Definition Income Tax

The income tax is a tax that also determines annually, taxing the income from work and capitalist exploitation. Whether it is a movable or immovable property. Depending on the type of income and how much that income is, rates are being apply. And also the tax is levied via withholdings or is been carry out directly by the taxpayer.

What levels of income tax are there?

There are five general types of income tax, which are as follows:

First category income: The taxpayer is the lessor or sub-lessor of the property when applicable. A natural person or a marital partnership and what he must pay to SUNAT is 6.25% of the gross income (equivalent to 5% on the gross income). The tax is paid for each and every rental property.

Second category income: In this category, the taxpayer is the one who carries out dividend activities, sale of real estate, interest originated by money loans, royalties for the use of copyrights, trademarks, etc … The definitive or temporary transfer of crucial rights, patents, or similar.

Third category income. In this category, you have to pay depending on the taxpayer’s income in the activities whose performance comes from companies, commercial, industrial, service, or business activities. The tax is progressive (the more income you receive, the higher percentage you will have to pay).

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Fourth and Fifth Category Income

  1. The fourth category, income.  Correspond to services provided without a dependency relationship. People who lend independent workers are subject to this income. Also included are the payment of state workers with a CAS contract, regional councilors, municipal councilors and agents, and the allowances of company directors, union officials, and business managers.
  2. Fifth category income. Your employer must withhold a portion of their remuneration for fifth category income tax for all workers on the payroll. All dependent workers who work in a company are subject to this income.
  3. Income from Foreign Source: Independent or dependent workers whose annual income exceeds 7UIT * S / 30,100.00 must pay income tax. The value of the ITU as of 2021 of S / 4,400.00.

Next, we are going to detail each of the income categories:

Fifth Category Income

Income obtained from personal work rendered in a dependency relationship (payroll), including public positions, such as salaries, salaries, allowances, bonuses, bonuses, bonuses, commissions, compensation in money or kind, representation expenses and, all remuneration for personal services.

Your employer must withhold a portion of their remuneration for fifth category income tax for all workers on the payroll.  All dependent workers who work in a company are subject to this income.

How to calculate the amount to pay for the fifth category rent?

To calculate the fifth category income, the employer must project the taxable income received by the employee throughout the year, verify if it exceeds 7 UIT, and also calculate the projected annual tax and the monthly withholding amount.

Fourth Category Income

The income which is been obtain from services rendered independently and through any profession, science, art, or trade, including state workers with a CAS contract, the allowances of directors, regional councilors, and municipal councilors. They correspond to services provided without a dependency relationship. People who lend independent workers are subject to this income.

Also included are the income of state workers with a CAS contract, regional councilors, municipal councilors and agents, and the allowances of company directors, union officials, and business managers.

 How to calculate the amount payable for income fourth category?

If you are an independent worker and issue receipts for fees. Income tax will be also withheld for an amount equal to 8% of the total amount of the issued token. If it does not exceed the amount of S /. 1,500, no withholding which is been apply. In a simple example, if they print a receipt for fees in the amount of S / 5,000 to company X, the withholding calculation will be:

  • Payment Amount: S / 5,000
  • Retention: 8%
  • Amount to Withhold: S / 400
  • Total Net Amount: S / 4,600

The company will retain S / 400 from them, receiving S /. 4,600 as payment of fees.

Third Category Income

If the Fourth Category income is been complement by business activities or vice versa. The total income obtained will be also consider as Third Category Income (business income). The period is also in which they perceive it as being between January 1 to December 31 is assessed for said work income.

He should consider receiving when available by the worker, although he will not collect it in cash or kind.

Foreign Source Income

When they come from a foreign source outside of Peru, they are not classify for tax purposes if receive. Such as the income obtained from renting a property located abroad, the interests obtained from bank deposit certificates from foreign financial entities. The revenue obtained from rendering services abroad, in addition to others.

Tax refund for earned income – 4th and 5th category

Independent or payroll workers that generate fourth and fifth category income), and by the annual determination of the Income Tax (IR) if it results in a favorable balance, in that case, they can request a refund.

To calculate the annual income, the following must be included as additional expenses:

  • Consumption in restaurants, bars, and hotels: They can deduct 25% of the consumption in bars, restaurants, and hotels for 2021 and 2022. To access the benefit, they must require an electronic ticket with the business ID or RUC number. If the purchase amount exceeds S / 3,500 or the US $ 1,000, it must be banked. In 2020 they can deduct 15%.
  • Rental expenses: They can deduct up to 30% of the rental cost when presenting the lease receipts or electronic invoice to SUNAT (depending on whether the landlord generates first or third-category income). If the person who rents the house does not give them the voucher, they must demand it. Only 30% of the deduction will apply to the holder of the receipt.
  • Professional fees of doctors and dentists: They can deduct 30% of the payment to doctors and also dentists for health care, of children under 18 years of age, of children of legal age with disabilities registered in CONADIS or of the spouse or common-law wife (or) in the non-refundable part for insurance.
  • Professional services generate fourth category income: They can deduct 30% of what they paid during 2020 to any natural person who had an independent profession or trade and wrote a receipt for an electronic fee when the payment is equal to or greater than S / 3,500 or the US $ 1,000, which must be banked.
  • Contributions to Essalud for hiring domestic workers: They must prove the expense through form 1676 that SUNAT also gives to the employers or the virtual document that proves the payment.
  • Tourist guide services and adventure tourism, ecotourism, or similar services:  They can deduct 50% of what was paid between 2021 and 2022 to any natural person issuing the receipt for electronic fees. And which is been register in the RUC under the primary activity or secondary activities of travel agencies, tour operators, reservation services, and related activities.
  • Artisan services: Allows 50% of what was paid during 2021 and 2022 to be deducted from any natural person who issues a receipt for electronic fees and also registers in the National Register of Artisans, in charge of Mincetur.
  • Services of travel and tourism agencies, travel and tourism operating agencies, tourist guides, thermal tourism centers or similar and adventure tourism services, ecotourism or similar: They can deduct 25% of what they pay for example during 2021 and 2022 to a natural person or company issuing payment vouchers and also registers in the RUC under the principal and secondary activity of travel agencies and tour operators and reservation services.
  • Artisan activity: They can deduct 25% of what they pay in 2021 and 2022 to any natural person or company that issues payment vouchers and is been register in the National Register of Craftsmen, in charge of the Minister.

Amount payable

If the amount to pay for one of the expenses is also equal to or greater than S / 3,500 or the US $ 1,000, they must use a

  • Credit or debit card
  • Checks
  • Account deposits
  • Bank transfer
  • And also other authorized means of payment.

Expenses to deduct

The total amount of additional expenses deducts (refund) cannot exceed 3 UIT S / 12,900.00 for 2020

  • Taking into account all payments between January 1 to December 31.
  • Which will appear in the Annual Tax Return Rent.
  • Which expires between March and April of the following year.
  • Based on the maturity schedule.

IR returns

Within the returns, they have types of returns:

Return of part:

 In this case, you can request it immediately after submitting the Annual Declaration, using the virtual form N ° 1649.

Being able to choose between 3 conditions of return: 

  • Deposit in the bank account
  • Pay order
  • Check (amounts to be return for more significant than 10 UIT’s).

If they do not agree with the result or considers that they are entitled to a higher refund. They can also file the tax return to generate a refund request.

In this article, you have been able to know what income tax is and the general types of income in Peru.

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