Recent Peruvian tax regulation has facilitated the way to become a tax resident in Peru. (Note that since tax "residency" or tax "domiciliation" has the same meaning under Peruvian law, we will indistinctively use both expressions).
As I have mentioned in previous articles, there is a significant difference between the tax treatment applicable to a "resident" and a "non resident". If you are a "tax-resident" in Peru, you are liable for income tax on worldwide income which means that you will need to pay income tax on all income you receive from Peru and from other countries.
Another big difference between "resident" and "non-resident" is that a "non-resident" employee has to pay a fixed income tax of 30% whereas a "resident" will be liable for an income tax in proportion to the amount of the global net revenue.
New regulation on tax residency has come into force since the beginning of this year. Up until this new legisltation, individuals were considered to be domiciled in Peru if they complied with one of the following requirements:
(i) Individuals who had lived in Peru for 2 years without being abroad during each calendar year for a total period of more than 90 days.
(ii) Individuals who had lived in Peru for 6 month and were registered in the Registry of Taxpayers (RUC).
(iii) Individual who had lived in Peru for 6 months and had asked their employer in Peru to be considered as being domiciled in Peru.
The new regulation, which totally replaces the later, makes it much easier for "non-residents" to become "residents". Indeed, as from 1st January 2007, individuals are considered to be Peruvian "residents" for tax purposes if they are in Peru for more than 183 days in any 12-month period. Note that the 183 days need not be consecutive.
Consequently, the 2 calendar years and the registering with the RUC are no longer relevant criteria in order to asses tax domiciliation. However, note that the effects of "residency" begin to apply the year after the above mentioned requirement, i.e., staying more that 183 days, has been fulfilled. The sooner in a calendar year a foreign employee arrives in Peru, the better chance he or she has to be considered as being domiciled in Peru from a tax viewpoint.
For instance, an expat who enters Peru in March 2007, then leaves Peru in May for one month and then comes back in June and remains here until the end of 2007, he or she will acquire Peruvian "residency" for tax purposes in October 2007. In such a case the legal effects of acquiring the Peruvian tax residency, will start in January 2008.
But be careful: an expat will lose tax residency in Peru if he or she stays out of Peru for more than 183 days in any 12-month period. So, before scheduling your travels for the year, remember to take this regulation into consideration. |
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