Peru operates a progressive tax system administered by the National Superintendence of Customs and Tax Administration (SUNAT). For employers operating in the country, understanding the various tax obligations related to their workforce is crucial for compliance. These obligations encompass contributions to social security, specific payroll taxes, and the mandatory withholding of income tax from employee salaries.
Navigating these requirements involves correctly calculating contributions based on employee compensation, adhering to strict reporting deadlines, and understanding the allowances and deductions available to employees that impact their final tax liability. This framework ensures that both employers and employees contribute appropriately to the national tax system and social welfare programs.
Employer Social Security and Payroll Tax Obligations
Employers in Peru are responsible for several contributions based on their employees' remuneration. These contributions fund social security, vocational training, and workplace risk insurance.
The primary employer contribution is to EsSalud (Peruvian Social Health Insurance). This covers healthcare benefits for employees and their dependents.
- EsSalud: The standard rate is 9% of the employee's monthly remuneration. There is no maximum contribution base.
In addition to EsSalud, employers may have obligations related to SENATI (National Service of Industrial Training and Tourism) and SCTR (Complementary Risk Work Insurance), depending on the industry and activities performed.
- SENATI: Applicable to companies in the industrial sector and certain service activities with more than 20 employees. The rate is 0.75% of the total monthly payroll for employees involved in production or maintenance activities.
- SCTR: Mandatory for companies whose activities are considered high-risk. This insurance covers work-related accidents and occupational diseases. It has two components: Health (managed by EsSalud or a private EPS) and Pension (managed by ONP or a private AFP). Rates vary significantly based on the company's risk level and the chosen insurer.
Employers must also contribute to the employee's pension fund, although this is typically deducted from the employee's salary and paid over by the employer. However, the employer is responsible for making the payment to either the public system (ONP - National Pension Office) or a private system (AFP - Private Pension Fund Administrator), depending on the employee's choice.
Income Tax Withholding Requirements
Employers are required to withhold income tax (Impuesto a la Renta de Quinta Categoría) from the salaries and other remuneration paid to their employees. This is a monthly withholding based on a projection of the employee's annual income.
The calculation involves projecting the employee's total gross income for the year, subtracting statutory allowances and eligible deductions, and then applying the progressive tax rates to the resulting net taxable income.
The main statutory allowance is equivalent to 7 Tax Units (UIT - Unidad Impositiva Tributaria). The value of the UIT is set annually by the government. For 2024, the UIT is S/ 5,150. Assuming this value or a similar one for 2025, the annual allowance would be 7 * S/ 5,150 = S/ 36,050.
The progressive tax rates for employment income (Quinta Categoría) apply to the annual net taxable income exceeding the 7 UIT allowance. The tax brackets are based on UIT values.
| Annual Net Taxable Income (Exceeding 7 UIT) | Tax Rate |
|---|---|
| Up to 5 UIT | 8% |
| Over 5 UIT up to 20 UIT | 14% |
| Over 20 UIT up to 35 UIT | 17% |
| Over 35 UIT up to 45 UIT | 20% |
| Over 45 UIT | 30% |
Note: These brackets are based on current law and the 2024 UIT value. The 2025 UIT value may change, affecting the monetary thresholds.
Employers calculate the projected annual tax liability and divide it by 12 to determine the monthly withholding amount. Adjustments are made throughout the year if the employee's income changes.
Employee Tax Deductions and Allowances
Employees benefit from statutory allowances and can claim additional deductions to reduce their taxable income.
The primary allowance is the 7 UIT mentioned above, automatically applied to all employees' projected annual income before calculating the tax.
In addition to the 7 UIT allowance, employees can claim an additional deduction of up to 3 UIT for certain personal expenses. These expenses must be properly documented with electronic receipts (comprobantes de pago electrónicos) and include:
- Lease payments for properties located in Peru.
- Interest on mortgage loans for the first home.
- Professional fees for services provided by doctors and dentists (for the employee and their dependents).
- Contributions to EsSalud for domestic workers.
- Expenses for services provided by hotels and restaurants.
The total amount of these additional deductible expenses is capped at 3 UIT annually. The actual deduction applied is 30% of the documented expenses, up to the 3 UIT limit. This deduction is typically claimed by the employee when filing their annual income tax return, but employers consider it in the monthly withholding calculation based on employee declarations.
Tax Compliance and Reporting Deadlines
Employers must comply with specific reporting obligations and deadlines to declare and pay withheld taxes and employer contributions.
The main monthly declaration is the Planilla Electrónica (Electronic Payroll), which consists of two forms:
- PLAME (Planilla Mensual de Pagos): Used to declare information about employees, their remuneration, withheld income tax (Quinta Categoría), and contributions to EsSalud, ONP/AFP, SENATI, SCTR, etc.
- PDT Remuneraciones (Form 601): The software or online form used to generate the declaration file for PLAME and other related payments.
The deadline for filing the PLAME and paying the corresponding taxes and contributions is monthly, based on the employer's Taxpayer Identification Number (RUC) and a schedule published by SUNAT. Generally, deadlines fall between the 14th and 24th of the month following the reporting period.
Employers must also provide employees with an annual certificate of income and withholdings (Certificado de Renta de Quinta Categoría) by March 1st of the following year, detailing the total income paid and tax withheld during the previous calendar year.
Special Tax Considerations for Foreign Workers and Companies
Tax obligations for foreign individuals working in Peru depend primarily on their residency status for tax purposes.
- Resident Individuals: Foreign individuals who have resided in Peru for more than 183 calendar days within any 12-month period become tax residents. As residents, they are taxed on their worldwide income, including employment income earned in Peru, under the same rules as Peruvian nationals (Quinta Categoría). Employers must withhold income tax accordingly.
- Non-Resident Individuals: Foreign individuals residing in Peru for 183 days or less in a 12-month period are considered non-residents. Non-residents are taxed only on their Peruvian-source income. Employment income earned from services rendered in Peru is subject to a flat withholding tax rate of 30% on the gross income, without the benefit of the 7 UIT allowance or additional deductions. Employers must apply this 30% withholding rate.
For foreign companies operating in Peru, their tax obligations depend on whether they have a permanent establishment in the country. If a foreign company hires employees in Peru without a registered local entity or permanent establishment, managing payroll and tax compliance becomes complex. Engaging a local Employer of Record (EOR) is often the most practical solution in such cases, as the EOR acts as the legal employer for tax and compliance purposes, handling all payroll, tax withholding, and social security obligations in accordance with Peruvian law.
