The Minister of Economy and Finance, Alex Contreras, announced last Monday, January 29, that the Government plans to increase the Selective Consumption Tax (ISC) during 2024. This measure was postponed last year to provide support to companies amid of the complex situation that the country was going through due to the possible arrival of the El Niño Phenomenon (FEN).
In this regard, Contreras explained that the decision to postpone this increase was also adopted so as not to harm the country’s economic recovery. On this occasion, he indicated that it will be progressive, in such a way that it does not generate a relevant impact. Next, he reviews the statements given by the Minister of Economy in this regard and learns about the main scope of the ISC.
Selective consumption tax will rise this year: what did the MEF say?
During an interview on TV Perú, the head of the MEF, Alex Contreras, explained that the objective of increasing the Selective Consumption Tax for 2024 seeks to avoid significant impacts on the economic recovery. “First, it will be a gradual increase that will not have a significant impact”he said.
Likewise, he maintained that in these days more information will be released about the execution of this measure, taking into account the reduction in tax revenue during the recession that the country is going through.
“I want to be very transparent with the winemakers, with the small stores; we are going to make a decision that allows us to balance two positions: not affect the recovery of our economy and not affect the resources that our State designates,” he added.
How would the increase in the ISC affect wineries?
According to tax lawyer Leonardo López, partner at Hernández y Cía Abogados, if the Ministry of Economy adjusts the fixed amounts of the Selective Consumption Tax to inflation in 2022 and 2023, the annual sales of wineries could have a drop of 4 ,5%. One option to reduce the impact of the ISC adjustment on companies would be to take into account only inflation in 2023 and establish a limit.
“This limit could be defined by the average between the minimum and maximum of the inflation target range defined by the Central Reserve Bank (BCR) for each year,” he said.
What is the Selective Consumption Tax?
The Selective Consumption Tax is a tax that taxes products such as alcoholic beverages, cigarettes or fuel, among others. Its purpose is to discourage the consumption of these products due to their possible negative effects on the personal, social or environmental level. It is worth mentioning that, by law, the ISC is updated regularly every year with the purpose of maintaining the tax burden.
Selective Consumption Tax: when was the last adjustment?
Through Ministerial Resolution No. 021-2022-EF/15, the Ministry of Economy and Finance updated the fixed amounts for products subject to the Selective Consumption Tax in 2022. This adjustment included a small increase in taxes of three goods such as cigarettes, alcoholic beverages with 20 degrees and pisco, with respective increases of S/0.01, S/0.08 and S/0.05.
Source: Larepublica
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