Employer Tax Obligations in Peru: A Guide for International Businesses

Navigating the Peruvian social security system is essential for employers operating in the country. The system is managed by key institutions including EsSalud (Social Health Insurance), SUNAT (National Superintendency of Customs and Tax Administration), and others overseeing pensions and compliance. Employers must contribute to health insurance and other mandatory benefits, which are critical for legal compliance and employee welfare.

For instance, a multinational company like SailGlobal entering the Peruvian market must budget for a 9% employer contribution to health insurance, fully borne by the company with no employee share. This applies to both the public EsSalud system and private EPS options.

Health Insurance: EsSalud vs. Private EPS

Peru offers a dual health insurance system. Employees can opt for EsSalud, the public provider, which covers medical services for formal workers and their families. Alternatively, private EPS plans offer more personalized care. Employers pay 9% of monthly salaries to EsSalud, but if they provide private EPS coverage, they can offset 25% of this contribution. This flexibility allows companies like SailGlobal to tailor benefits to attract top talent while managing costs.

Work Injury Insurance

High-risk industries such as mining require supplemental insurance for work-related injuries. This mandatory coverage, paid by employers, includes medical care and disability benefits. For example, a construction firm in Lima must secure this to protect workers and avoid penalties.

Compensation for Time of Service (CTS)

CTS acts as a severance fund, providing financial security upon employment termination. Calculated at 1/12 of monthly salary per service month, it is deposited semi-annually. A recent law permits full withdrawals until 2026, offering employees liquidity during economic shifts.

Additional Voluntary Benefits

While not mandatory, perks like profit-sharing or flexible work arrangements enhance retention. SailGlobal often advises clients to include these in compensation packages to stay competitive in sectors like tech, where benefits drive recruitment.

Employee Tax Responsibilities in Peru

Employees in Peru face deductions for pensions and income tax, based on residency. Residents are taxed on global income, while non-residents pay only on Peruvian earnings. Tax rates range from 8% to 30%, with penalties for non-compliance.

Pension Systems: ONP vs. AFP

Employees choose between the state-run ONP (13% contribution) or private AFP (12.5% average). ONP requires 20 years of contributions for retirement, whereas AFP offers investment-based returns. SailGlobal helps staff navigate this choice through financial counseling sessions.

Personal Income Tax Details

Progressive tax brackets are tied to the UIT (Tax Unit), set at PEN 5,150 in 2024. Deductions include mortgage interest and health contributions. Non-residents pay a flat 30% rate. For example, an expat earning PEN 50,000 annually would fall into the 20% bracket after deductions.

Taxable Income and Deductions

Income categories cover employment, capital gains, and rentals. Allowances reduce taxable amounts, such as up to 3 UIT for rental expenses.

International Compliance

Foreign tax credits prevent double taxation, aligning with CRS standards. SailGlobal ensures clients adhere to treaties, minimizing risks for cross-border employees.

Avoiding Penalties

Late filings incur fines up to 50% of owed tax, but proactive corrections can reduce penalties by 90%. Annual returns are due by April, based on RUC numbers. Regular audits by SUNAT highlight the need for accuracy; SailGlobal’s compliance tools help businesses avoid common pitfalls.

Understanding these elements is key to successful operations in Peru. Partnering with experts like SailGlobal ensures adherence to local laws while optimizing tax strategies.

Peru Employer and Employee Taxes 2024: Compliance Guide for Businesses