New features introduced by Law No. 30296 to reactivate Peru’s economy
Law No. 30296 was published in the Peruvian Official Gazette on December 31, 2014, and, with the aim of reactivating the Peruvian economy, amends provisions relating to income tax, with effect from January 1, 2015.
Notable among the new features introduced by the law is the reduction of the tax applicable to business income (third category) from 30% (until 2014) to 28% (2015 and 2016), 27% (2017 and 2018) and 26% (2019 onwards).
The law also raises the rate applicable to dividends and other forms of profit distributions obtained by individuals domiciled in Peru, as well as by individuals or legal entities not domiciled in the country, which is pushed up from 4.1% (until 2014) to 6.8% (2015 and 2016), 8% (2017 and 2018) and 9.3% (2019 onwards).
- Dividends and other forms of profit distributions that are carried out or made available on or after January 1, 2015, but which relate to retained earnings or other distributable items obtained by the legal entity until December 31, 2014, will continue to be taxed at the rate of 4.1%.
- There will be a non-rebuttable presumption that loans granted by legal entities to their shareholders, members, associates, owners or other related persons, in cash or in kind, constitute dividends or another form of profit distribution where the following requirements are met:
- The legal entity must have profits and unrestricted reserves.
- The legal entity must not be a multiple operations company or a finance lease company.
- They must not entail lending transactions in favor of workers that solely own investment shares in the legal entity.
Likewise, the law changes the progressive accumulative rates applicable to net salary income and to net foreign-source income of domiciled individuals, which from tax year 2015 are 8% (up to 5 UIT), 14% (from 5 UIT to 20 UIT), 17% (from 20 UIT to 35 UIT), 20% (from 35 UIT to 45 UIT) and 30% (above 45 UIT).
- The net salary income is the result of adding together net fourth-category income (which is equal to 80% of gross fourth-category income) and net fifth-category income (which is equal to 100% of gross fifth-category income) and subtracting 7 tax units (Unidades Impositivas Tributarias, UIT). The UIT for the year 2015 is S/.3,850.
Lastly, one of the most notable new features is that from now on, for costs and expenses to be deductible in determining income tax applicable to business income (third category), they must be supported by a payment receipt issued by a party that keeps its registration on the Single Taxpayers Register (RUC) in force, that is, a party that has not been notified by the National Customs and Tax Authorities (SUNAT) of the cancellation of its registration as of the issue date of the receipt.
Garrigues Latin American Practice