What does ISC mean in Peru and what products does it affect?

The Selective Consumption Tax (ISC) is a concept that all people involved in the production and importation of products such as fuel, soft drinks, cigarettes and others determined by the State must know. The first sales of such goods and services they must pay this tax that tries to discourage their consumption by considering that these generate negative externalities, which are undesirable effects for society.

It is convenient to be attentive periodically to the decisions that are made by entities such as the Ministry of Economy and Finance to vary the rates that are applied on certain products and that you can review on the official website of the Sunat, entity before which the entrepreneurs involved in their sale or import they must declare and pay the ISC. Here we give you all the guidelines to calculate and cancel it.

What is the ISC or Selective Consumption Tax?

The Selective Consumption Tax or ISC is an indirect and specific tax that only applies to a specific set of goods. According to the Ministry of Economy and Finance, it is an important tax instrument that helps to combat negative externalities on the health of the population and the environment.

Sunat also points out that this tax has the objective of attenuating the regressivity of the VAT by demanding a higher tax burden from those consumers who objectively show a greater taxable capacity for the acquisition of sumptuous or luxury goods.

What products does the Selective Consumption Tax affect?

The list of products affected by the Selective Consumption Tax is found in Appendix III and paragraphs A, B and C of the New Appendix IV of the IGV and ISC Law. Here are some of the main ones:

• Gasoline for engines
• New assembled motor vehicles designed primarily for the transport of people
• New motorcycles and cycles, except those with special adaptations for people with disabilities
• Ethyl alcohol and denatured spirits of any strength
• Water, including mineral and carbonated, with the addition of sugar or another sweetener (such as soda) or flavored
• Used road tractors for semi-trailers
• Used motor vehicle bodies
• Cigars and cigarettes containing tobacco
• Black tobacco cigarettes and blond tobacco cigarettes
• Lotteries, bingo halls, raffles and sweepstakes
• Slot machines
• Casino games
• Equestrian events
• Beer
• Pisco.

How is the Selective Consumption Tax calculated?

The calculation of the Selective Consumption Tax will vary depending on the case. First, you must identify in which system the product for sale is located:

Value system

The products contemplated in literal A of the New Appendix IV and games of chance and betting (except casino games and slot machines) will be applied with the value system.

In the sale of goods, the taxable base will be the sale value, excluding VAT and ISC, while in the import it will be the customs value plus the import duties paid. In the games of chance and bets contemplated, as well as in the equestrian events, the tax will be applied on the difference between the total income received and the total prizes awarded in a month.

On the aforementioned tax bases, the rate indicated in paragraph A. For example, the rate will be 10% for new assembled motor vehicles designed mainly for the transport of people, which exclusively use gasoline; and 50% for cigars and cigarettes containing tobacco.

Specific system

The products included in Appendix III and literal B of the New Appendix IV, as well as casino games and slot machines, will be applied with the specific system, in which the rate is applied on the volume sold or imported.

In casino games, the rate will be applied to each casino game table based on their average monthly net income level; and in the slot machines it will be for each one according to their monthly net income level.

The rate or tax to be applied may vary for each asset and is specified in the literal or appendix where the asset subject to the ISC is included. For example, the rate in the case of beers is S / 2.31 per liter, while in the case of dark tobacco and blond tobacco cigarettes it is S / 0.35 per cigarette.

A practical case could be the following: if a producer has sold 200 liters of beer, the rate of S / 2.31 per liter will be applied: 2.31 (200) = S / 462. This amount must be declared and paid as concept of ISC the month following the sale, according to the monthly expiration schedule.

How to pay the ISC?

If you are a natural or legal person and carry out business activities related to the sale or import of goods and services taxed by the ISC, you must declare and pay the Selective Consumption Tax on a monthly basis, according to the schedule approved by Sunat. For this, you will need RUC, SOL code and the PDT ISC- Virtual Form N ° 615 with the following data:

• Tax period: month and year.
• Number of appendix to be declared: includes tariff heading, unit amount and affected quantity.
• Previous payments you have made
• Balance in favor of the previous period
• In games of chance and bets: income for the month, prizes paid, deductions and compensation, as the case may be.

Then follow these steps:

• Go to Sunat Online Operations
• Select PDT presentation
• Attach the PDT ISC- Virtual Form No. 615
• Choose the payment method
• Save the declaration and payment certificate.

If you do not pay the ISC when filing your return, you can use the Form No. 1662, in its physical or virtual version, and indicate the respective code. In the case of imports, the ISC in charge of the importers will be settled and paid in the same document where the customs duties are set.