2005, which will mean the free traffic of goods, services, capitals and people through the sub-region.

The ACN has already reached an agreement with Brazil and Argentina as the first step towards the creation of a Free Trade Zone with MERCOSUR (Argentina, Brazil, Paraguay, Uruguay).

Likewise, Peru will participate at the next negotiations for the establishment of the Free Trade Area of the Americas that will entry into force in year 2005.



It is a temporary tax in force up to December 31, 2000, which taxable basis is composed of:

a.  For employers: The amount paid to their permanent or temporary workers.

b.  For independent workers: Total gross income if higher than S/. 1692 (equivalent to US$ 483.43, a t an exchange rate of 1 US$=S/. 3.50) The rate applicable is 5%.


It is a monthly tax on the operation of casinos and slot machines. The taxable baiss is composed of the gross earning resulting from the operation of casinos and slot  machines. For this purpose, gross earning shall be considered as the result between the total earning from bets of money on games in one month and the amount of prizes given in the same month.

The aliquot os this tax is 20% of the taxable basis.


1Tax Reference Unit (TRU) for 2000: S/. 2900 (Exchange rate as of July 31: 1 US$ = S/.3.5)

2 The Amazon region is considered to be:

Departments of Loreto, Madre de Dios, Ucayali, Amazonas and San Martin.

Districts of Silvia and Ayahuanco of the province of Huanta and Ayna, San Miguel and Santa Rosa of the province of

La Mar of the department of Ayacucho

Provinces of Jaen and San Ignacio of the department of Cajamarca

Districts of Yanatile of the province of Calca, province of La Convencion, Kosñipata of the province of Paucartambo,

Camani and Marcapata of the province of Quispichanchis of the department of Cusco

Provinces of Leoncio Prado, Puerto Inca, Marañon and Pachitea, as well as the districts of Monzon of the province of

Huamalies, Churubamba, Santa Maria del Valle, Chinchao, Huanuco and Amarilis of the province of Huanuco,

Conchamarca, Tomayquichua and Ambo of the province of Ambo of the department of Huanuco.

Provinces of Chanchamayo and Satipo of the department of Junin

Province of Oxapampa of the department of Pasco.

Districts of Coaza, Ayapata, Ituata, Olaechea and San Gaban of the province of Carabaya and San Juan del Oro,

Limbani, Yanahuaya, Phara and Alto Inambari, Sandia and Patambuco of the province of Sandia, of the department of


Districts of Huachocolpa and Tinta and Puncu of the province of Tayacaja of the department of Huancavelica

District of Ongon of the province of Pataz of the department of La Libertad; and,

District of Carmen de la Frontera of the province of Huamabamba of the department of Piura

3 To enjoy the tax benefits, the taxpayers shall fulfill the requirements established by the Regulations. It shall be

considered the domicile of their headquarters, registration with the Public Registry, and that no less than 70% of their

assets and/or production exist and are produced in the Amazon region.

4Benefits for the Investment Programs

A tax benefit on Income Tax shall be applicable up to December 31 of year 2008 for the execution of Investment Programs in the Jungle zone. Such benefit may be extended by express legal provision and shall be applied as follows:

a.  Taxpayers located in the departments of Loreto, Madre de Dios and the districts of Iparia and Masisea of the province of Coronel Portillo and the provinces of Atalaya and Purus of the department of Ucayali, that carry out the following activities: agrofarming, acqualture, fishing, tourism; as well as manufacturing activities related to the processing, transformation, provided those are produced in that zone, that total or partially reinvest their net income in the Investment Programs, shall have right to a tax credit equivalent to 5% (five percent) of the reinvested amount.

b.  The corporate bodies or individuals that reinvest in that indicated in item a) and in the Investment Programs in the Jungle zone, may deduct from their net income the invested amount with 20% (twenty per cent) limit. For purposes of the established in the present provision, the Investment Programs shall apply to infrastructure works and/or acquisition of capital goods destined to increase the production levels of the companies referred to in item a)

Such Programs shall be submitted to the Executive Committee on Promotion of Private Investment in the Amazon region, which, prior opinion of the respective sector, shall issue the corresponding resolution. The approval of those programs shall be without prejudice of later control by SUNAT.

Investment Program with Tax Benefit shall have a maximum term of 4 (four) years, term in which they shall be executed.

5In the case of companies that conclude contracts with the State under sectoral norms, the lqw sets forth that

investments shall require a term over four years for exploration, development and working of natural resources, and a

term of two years or more, provided the term does not exceed four years as in case of development an'/or working of

natural resources.

6 Provided they:

a)  Import goods destined to regional consumption under the Peruvian-Colombian Customs Cooperation Covenant of

1938, and goods listed in Appendix of Decree Law N 21503. Likewise, importation of inputs, sale of goods and inputs

used or consumed in the Region for the elaboration of those goods is exempt..

b)  Regional sale for domestic consumption of goods produced therein, inputs for the elaboration of said goods and

natural products typical of the Region, whatever the state of transformation may be; and,

c)         Services rendered in the Region

7 The importation of the following is not :

a.  Goods or transfer of goods made free-of-charge, in favor of entities and agencies of the Public Sector, except public enterprises, as well as religious entities.

b.  Goods acquired with donations from abroad provided that they are destined to the execution of public works through agreements made in accordance with bilateral agreements or technical cooperation, carried out between the Government of Peru and other States or International or Governmental Agencies, with bilateral and multilateral funds..

8 Equivalent to one twelfth of 7 UIT

Business contact: Commentaries, proposals or details for negotiation: Mr. Jorge Perazzo
51 1 2638212 (spanish please) 1—602-499 2708 (USA)
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