Tax revenues would fall 6.3% in 2023, predicts the MEF

The Government’s tax revenue at the end of 2023 would amount to S/206,492 million, which would imply a contraction of 6.3% in real terms compared to the previous year, according to the projections of the Ministry of Economy and Finance (MEF) in its Macroeconomic Framework Multiannual 2024-2027.

This drop will occur despite the fact that income would reach 20.4% of the Gross Domestic Product (GDP), a level above what was recorded before the pandemic. In addition, a tax pressure of 15.5% is expected, below what was observed in 2022 (16.8%) and 2021 (16.0%).

According to the MEF, the decline in tax revenues for 2023 was already estimated in its previous reports due to the lower regularization of the Income Tax (IR) and lower copper and oil prices, which in the first half of 2022 grew at historical levels; as well as the deterioration of economic activity in the first half of the year, which caused collections to June to fall by 12.3% in real terms.

However, towards the second semester, the MEF expects a progressive recovery in income (+0.8% real) given the dissipation of the statistical effect of the IR regularization obtained in 2022, the moderation of the fall in food prices commodities and the gradual recovery of GDP.

In detail, the tax revenues of the General Government would reach S/159,958 million, while non-tax revenues would reach S/47,341 million. Meanwhile, a deficit of S/807 million in capital income is estimated.

However, the main risk is El Niño, since, if this phenomenon is of extraordinary intensity, it is projected that tax revenues would be reduced to S/205,000 million by the end of the year.

Increase income and simplify regimes

Given this situation, the head of the MEF, Alex Contreras, indicated that one of the challenges of his management is to increase collection, since in terms of GDP our country is almost 8 points below what Latin America collects, which makes that Peru has fewer spending possibilities.

“The great challenge is how to increase Peru’s income capacity, which is quite low in terms of GDP and that has to do with informality. As an Executive, we have committed to sending at the end of this year a proposal for changes to tax regimes that will allow it to be the first pillar to fight against informality and tax avoidance,” Contreras said before the Budget and General Accounts Commission of Congress.

Likewise, he added that a mechanism to increase resources is to boost economic growth, productivity, and competitiveness by developing more private investment projects, as well as improving the execution and efficiency of public spending.

Tax debt

On the other hand, Enrique Vera, head of Sunat, stated that in August it was possible to recover S/2.7 billion of the companies’ tax debt and this figure is expected to increase, although it will depend on the confirmation of the debt that is in dispute.

“More than on Sunat itself, it depends on the Tax Court itself or the Judiciary confirming the debt that is in dispute. As soon as they confirm, we will be able to collect it because we would have the coercive legal tools that will do so, it is a consequence of other instances resolving, when it is confirmed, we will execute it,” he emphasized in said commission.

The word

Alex Contreras, Minister of Economy and Finance

“Peru is the country that collects the least in terms of its GDP, almost 8 points below Latin America, and when you have less income and are fiscally organized you have fewer possibilities to spend.”