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IGV of 8% for mypes of tourism and restaurants: what implications does this rule of Congress bring?

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This Thursday, July 14, the Plenary of Congress approved by majority the rule that provides a special rate of 8% of the general sales tax (IGV) for micro and small businesses of the tourism sector and restaurants. This tax modification will be valid until December 2024.

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The president of the Commission of Economy of the Congress, Silvia Monteza (Popular Action), pointed out that 85% of informality is registered in the category of restaurants. In addition, he considered that not providing support to companies that are currently taxed could mean their transition to informality.

“Urgent transition rules must be generated”

For the tax lawyer Francisco Pantigoso, the approval of this rule on the IGV requires additional measures before moving from one scheme to another. “The restaurant has purchases under 18% under the previous rate, that is, stocks of purchases under that rate. Now, how are you going to apply that accumulated tax credit? Would a part go to expense or cost?”, questioned the specialist.

Resurgence. The restaurant sector was one of the hardest hit by the pandemic. Photo: Antonio Melgarejo/The Republic

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“Urgent transition regulations must be generated, as in the time of Alan García, who lowered the rate from 19% VAT to the current 18%. There are going to have to be very important considerations of formal control and registration for the use and control of the tax credit”, considered Pantigoso, also a professor of Law at the Universidad del Pacífico.

The specialist predicts that restaurants will maintain their menu prices after the VAT reduction “to recover some of a tax credit that they cannot use but only at 8%”. This position was confirmed by the president of the Peruvian Association of Hotels, Restaurants and Related (Now Peru), Blanca Chávez.

The reduction of VAT “It would help so that we don’t raise prices,” Chavez said, since “all (inputs) have risen by more than 70%.” “The rise in supplies is something that, really, we never thought to have in this way,” lamented the leader of the union.

MEF: VAT reduction encourages business “dwarfism” and informality

The autograph of said norm was sent to the Executive, which will have 15 days to promulgate it or present observations. Before the vote in plenary, the Ministry of Economy and Finance (MEF) had been against this legislative initiative.

“A reduced VAT rate it distorts and hinders its application, makes the tax system more complicated (by generating three additional regimes) and encourages business ‘dwarfism’ and informality,” the MEF assured on July 8 via Twitter.

He also noted that most restaurants and hotels have local people as customers and not tourists. “To date, they would have been registering billing levels similar to those of the pre-pandemicwhich would indicate a recovery in the sector,” he added.

Restaurant guild representative asked President Pedro Castillo to enact this rule. Photo: Composition LR/Jaime Mendoza/AFP

What impact would this measure have on collection?

According to information from the MEF, this bill, approved by the Congress, “It would have a fiscal cost of S/ 690 million.” Likewise, this estimate “does not include the quantification of the increase in tax fraud associated with this project,” warned the government entity.

The reduction of VAT to 8% for tourism and restaurant mypes would affect tax collection, since this tax represents more than 50% of the total, Pantigoso said. “Remember that its control (of the IGV) is very agile (information crosses between seller and buyer) unlike more complex taxes to audit, such as income tax”, he specified.

However, the professor acknowledged that this sector continues to be one of the most affected since 2020. “The pandemic has hit them very hard. It is said that almost half of the ventures in these areas have gone bankrupt and those that remain must suffer —in addition to COVID-19— the excessive increase in supplies. They are under a ‘perfect storm,’ ” he pointed out.

Given this, the representative of Now Peru called on the Executive to give the green light to the project. “We need the president to enact it. That he leave once and for all and that the president or the FEM“, held. “Let us remember that neither this government nor the previous one gave us any financial aid,” Blanca Chávez stressed about the situation in her sector during the pandemic.

Source: Larepublica

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