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Peru: Taxes and Costs

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Rental income tax is high in Peru

Effective Tax Rate on Rental Income
Monthly Income	US$1,500	US$6,000	US$12,000
Tax Rate	24%	24%	24%
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INDIVIDUAL TAXATION

Non-residents are taxed only on their Peruvian-sourced income. Married couples are taxed separately.

INCOME TAX (Impuesto a la Renta)

RENTAL INCOME
Rental income earned by non-residents is subject to a 30% flat rate. The taxable income is 80% of the gross rent, which is irrefutably considered as net income. Non-residents are not entitled to any other deductions.

CAPITAL GAINS
Capital gains earned by non-residents from selling Peruvian property, considered as investment income, are taxed at a flat rate of 30%. The taxable gain is computed by deducting the invested capital (acquisition and improvement costs) from the gross selling price or market value of the property. These costs can only be deducted upon approval of the tax authorities.

VALUE ADDED TAX (Impuesto General a las Ventas)

Generally, leasing properties in Peru is liable to VAT at 17%. However, if the leasing of property is not effectively connected with a trade or business, the lease transaction is then not liable to this tax.

MUNICIPAL SALES TAX (Impuesto de Promoción Municipal)
The rules regarding transactions subject to VAT also apply to municipal sales tax which is levied at a flat 2% rate.

PROPERTY TAX

Real Estate Tax (Impuesto Predial)

Real estate tax is levied on the cadastral value of the real estate, as assessed by the government, at progressive rates. The property owner is liable to pay this tax annually.

An official established tax unit (Unidad Impositiva Tributaria or UIT) is used to determine the tax liability. The UIT is a benchmark figure established to maintain the taxes, deductions, etc. at constant proportions to income. The UIT value for 2008 is PEN3,500 (US$1,118).

Net Worth Tax

Net worth tax is levied at 0.4% on the net assets of entrepreneurs exceeding PEN1 million (US$319,489). This tax may be credited against business income tax liability.

CORPORATE TAXATION

Companies are taxed on their Peruvian-sourced income.

INCOME TAX

Companies earning income and capital gains are taxed at the standard corporate rate of 30%. The taxable income is computed by deducting income-generating expenses from the gross income. Other allowable deductions are: amortization of intangibles, bad debts, entertainment expenses, gifts, goodwill, interest expenses, royalties, insurance, salaries and wages of employees, board member fees, start-up expenses, social security contributions, travel expenses, promotional costs, and premiums for health insurance, and taxes levied on income-generating assets and activities.

VALUE ADDED TAX (Impuesto General a las Ventas)

Generally, leasing properties in Peru is liable to VAT at 17%. However, if the leasing of property is not effectively connected with a trade or business, the lease transaction is then not liable to this tax.

MUNICIPAL SALES TAX (Impuesto de Promoción Municipal)

The rules regarding transactions subject to VAT also apply to municipal sales tax which is levied at a flat 2% rate.

Peru - more data and information

• Guide to buying houses and registering property sales in Peru

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