Foreign Residents Taxes in Peru
Let´s look in a brief summary the tax legislation in Peru that foreign residents need to be aware of.
Foreign, must pay income tax for revenues they earn in Peru, the notion income from Peruvian source is very extensive, such a notion includes a spectrum of types of revenues ranging from incomes generated by real estate located in Peru, commercial or civil activities developed in Peru, to Internet services provided abroad to clients who use such services in Peru.
In addition, in the event if the foreigner is a resident in Peru, that person (colective or individual) must not only pay for incomes from Peruvian source, but also for income created anywhere in the world. For instance, an American citizen considered by the Peruvian Tax Authority (SUNAT) to be resident in Peru, will have to pay income tax even for incomes produced by real estate properties located in the US. Furthermore, note that when a foreigner carries out work in Peru for a company registered off-shore, always is bound to pay income tax in Peru.
According to the Peruvian legislation, revenues are divided into the following categories:
- 1st category revenues: income produced by rental lease agreements.
- 2nd category revenues: capital gains such as interest from loans and royalties.
- 3rd category revenues: income produced by commercial and industrial activities.
- 4th category: income produced by independent professionals.
- 5th category: income produced by employees.
The 1st, 2nd, 4th and 5th of the above mentioned categories refer to income produced by individuals or natural persons. The 3rd category refers to income produced by companies and/ or persons acting as entrepreneurs or businessmen
In the 3rd category, a 30% income tax is applied to net revenues. For the other categories of revenues, there will be different rates that are progressively applied in proportion to the amount of the global net revenue during a year.
Net revenue to 27 UIT: 15%
More than 27 UIT but less than 54 UIT: 21%
More than 54 UIT: 30%
Note: UIT = 3600 PEN = 9720 $ (results may vary depending exchange rate)
("UIT". amount fixed by the government, stand as a Taxation Unit.)
The aforementioned rates only apply to taxpayers in Peru. If the taxpayer is a natural person not resident in Peru, one single rate of 30% will apply!
According to Peruvian regulation, foreigners that are considered to be resident in Peru if they comply with one of the following requirements:
(i) Foreigners who have lived in Peru for 2 years without being abroad during each calendar year for a total period of more than 90 days.
(ii) Foreigners who have lived in Peru for 6 month and are registered in the Registry of Taxpayers (RUC). (see article : Steps to start a business in Peru part II)
(iii) Foreigners who have lived in Peru for 6 months and have asked their employer in Peru to be considered as being resident in Peru.
Note that the effects of "residency" begin to apply the year after the above mentioned requirements have been fulfilled. Consequently, the sooner in a calendar year a foreign employee arrives in Peru, the better chances he or she has to be considered as being resident in Peru from a tax viewpoint.
Source : Peruvian Income Tax Law (Ley General al Impuesto a la Renta)
