Peru

The country profile includes data on the income taxes paid by workers, their social security contributions, the family benefits they receive in the form of cash transfers as well as the social security contributions and payroll taxes paid by the employers. Results reported include the average and marginal tax burdens for eight different family types.

It also describes the personal income tax systems, all compulsory social security contribution schemes and universal cash transfers as well as recent changes in the tax/benefit system.

  
Peru 2013
Tax / benefit of single persons

Wage level (% of average wage)

67

100

167

67

Number of children

0

0

0

2

1.

Gross wage earnings

11 413

17 034

28 447

11 413

2.

Standard tax allowances

25 900

25 900

25 900

25 900

Basic allowance

25 900

25 900

25 900

25 900

Married or head of family

0

0

0

0

Dependent children

0

0

0

0

Deduction for social security contributions and income taxes

0

0

0

0

Work-related expenses

0

0

0

0

Other

0

0

0

0

3.

Tax credits or cash transfers included in taxable income

0

0

0

0

4.

Central government taxable income (1-2+3)

0

0

2 547

0

5.

Central government income tax liability (exclusive of tax credits)

0

0

382

0

6.

Tax credits

0

0

0

0

Basic credit

0

0

0

0

Married or head of family

0

0

0

0

Children

0

0

0

0

Other

0

0

0

0

7.

Central government income tax finally paid (5-6)

0

0

382

0

8.

State and local taxes

0

0

0

0

9.

Employees’ compulsory social security contributions

Gross earnings

1 240

1 850

3 090

1 240

10.

Total payments to general government (7+8+9)

1 240

1 850

3 472

1 240

11.

Cash transfers from general government

0

0

0

0

For head of family

0

0

0

0

For two children

0

0

0

0

12.

Take-home pay (1-10+11)

10 173

15 184

24 975

10 173

13.

Employer’s compulsory social security contributions

918

1 371

2 289

918

14.

Average rates

Income tax (7 / 1)

0.0%

0.0%

1.3%

0.0%

Employees’ social security contributions (9 / 1)

10.9%

10.9%

10.9%

10.9%

Total payments less cash transfers [(10-11) / 1]

10.9%

10.9%

12.2%

10.9%

Total tax wedge including employer’s social security contributions [(10+13-11) / (1+13)]

17.5%

17.5%

18.7%

17.5%

15.

Marginal rates

Total payments less cash transfers: principal earner

10.9%

10.9%

25.9%

10.9%

Total payments less cash transfers: spouse

N.A.

N.A.

N.A.

N.A.

Total tax wedge: principal earner

17.5%

17.5%

31.4%

17.5%

Total tax wedge: spouse

N.A.

N.A.

N.A.

N.A.

Peru 2013
Tax / benefit of married couples

Wage level (% of average wage)

100-0

100-33

100-67

100-33

Number of children

2

2

2

0

1.

Gross wage earnings

17 034

22 655

28 447

22 655

2.

Standard tax allowances

25 900

51 800

51 800

51 800

Basic allowance

25 900

51 800

51 800

51 800

Married or head of family

0

0

0

0

Dependent children

0

0

0

0

Deduction for social security contributions and income taxes

0

0

0

0

Work-related expenses

0

0

0

0

Other

0

0

0

0

3.

Tax credits or cash transfers included in taxable income

0

0

0

0

4.

Central government taxable income (1-2+3)

0

0

0

0

5.

Central government income tax liability (exclusive of tax credits)

0

0

0

0

6.

Tax credits

0

0

0

0

Basic credit

0

0

0

0

Married or head of family

0

0

0

0

Children

0

0

0

0

Other

0

0

0

0

7.

Central government income tax finally paid (5-6)

0

0

0

0

8.

State and local taxes

0

0

0

0

9.

Employees’ compulsory social security contributions

Gross earnings

1 850

1 850

3 090

1 850

10.

Total payments to general government (7+8+9)

1 850

1 850

3 090

1 850

11.

Cash transfers from general government

0

0

0

0

For head of family

0

0

0

0

For two children

0

0

0

0

12.

Take-home pay (1-10+11)

15 184

20 805

25 357

20 805

13.

Employer’s compulsory social security contributions

1 371

1 371

2 289

1 371

14.

Average rates

Income tax (7 / 1)

0.0%

0.0%

0.0%

0.0%

Employees’ social security contributions (9 / 1)

10.9%

8.2%

10.9%

8.2%

Total payments less cash transfers [(10-11) / 1]

10.9%

8.2%

10.9%

8.2%

Total tax wedge including employer’s social security contributions [(10+13-11) / (1+13)]

17.5%

13.4%

17.5%

13.4%

15.

Marginal rates

Total payments less cash transfers: principal earner

10.9%

10.9%

10.9%

10.9%

Total payments less cash transfers: spouse

0.0%

0.0%

10.9%

0.0%

Total tax wedge: principal earner

17.5%

17.5%

17.5%

17.5%

Total tax wedge: spouse

0.0%

0.0%

17.5%

0.0%

The national currency is the Sol (PEN). In 2013, the average exchange rate was PEN 2.72 to USD 1. In that year, the average worker earned PEN 17 034.11.

The Report includes estimates of the tax wedge over the whole of the income distribution ordered by deciles of total labour income of formal wage earners derived from the household surveys.

Deciles of Incomes

1

2

3

4

5

6

7

8

9

10

Local currency (PEN)

6 377

8 516

9 710

10 904

12 503

14 224

16 228

19 606

25 246

48 230

USD1

2 346

3 133

3 573

4 012

4 600

5 233

5 970

7 213

9 288

17 744

Dollars in PPP2

4 187

5 591

6 376

7 160

8 210

9 339

10 655

12 873

16 576

31 668

Ratio to the minimum wage3

0.7

0.9

1.1

1.2

1.4

1.6

1.8

2.2

2.8

5.4

1. Average official exchange rates published by the central bank.

2. Calculated using the implied conversion rate (National currency per current international dollar in purchasing parity power) published by the IMF in the World Economic Outlook dataset.

3. Ratio of the income decile to the official minimum wage of the country.

1. Personal income tax system

The fiscal year is the calendar year.

1.1. Central government income tax

The income tax is levied on income of any source. It is comprised by five categories: i) income produced by the exploitation of capital goods; ii) other capital gains; iii) corporate income; iv) income from self-employment and v) income from employment.

Income from employment includes: wages, salaries, premiums, bonuses and commissions.

The main exemptions relating to income from employment are:

  • Compensation paid due to illness, or work injuries.

  • Subsidies for illness and maternity.

  • Interest and gains from public notes or bonds issued by the government of Peru.

1.1.1. Tax unit

Members of the family are taxed separately.

The personal income tax is applied to all residents and non-residents receiving income in the country. For the purposes of the tax code, a person who resides in the country for more than 183 days in the year is considered to be a Peruvian resident.

1.1.2. Tax allowances and tax credits

1.1.2.1. Standard tax allowances and tax credits

  • 7 tax units (PEN 25 900). A tax unit was equivalent to PEN 3 700 in 2013.

1.1.2.2. Main non-standard tax allowances and tax credits

None.

1.1.3. Tax schedule

The annual personal income tax liability was calculated on the taxable income according to the following schedule in 2013:

Income (PEN) up to

Marginal rate (%)

99 900 (27 tax units)

15.0

199 800 (54 tax units)

21.0

above

30.0

1.2. State and local taxes

No state or local taxes are levied on wages.

2. Compulsory social security contribution to schemes operated within the government sector

2.1. Employee contributions

Program

Marginal rate (%)

Old age, disability and death program

13.0

The employee contributions are levied on gross wages. The lower earnings threshold is the minimum wage (PEN 9 000 per year). There is no upper ceiling on the contributions. Mid and end year bonuses are exempt from social security contributions.

2.2. Employer contributions

Employers are required to contribute to the following public programs.

Program

Marginal rate (%)

Healthcare programs

9.0

Work Injury

0.6

The employer contributions are levied on the payroll. Mid and end year bonuses paid to employees are exempt from social security contributions.

3. Universal cash transfer

3.1. Amount for spouse and for dependent children

None.

4. Main changes in tax/benefit since 2013

The income tax schedule for the fifth category was updated as follows for 2015:

Tax units up to

Marginal rate (%)

5

8.0

20

14.0

35

17.0

45

20.0

above

30.0

The taxable unit in 2015 was PEN 3 850.

5. Memorandum items

5.1. Identification of an AW

The data refer to the earnings of workers within the formal sector. The average worker’s wage was calculated using microdata from the national household surveys.