Income tax: what is it, what are its categories and how to calculate them?

At Peru, Income tax (IR) is applied to all earnings obtained from a job or from the exploitation of capital, whether from real estate (houses, apartments and land) or furniture (vehicles, machinery, artifacts ). This tribute is paid to the National Superintendency of Tax Administration (Sunat) once a year. Find out below what their categories are and how to calculate the amount to pay.

What is income tax (IR)?

Income tax is a tribute that is paid on the income received annually; that is, it is valid from January 1 to December 31.

This income can come from:

• Leases or other types of transfer of real and personal property
• Shares and other transferable securities (capital gains)
• Of the work carried out in a dependent and independent way.

Income tax is divided into five categories that determine who, what types of income and the levels of taxation that will be applied to each case.

Who pays income tax?

All natural person (dependent and independent workers) and legal (businesses, companies, others) must declare and pay income tax.

What is the first category income tax?

Top-notch rent It is a tax that is applied to natural persons who, during the year, had income from the lease and sublease of real estate (houses, apartments and land) or furniture (vehicles, machinery, artifacts), whatever their amount.

This tax is equivalent to 5% of the amount rent and must be paid to the National Superintendency of Customs and Tax Administration (SUNAT). To carry out the procedure you need RUC and SOL password.

How to calculate the first category income tax?

To know how much you must pay for the first category income tax to Sunat, you must follow these three easy steps:

1. Identify the amount

You must identify the rent amount. For example, if you are renting a house or apartment for S / 1,000 soles (including water and electricity), then on this amount you will calculate the tax.

2. Apply the tax

The 5% tax applies to the amount identified. Example: 1,000 x 5% = S / 50.00 of monthly tax

The tax that corresponds to you to pay monthly would be S / 50, 00

3. Compare the tax

In December you should compare the tax paid during the year with the tax that originates from 6% of the self-assessment value (value of your property according to the district municipality, which informs you in February of every year).

For example, if the apartment you rent has a self-assessment of S / 120,000, you must calculate 6% of that amount, which would be equivalent to S/ 7.200. On this figure, you apply 5% of income tax, which would give a total of S/ 360,00. This would be the minimum amount that should have been paid for first category income tax during the year.

Now you make the comparison. If you paid S / 50.00 monthly, in one year you paid S / 600.00. So, you contributed more than the minimum amount that is S / 360.00, for which there is no obligation to file an annual affidavit. If the amount paid is less than the value of self-assessment, you must submit said statement and pay the resulting difference.

What is the second category income tax?

The second category income tax is a tax that is applied to natural persons who carry out a sale of real estate, shares or securities, interests for placement of capital, royalties, patents, annuities, key rights and others.

If the property sold is in any of the following cases, you are not obliged to pay said tax:

• It is your only property and you have owned it for a minimum of two years.
• It was acquired before January 1, 2004.
• The sale value is less than the value of the updated cost.

To carry out the procedure you need RUC and SOL password.

How to calculate second category income tax?

To know how much you must pay for second category income tax to SUNAT, you must follow these three easy steps:

1. Determine the updated acquisition cost of your property

To update the cost of acquisition or construction of the property you are selling, you must apply the Monetary Correction Index – ICM of the month.

For example, if on May 25, 2020 you sold a property for S / 180,000 and the acquisition value of said property was for S / 120,000 in October 2017, then, you must apply 1.17 to the acquisition value, according to the ICM.

Thus: S / 120,000 x 1.17 = S / 140,400 the updated acquisition cost.

2. Determine the net income

Next, you must subtract from sale price of the property the cost of the property updated with the ICM to obtain as a result the net income from the sale.

Sale price: S / 180,000 – updated acquisition cost: S / 140,400 = S / 39,600 is the net income.

3. Determination of the tax

You apply 5% of the second category income tax to the net income obtained. This will result in the tax to be paid. Example: S / 39,600 x 5% = S / 1,980.

The tax to be paid will be S / 1,980, which must be declared and paid in the month following receipt of the payment for the sale of the property, as stipulated by the Sunat in its monthly due dates schedule.

What is the third category income tax or general regime?

The third category income tax is a tax applied to those people natural and legal who develop and earn an income through business activities. Generally, these incomes are produced by the joint participation of capital investment and labor.

Third category incomes are those derived from the Commerce, the industry O mining, from Agropecuary exploitation, forest, fishery or other natural resources. In general, of any activity that constitutes usual business of purchase or production and sale, exchange or disposal of goods.

Monthly expiration schedule for general regime

What is the fourth category income tax?

The fourth category income tax is a tax that is applied to services rendered independently of any profession, science, art or trade.

Also in this category are the income of state workers with a CAS contract, directors, regional councilors and municipal councilors, as well as agents.

How to calculate the fourth category income tax?

To know how much you must pay for the fourth category income tax to SUNAT, you must follow these three simple steps:

1. Discounts 20% of the income received or collected during the year

For example, if this year you obtained S / 45,000 of income throughout the year 2020, you must discount 20%; that is, S / 9,000, which would give you a total of S / 36,000.

2. Discounts the value of 7 UIT

Subtract the value of 7 UIT (S / 30,800) from the previous result: S / 36,000 – S / 30,800 = S / 5,200.

3. Apply the tax rate for each income bracket

Range or income bracket: rate to be applied.

ITU 2021 value: S / 4,400.

• First tranche: 0-5 UIT 8%
• Second tranche: from 5 – 20 UIT 14%
• Third tranche: from 20- 35 UIT 17%
• Fourth tranche: from 35- 45 UIT 20%
• Fifth tranche: more than 45 UIT 30%

As the base amount on which the tax is calculated is within the first tranche (S/ 5.200), Being less than 5 UIT (S / 22,000), you must apply the 8% rate; that is, 5,200 x 8% = S/ 416.00. That would be the amount you must pay to SUNAT annually.

What is the fifth category income tax?

The fifth category income tax is applied to income obtained from personal work rendered in a dependency relationship (payroll) or public offices; In other words, all the companies are affected by this tax. dependent workers who work for a company.

Salaries, salaries, allowances, bonuses, bonuses, bonuses, commissions, compensation in money or in kind, representation expenses and, in general, all compensation for personal services are taken into account.

As a general rule, if you are a fifth category income generator, you should not submit an annual affidavit, unless you have fourth category income at the same time. In that case, you do need to file an annual affidavit for all of your income.

Workers whose gross annual remuneration does not exceed seven Tax Units (FROM) will not have to pay the fifth category income tax.

How to calculate fifth category income tax?

To calculate the tax of fifth category, the employer must project the taxable income that the employee will receive throughout the year, verify if it exceeds 7 UIT and, from that, calculate the projected annual tax and the Monthly amount retention.

In which cases is the fourth and fifth category income returned?

If you are a fourth or fifth category taxpayer, that is, you issue receipts for fees or you are on the payroll, there are two types of refunds in case you have a credit balance, product of excess withholdings or deductible expenses. These are: return of trade O return on request.

Foreign source income

It is a category of income for which the Sunat must charge you a legal tax and that includes money that comes from a localized source outside the national territory. They are not categorized and are considered for tax purposes, provided they have been received.

It can be considered as income from foreign source:

• The income obtained from renting a property located abroad.
• Interest acquired on bank deposit certificates from foreign financial entities.
• Earnings received from rendering services abroad.
• The sale of a shoe brand registered in another country, whose exploitation is carried out outside of Peru.
• Profits received from a company located in another country.