Congress approved, in the first vote, an initiative that cuts the VAT rate for beauty salons. MEF warns that it will not impact small businesses. S/17 million per year will no longer be collected.
By majority, the Plenary of Congress approved, in the first vote, the replacement text of the opinion of PL 4450 and 6611, which establishes a rate of 8% of the VAT for hairdressers and other beauty treatment services.
According to César Revilla (Fuerza Popular), president of the Economy Commission, the measure—called Tax Re-cut— will help businesses recover after the impact of the coronavirus on their activity and in the face of the increase in the cost of the inputs they use, added to the fact that “few accessed Reactiva Perú” and had to “migrate to RUS or be informal” and to date, they accumulate lease debts.
Nevertheless, The Ministry of Economy and Finance (MEF) has questioned the initiative given that it is regressive and benefits larger companies to a greater extent.
“If approved, 55% of the tax benefits would be concentrated in 5.4% (162 companies) of the highest-income taxpayers,” noted the portfolio headed by José Arista.
The MEF adds that the reduction from 18% to 8% of the VAT will provide relief only to “companies associated with large franchises of cosmetics and beauty salons aimed at middle-high and high socioeconomic strata.”
Why wouldn’t it help small businesses? According to the MEF, 84% of the companies in the sector—almost 15,3000 hair salons—belong to the NRUS and do not declare or pay VAT, and therefore, this reduction to 8% of the VAT will be applied to 16% of taxpayers in the sector.
And, therefore, this law—pending a second vote—would generate “fiscal dwarfism” because the giants in the sector will restructure their income to benefit from the benefit and reduce their tax payments. The MEF foresees a fiscal blow of S/17 million per year.
Source: Larepublica
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