Living in Peru : your everyday companion

Declaration and payment of taxes is a monthly obligation in Peru. Nowadays, citizens are more aware of the importance of taxes for the country’s development. The idea that money collected from taxes is wasted on counterproductive state expenditures, such as supporting an inefficient bureaucracy, has gradually faded. The general belief that tax payment is a sanction and a disbursement of a hard earned salary has been abandoned by the vast majority of the population.

Income Categories
It is important to identify your income category when you pay taxes in Peru. A good proportion of the taxes that people pay come from income generated from rent, sublease and transfer of assets, which fall under the first income category. The income from royalties, interests, dividends and capital gains are part of the second income category. The third income category is related to corporate profits. The fourth income category is the revenue that comes from independent work and fifth income category refers to the profit of working as an employee.

The taxes collected from the fourth and fifth income categories represent the biggest contribution to taxes after input from the third income category. That being said, it is important to note that people who work as employees (fifth category) but also receive fourth category revenue, and whose total income is above s/.2.589 per month, must make declaration and payment of taxes of fourth category. If they fail to do so, a fine of 50% of the tax unit will be charged.

Here is an example of a very common case: a person receives a monthly salary of S/. 3,000 from working as an employee and at the same time, makes S/.2,600 from professional services or freelancing (which is a permanent situation for many, given the fact that many companies pay low salaries in order to cut costs). Despite having contributed with a withholding tax of S/.5.672 (for the fourth and fifth category), this person will soon realize that a payment of S/.1.581 needs to be made (due to the fine of the tax unit). If the situation had been regularized on time, this sum of money could have easily been destined to cover other payments such as the children’s school or university pensions.

In the aforementioned case, this person can choose not to pay the entire sum immediately and has two ways of doing it. The first is to make payments to an account to which Sunat will add the corresponding interests for not having paid on time. The interest rate in this case is 1,5% per month.

The other alternative is an installment agreement. Sunat's website offers an option where this can be done via the internet, where a form must be filled out and sent via email.

In this case, the minimum payment is 5% of the tax unit which is S/. 177.50. The debt can be paid in up to 72 installments. If the person chooses to pay in 24 months, the interest is 1.2%, 1.35% in 48 months and 1.5% in 72 months.

Translated by Diana Schwalb