Young Entrepreneur Law: less income for companies that hire personnel between 18 and 29 years old

The Executive Branch approved the regulatory provisions of the Young Entrepreneur Law (Law 31828), which will allow the application of the tax benefits included in said law.

Supreme Decree No. 054-2024-EF establishes provisions that will allow the consolidation of a regulatory framework that promotes sources of formal work for young people, “contributing to the economic development of the country.”

The Young Entrepreneur Law establishes that companies that hire one or more new workers may enjoy an additional deduction of 50% of the basic remuneration paid to them.regardless of their working hours and their contractual modality.

The tax benefits have effects on the determination of the Income Tax for the years 2024 and 2025, indicates the device promoted a little less than a year ago.

Young Entrepreneur Law: you must not earn more than S/1,700

The measures of the Young Entrepreneur Law are applicable to employment relationships initiated on or after January 1, 2024 that meet certain requirements, such as, for example:

• The employment contract must be valid for a minimum period of one month.
• The remuneration does not exceed S/ 1,700.
• They are registered in the T application – SUNAT Registration of the electronic return.

The decree recently published by the Ministry of Economy and Finance (MEF) establishes, among others, the following:

• The additional deductions of the Young Entrepreneur Law can be applied by those taxpayers subject to the General Income Tax Regime or the MYPE Tax Regime, and who declare that they have new workers, according to the definitions established in this device.
• New workers must be between 18 and 29 years old at the time of hire. Such moment must be reported by the contracting companies as the registration date of each new worker in the SUNAT T-Registry.

The provisions approved by the Government also establish formal definitions referring to the status of workers at the time of their hiring, and the main fixed and variable remunerations that they will receive.

Finally, all remunerations are considered deductible, procedures are established for companies to certify that the number of workers declared under these regulatory provisions is greater than the amount they previously had. That is to say, they have effectively made new hires.