Peru's tax system is managed by the National Superintendence of Tax Administration (SUNAT). It includes various taxes and contributions levied on both employers and employees. Understanding these obligations is crucial for businesses operating in Peru to ensure compliance and avoid penalties. The tax landscape covers social security contributions, payroll taxes, income tax withholdings, and other specific levies.
Navigating Peru's tax regulations can be complex, especially for foreign companies. This guide provides a comprehensive overview of employer tax obligations and employee tax deductions in Peru for 2025, covering social security, income tax, compliance, and special considerations for foreign workers.
Employer Social Security and Payroll Tax Obligations
Employers in Peru are required to contribute to several social security and payroll taxes. These contributions fund healthcare, pensions, and other social benefits for employees. The main employer obligations include:
- Health Insurance (EsSalud): Employers contribute 9% of the employee's gross monthly salary to EsSalud, the public health insurance system.
- Pension Fund (ONP or AFP): Employees can choose between the National Pension System (ONP) or a private pension fund administrator (AFP). If the employee is affiliated with ONP, the employer does not make a direct contribution. If the employee is with an AFP, the employer withholds the employee's contribution and remits it to the AFP.
- Work Risk Insurance (Seguro Complementario de Trabajo de Riesgo - SCTR): Employers engaged in high-risk activities are required to provide SCTR coverage for their employees. The contribution rate varies depending on the risk level of the job.
- Training Contribution (SENATI): Companies in the manufacturing sector contribute 0.75% of the total payroll to SENATI, a national training service.
Income Tax Withholding Requirements
Employers in Peru are responsible for withholding income tax from their employees' salaries. The income tax rates are progressive and applied to the employee's taxable income.
The income tax brackets for 2025 are as follows (expressed in Tax Units, or UIT, for 2025. The UIT value for 2025 is S/ 5,150):
| Taxable Income (UIT) | Rate |
|---|---|
| Up to 5 | 8% |
| Over 5 and up to 20 | 14% |
| Over 20 and up to 35 | 17% |
| Over 35 and up to 45 | 20% |
| Over 45 | 30% |
To calculate the monthly income tax withholding, employers must:
- Determine the employee's gross monthly income.
- Subtract any allowable deductions (see the next section).
- Calculate the annual taxable income by multiplying the monthly taxable income by 12 (plus any additional payments such as bonuses).
- Apply the progressive tax rates to determine the annual income tax liability.
- Divide the annual income tax liability by 12 to arrive at the monthly withholding amount.
Employee Tax Deductions and Allowances
Employees in Peru are entitled to certain tax deductions and allowances that reduce their taxable income. These deductions include:
- 7 UIT Deduction: All employees are entitled to a standard deduction of 7 UIT (Tax Units) annually. For 2025, this amounts to S/ 36,050 (7 x S/ 5,150).
- Donations: Donations to qualified charitable organizations are deductible up to a certain limit.
- Professional Fees: Certain professional fees related to the employee's work may be deductible.
- Mortgage Interest: Interest paid on mortgage loans for the employee's primary residence may be deductible.
- Healthcare Expenses: Certain healthcare expenses may be deductible, subject to specific regulations.
Employees must provide documentation to support their deductions, and employers must take these deductions into account when calculating income tax withholding.
Tax Compliance and Reporting Deadlines
Employers in Peru must comply with specific tax reporting and payment deadlines. Key deadlines include:
- Monthly Tax Filings: Employers must file monthly tax returns (PDT 601 – PLAME) and pay the corresponding taxes by the due date, which varies depending on the employer's tax identification number (RUC).
- Annual Tax Reconciliation: Employers must file an annual tax reconciliation return (Declaración Jurada Anual del Impuesto a la Renta) by the deadline established by SUNAT, typically in March or April of the following year.
- Employee Income Certificates: Employers must provide employees with an annual income certificate (Certificado de Rentas y Retenciones) by the deadline set by SUNAT.
Failure to comply with these deadlines may result in penalties and interest charges.
Special Tax Considerations for Foreign Workers and Companies
Foreign workers and companies operating in Peru are subject to specific tax rules and considerations:
- Tax Residency: Foreign workers who stay in Peru for more than 183 days in a 12-month period are considered tax residents and are subject to Peruvian income tax on their worldwide income. Non-residents are taxed only on their Peruvian-source income.
- Double Taxation Agreements: Peru has double taxation agreements (DTAs) with several countries. These agreements may provide relief from double taxation for foreign workers and companies.
- Expatriate Allowances: Certain allowances paid to expatriate employees, such as housing and cost-of-living allowances, may be taxable or tax-free depending on the specific circumstances and applicable regulations.
- Branch vs. Subsidiary: Foreign companies operating in Peru can choose to establish a branch or a subsidiary. The tax implications differ depending on the chosen structure. Branches are generally taxed on their Peruvian-source income, while subsidiaries are taxed on their worldwide income.
- Transfer Pricing: Foreign companies must comply with Peruvian transfer pricing regulations, which require that transactions between related parties are conducted at arm's length.
