Peru applies income tax to employees’ payrolls in both the private and public sectors, whose annual income exceeds 7 UIT (Unidad Impositiva Tributaria – Applicable Tax Unit), to contribute to the country’s tax system.
What Is Income Tax?
Fifth category income refers to income obtained from employment, i.e., income that comes from a formal employment relationship. This type of income includes wages, salaries, gratuities, bonuses, and any other income derived from subordinate work.
How Is the Fifth Category Income Tax Calculated?
In order to calculate the fifth category income tax, follow these steps:
- Determine your annual income: Add up all the income received during the year, including salaries, bonuses, and other profits.
- Apply the 7 UIT deduction: Subtract 7 UIT (which for 2024 is equivalent to S/36,050) from your annual income, which is the basic deduction allowed by law.
- Apply the tax rates: Apply the current tax rates to the remaining amount according to the brackets established by the SUNAT (Superintendencia Nacional de Aduanas y Administración Tributaria – National Superintendence of Customs and Tax Administration).
Practical Example:
Let us assume that your annual income is S/60,000.
Step 1: Annual income = S/60,000
Step 2: 7 UIT deduction = S/36,050
Step 3: Tax base = S/60,000 – S/36,050 = S/23,950
The corresponding tax rates apply to this amount according to the SUNAT’s brackets.
Importance of Correct Calculation
Both employers and employees must accurately calculate to comply with tax obligations and avoid possible penalties. Additionally, keeping proper track of monthly withholdings allows for better financial planning and avoids surprises at the end of the fiscal year.
Facilitating Tools in Calculating
Various online tools and calculators can help you determine the exact amount of the withholding income tax. These tools simplify the process and ensure that current deductions and rates apply correctly.
Conclusion
Correctly calculating the fifth category income tax is fundamental to comply with tax obligations in Peru. Knowing the process and using the right tools will allow you to keep your finances in order and avoid inconveniences with the SUNAT.
Source: Impuestos