Peru’s tax system is comprehensive, covering both corporate and personal income worldwide. With corporate taxes at 29.5% and personal taxes reaching up to 30%, the framework balances simplicity with robust anti-avoidance measures. Notably, there are no inheritance, gift, or wealth taxes, adding appeal for residents. Peru’s adoption of global standards like the Common Reporting Standard (CRS) and agreements such as Double Tax Treaties (DTTs) ensures transparency and international compliance, while its Controlled Foreign Corporation (CFC) rules highlight a focus on preventing tax evasion.
Peru’s Tax System overview
| Corporate Income Tax: | 29.5% |
| Personal Income Tax: | 30%, progr. |
| Inheritance Tax: | None |
| Gift Tax: | None |
| Wealth Tax: | None |
Corporate Income Tax
Corporations incorporated in Peru are subject to tax on worldwide income at a rate of 29.5%. Legal entities are considered as tax resident in Peru when incorporated in Peru, and Peru does not apply the place of effective management test.
Personal Income Taxation
Peruvian residents are subject to tax on worldwide income at progressive rates up to 30%. There is no gift tax, inheritance tax, or wealth tax.
Anti-Avoidance Rules
Peru has General Anti-Avoidance Rules (GAARs). In addition, Peru has Transfer Pricing rules, which require transactions between related parties, and between Peruvian residents and Low Tax Jurisdictions, to be arms-length. Peru also has Thin Capitalization rule. Peru has Controlled Foreign Corporation (CFC) rules.
Controlled Foreign Corporations (CFCs)
A Controlled Foreign Corporation (CFC) is defined as a non-resident entity with legal personality that has passive income subject to tax at a rate equal to or less than 75% of the income tax rate in Peru controlled by Peruvian residents. Control is defined as direct or indirect participation of more than 50% of the capital, profits or voting rights of the CFC, resulting in attribution of undistributed income.
Foreign Trusts
CFC Regulations extend the definition of CFCs to foreign trusts even though they lack legal personality. The CFC rules should not apply to foreign trusts with underlying companies where the foreign trustee has full powers of administration and investments, discretion over distributions, and the settlor has no powers of revocation or amendment, and neither the settlor nor the beneficiaries have any reserved powers of administration. The Investment Advisors and Protectors should be non-family members. Trust instruments should be drafted with Peruvian CFC rules in mind.
Double Tax Treaties (DTTs)
Tax Information Exchange Agreements
OECD Multilateral Convention
Common Reporting Standard (CRS)
FATCA
Peru offers a well-structured tax framework with clear rules for corporations and individuals alike. Its worldwide income taxation is complemented by robust anti-avoidance measures, including CFC rules and transfer pricing regulations. The absence of wealth, gift, and inheritance taxes is a notable feature, while global agreements and information exchange practices ensure alignment with international standards. Peru’s tax system is designed for clarity and compliance, meeting the needs of a modern economy.
