In Peru, income tax is applied to employees on the payroll, in both the private and public sectors, whose annual income exceeds 7 Tax Units (UIT). This tax is essential to contribute to the country’s tax system and is calculated on the annual income that exceeds this threshold.
What is income tax?
Fifth category income refers to income obtained from employment, that is, 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 fifth category income tax calculated?
To calculate fifth category income tax, follow these steps:
- Determine your annual income: Add up all the income you have received during the year, including salaries, bonuses and other benefits.
- Apply the deduction of 7 UIT: Subtract 7 UIT (which for 2024 is equivalent to S/ 36,050) from your annual income. This 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 National Superintendency of Tax Administration (SUNAT).
Practical example:
Let’s assume that your annual income is S/ 60,000.
Step 1: Annual income = S/ 60,000
Step 2: Deduction of 7 UIT = S/ 36,050
Step 3: Tax base = S/ 60,000 – S/ 36,050 = S/ 23,950
The corresponding tax rates are applied to this amount according to the brackets established by SUNAT.
The importance of calculating correctly
It is essential that both employers and employees make this calculation accurately in order to comply with tax obligations and avoid possible penalties. In addition, keeping proper track of monthly withholdings allows for better financial planning and avoids surprises at the end of the fiscal year.
Tools to facilitate the calculation
There are various online tools and calculators that can help you determine the exact amount of the withholding income tax. These tools simplify the process and ensure that the current deductions and rates are applied correctly.
Conclusion
Correctly calculating the fifth category income tax is essential 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 SUNAT.
Source: Impuestos