Peruvian income taxes may be divided into 2 large groups:

Corporate income tax

The general income tax annual rate for resident entities is 29.5%. In addition to
this, resident entities are obliged to make advance payments on a monthly basis by
applying a coefficient over the accrued taxable income of the month. Advance
payments are to be offset against the annual income tax obligation.

All resident companies are subject to this income tax on their worldwide taxable
income. Resident companies are those incorporated in Peru. Branches and permanent
establishments of foreign companies that are located in Peru and non-resident
entities are taxed only on income from Peruvian sources.[2]

Various significant tax incentives are available for investments in the following
areas:

Mining enterprises,
Oil and gas licenses and services contracts,
Certain agricultural activities,
Capital markets.
They are available also for investments in manufacturing industries located in the
jungles, in designated tax-free zones and in borderline areas of the country.
Furthermore, companies involved in certain economic sectors may be subject to
special or reduced income tax rates (i.e. companies involved in agriculture, animal
husbandry and similar activities are entitled to a 15% rate).[3]

Personal income tax

Peru also has an income tax for individuals. Peruvian citizens domiciled in Peru
are subject to taxation on their worldwide income. Individuals not domiciled in
Peru are only taxed in this country on their Peruvian sourced income.

Foreigners residing or staying in Peru for more than 183 days within any given 12-
month period, will be given the status of individuals domiciled in the country from
January 1 of the following fiscal year in which the duration of stay expires.[4]

Dividends distributed by companies incorporated or established in Peru, received by

individuals, are subject to the following rates:

4.1% on results as of December 31, 2014,

6.8% on results generated in 2015 and 2016,
5% on results generated from 2017 onwards.
This, currently valid Dividend Tax rate of 5%, is imposed on distributions of
profits to nonresidents and individuals by resident companies and by branches,
permanent establishments and agencies of foreign companies.[4]

Value added tax (VAT)

The general rate of VAT is 18% (16% of VAT itself plus 2% of municipal promotion
tax). VAT in Peru is generally imposed on the following transactions: sale of
movable property, rendering and use of services, construction contracts, first sale
of real property (except land) made by builders and the import of goods.

As occurs with many indirect tax systems, to determine the tax payable by the
company performing the above-mentioned transactions (output VAT), the VAT paid in
the company’s acquisitions is accepted as a tax credit (input VAT). Exporters can
recover VAT paid in acquisitions for up to 18 per cent of an export’s free on board
(FOB) value.

Companies that have not commenced productive operations with a pre-production stage
equal to or longer than two years may resort to a special system to obtain the
advanced recovery of the VAT levied on certain acquisitions provided that they
execute an investment agreement with the state.[3]