• Service: Tax, Global Mobility Services
  • Type: Business and industry issue, Regulatory update
  • Date: 1/1/2014


A person’s liability to Peruvian tax is determined by his or her residence status for taxation purposes and the source of his or her income. For residents, income tax is levied at progressive rates on an individual’s taxable income for the year, which is calculated by subtracting allowable deductions from the total assessable income. For non-residents, income tax is levied at a flat rate on an individual’s taxable income for the year.

Key message

Extended business travelers are likely to be taxed on employment income relating to their Peruvian work days.


Income tax

Liability to income tax

A person’s liability to Peruvian tax is determined by his or her residence status. A person can be a resident or a non-resident for Peruvian tax purposes.

A resident is defined as someone who has spent 183 days in Peru within any 12-month period. This status is lost after the individual is absent from the country at least 184 days (in total) during the previous year.

A change in the tax treatment applies at the start of the following Peruvian tax year (the Peruvian tax year begins every January 1st).

As general rule, a person who is a resident of Peru is assessable on his or her worldwide income. Non-residents are generally assessable on income derived directly or indirectly from sources in Peru. Extended business travelers are usually considered non-residents of Peru for tax purposes, as we explained, the residence status depends of the days spent in Peru.

Definition of source

Employment income is generally treated as Peruvian-sourced compensation when the individual performs the services while he or she is physically located in Peru.

Tax trigger points

Technically, there is no threshold/minimum number of days that exempts the employee from the requirements to file and pay tax in Peru. To the extent that the individual qualifies for relief in terms of the dependent personal services article of the applicable double tax treaty, there will be no tax liability.

Types of taxable income

For extended business travelers, the types of income that are generally taxed are employment and Peruvian-sourced income and gains from taxable Peruvian assets (such as real estate).

Tax rates

Peruvian individual income taxes are calculated using a progressive scale expressed in tax units. These units are established each year by the government and the current tax unit value for 2014 is 3,800 Peruvian nuevos soles (PEN). It was PEN 3,600 for 2011; PEN 3,650 for 2012,and PEN 3,700 for 2013. PEN

For residents, net taxable income is taxed at graduated rates ranging from 15 percent to 30 percent (the progressive scale of tax is 15 percent, 21 percent, and 30 percent). The maximum tax rate is currently 30 percent on income earned over 54 tax units. Non-residents are subject to flat tax rate of 30 percent on total taxable income.


Liability to social security

Employers and employees must make contributions to the social tax scheme in Peru as follows:

  Paid By
Type of insurance Employer
Health system 9 0 9
Pension Fund 0 13 13
Total percent 9 13 22

With regard to the pension fund:

  • The employee can choose between the Public Pension System (ONP) and the Private Pension System (from the available pension management companies)
  • ONP applies a rate of 13 percent, while each company of the Private Pension System applies different rates, so the 13 percent listed above is an average value.

Peru has ratified the Social Security Agreement promoted by the Iberoamerican Organization made with to purpose to prevent double taxation and allow cooperation between Peru and overseas tax authorities in enforcing their respective tax laws. But most important, this agreement has a positive impact on the situacion of inmigrant employees. However, legal instrument has not been entirely implemented in Peru.


Compliance obligations

Employee compliance obligations

Annual income tax returns are due during the first three months following the tax year-end, which is 31 December. The presentation dates are established each year by the Peruvian tax administration (SUNAT through a resolution issued by the end of the year.

Employer reporting and withholding requirements

Withholdings from employment income are covered under the Pay-As-You-Go (PAYG) system. If an individual is taxable in respect of employment income, the employer has a PAYG withholding requirement.

Withholding obligations are applied only to resident employers. If the employer is a non-resident entity, no tax withholding obligation arises, and it is the responsibility of the employee to file and pay the corresponding taxes properly.


Other issues

Work permit/visa requirements

In general a visa must be applied for before the individual enters Peru. The type of visa required will depend on the purpose of the individual’s entry into Peru.

In some specific circumstances, an individual may enter the country with a business visitor visa, called ‘Visas de Negocios’. In order to qualify for the business visa, the short-term traveler may, among other very limited activities, attend meetings, attend a sales call on behalf of a non-Peruvian entity, and attend seminars. Also, to apply for this type of visa, the individual has to demonstrate that during his or her stay in Peru, he or she only will attend these specific activities. In other cases, it will be required another type of visa and, possibly, work permits for individuals.

It is important to consider that business visas are generally valid for 90 days. But, there is the possibility to ask for a permission to extend it, in those cases the maximum stay days would be 183.

If the foreign individual will perform services within Peruvian territory under an employment relationship (either with a Peruvian employer or with a foreign employer), he/she will need a work visa. This visa could be applied and from abroad before entering Peru or as a result of the procedure of change of migratory status upon DIGEMIN (Peruvian immigration office). Therefore, a foreign individual is allowed to change his/her migratory status while being in Peru.

Double taxation treaties

In addition to Peru’s domestic legislation, Peru has ratified eight agreements to prevent double taxation and allow cooperation between each tax authorities with Switzerland, Portugal, Korea, Mexico, Canada, Chile, Brazil and the CAN (known in Spanish as “Comunidad Andina” which is comprised of Ecuador, Colombia and Bolivia). Also, some of them have already taken effect: Korea, Mexico, Canda, Brasil, Chile and the CAN.

Permanent establishment implications

In some cases, there is the possibility that a permanent establishment (PE) could be created as a result of extended business travel, but this would depend on the type of services performed and the level of authority the employee has.

A simple assignment of employees to Peru will not result in a PE in Peru. The following are considered to be examples a PE of a non-resident entity:

  • A person acting in Peru on behalf of the non-resident entity and empowered by it to sign contracts on its behalf, and who habitually uses such empowerment in Peru; or
  • A person acting in Peru on behalf of the non-resident entity who habitually maintains goods in stock within Peruvian territory to be negotiated in Peru.

Indirect taxes

The standard rate of VAT is 16 percent. The Municipal Promotion Tax (Impuesto de Promoción Municipal (IPM)) of 2 percent is also added to the value of goods or services used to determine the IGV (Peruvian VAT), which results in a 18 percent sales tax overall.

The Peruvian VAT (Impuesto General a las Ventas, (IGV)) is a tax based on the value-added method. It is applied following the subtraction method on a financial basis of tax against tax.

VAT is payable on:

  • The sale of goods in the country
  • The rendering of services in the country
  • The use of services in Peru (rendered by non-residents)
  • The first sale of real estate performed by the builder or companies linked to the builder
  • Building activities
  • Imports of goods

There is no special registry in Peru for VAT. Nevertheless, there is a general obligation for taxpayers to register with the Peruvian tax authority (SUNAT) to obtain their taxpayer identification number (Registro Único de Contribuyentes (RUC)).

The aforementioned registry not only includes VAT-taxable persons, but all other types of taxpayers and/or taxable persons subject to Peruvian tax laws as well (including income tax, VAT, and others).

Transfer pricing

Peru has a transfer pricing regime based on arm’s-length principles. A transfer pricing implication could arise to the extent that the employee is being paid by an entity in one jurisdiction but performing services for the benefit of the entity in another jurisdiction, in other words a cross-border benefit is being provided. This would also be dependent on the nature and complexity of the services performed.

Management fees are deductible unless they are paid to a resident of a tax haven. The authorities release a list of tax havens each year. A 30 percent withholding rate is applied to management services performed in Peru, but does not apply if the services were rendered abroad. Additional information can be found in Articles 24 and 108-118 of the Income Tax Regulations and Resolution 167-2006.

Local data privacy requirements

Recent legislative activity and governmental agency reports has Peru moving towards a comprehensive data protection regime based upon the EU Data Protection Directive 95/46/EC. Until those laws are passed, various laws and articles of the 1993 constitution outline current data privacy rights.

Exchange control

Peru does not restrict the flow of Peruvian or foreign currency into or out of the country.

Non-deductible costs for assignees

Non-deductible costs for assignees include contributions by an employer to non-Peruvian pension funds.


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Rocío Bances

Tax Partner

KPMG in Peru

+51 1 611 3000

Thinking Beyond Borders