Cesar Vallejo University

FACULTY OF BUSINESS
PROFESSIONAL
SCHOOL OF ACCOUNTING

ACADEMIC REPORT TITLE:

Peruvian and foreign entity in domiciled and non-
domiciled people

AUTHOR(S):
Ordoñez Ruiz Mari Carmen (ORCID: 0009-0002-6398-197X)

TEACHER:
MBA. JOSSELYN MIRELLY GONZALES SALAZAR

CHEPEN - PERU
 2023

INTRODUCTION

Economic activity in Peru continues to grow, which is why many Companies

registered in Peru begin to establish branches or subsidiaries in the country.
abroad to expand its activities to other markets. National legislation takes into
account tax regulations, as well as measures and methods to avoid double
taxation in international economic relations where Domiciled taxpayers pay
income tax on their income in the foreign.

In Peru, these people will pay the country's income tax. It should be noted that
When it comes to paying taxes, there are differences between natural persons
domiciled and non-domiciled natural persons, that is, natural persons or Non-
domiciled legal entities are taxed differently than natural persons or domiciled
legal entities. In the following lines this topic will be analyzed in more detail.The
State Administration of Customs and Taxation (SUNAT, 2023) mentions that
income from foreign sources is called income from foreign sources. foreigner.

Income from foreign sources is not classified and is considered for tax purposes
whenever they are received. This report introduces us to the treatment of
taxpayers not domiciled in Peru in our tax legislation the rent. Likewise, it
comments on how this situation is regulated, analyzing the concepts and
regulation of jurisdictional bases, the impact of conditions of residence,
Peruvian and international income standards, to address the double taxation
issues.

INCOME FROM PERUVIAN SOURCE:

All taxable income obtained by individuals is subject to tax.

taxpayers who, in accordance with the provisions of this Law, are considered
domiciled in the country, without taking into account the nationality of the natural
persons, the place of constitution of the legal entities, nor the location of the
producing source. In the case of taxpayers not domiciled in the country, from
branches, agencies or others permanente establishments of sole
proprietorships, companies and entities of of any nature constituted abroad
referred to in paragraph e) of article 7, the Tax falls only on taxable income from
Peruvian sources. (Art. 6).

(Art. 7) The following are considered domiciled in the country:

a) Natural persons of Peruvian nationality who have domicile in the country, in

accordance with the rules of common law.

b) Foreign natural persons who have resided or remained in the country for
more tan one hundred eighty-three (183) calendar days during any period of
twelve (12) months.

c) People who perform representative functions or positions abroad officials and

that have been designated by the National Public Sector.

d) Legal entities incorporated in the country.

e) Branches, agencies or other permanent establishments in Peru of companies

sole proprietorships, companies and entities of any nature incorporated abroad,
in which case the domiciled status extends to the branch, agency or other
permanent establishment, regarding their Peruvian source income.

f) Inheritances, when the deceased, at the date of his death, had the status of
domiciled in accordance with the provisions of this Law.

g) The multinational banks referred to in the Seventeenth Final Provision and

Complementary to the General Law of the Financial System and the Insurance
System and Organic of the Superintendency of Banking and Insurance - Law
No. 26702, regarding income generated by its operations in the domestic
market.

h) Sole proprietorships, de facto companies and entities referred to in the third

and fourth paragraphs of Article 14 of the Law, constituted or established in the
country.

For Income Tax purposes, natural persons, with the exception of included in
subsection c) of this article, will lose their domiciled status when acquire
residency in another country and have left Peru, which must be proven in
accordance with the rules established by the regulations for this purpose. In the
event that not the status of resident in another country can be accredited,
natural persons, except those mentioned in section c) of this article, will
maintain their status as domiciled as long as more than one hundred and
eighty-three (183) remain absent from the country calendar days within any
period of twelve (12) months. The Peruvians who If they have lost their
domiciled status, they will regain it as soon as they return to the country, unless
they do so temporarily, remaining in the country one hundred and eighty-three
(183) calendar days or less within any twelve (12) month period. The provisions
on domicile, contained in this chapter, do not modify the rules on tax domicile
contained in the Tax Code.

Natural persons are considered domiciled or not in the country depending on

their condition at the beginning of each taxable year, judged in accordance with
the provisions of the preceding article. Changes that occur during the course of
a taxable year will only produce effects from the following fiscal year, except in
the case in which fulfilling With the requirements of the second paragraph of the
previous article, the domiciled condition is will lose when leaving the country.
(Art. 8).

RATES

A fee is a tax that is paid in order to be able to enjoy services or exercise certain
activities. It has been pointed out that one of the most important effects of
domiciled status of natural or legal persons, is the rate applicable to their taxed
income.

Interest rates:

Interest rates are the price, that you have to pay an extra amount for the
amount you is received at a given time and the amount is shown as a
percentage and will be larger if the loan is more widespread. Interest rates are
subject to supply and demand, so they are set as the market says. If the low
rate means that There is a great demand for financial products. Different types
of interest rates:

• Nominal Interest Rate (TIN): These are those that capitalize many times in a
year.
• Effective Interest Rate: This sets the nominal interest annually that depends
on the frequency of this being paid.

• Fixed Interest Rate: It is the rate that remains the same throughout the validity
of the loan.

• Real Interest Rate: This rate is very important because it helps determine what
the real interest that we are going to earn for the investments we make and
inflation reduces the purchase and the money loses value.

Other types of fees:

• Academic Fee: It is the amount that the student will pay to prepare their official
studies.

• Administrative Fee: These are those that will have to be paid for using a public
service.

• State Fees: These are the fees paid for services that are provided to us.
national character:

• Autonomous Rates: These are those paid for the services that are provided to
us. autonomous character.

• Local Rates: These are those that are applied by the town councils for which
they lend us a public service.

Withholdings

The TUO tells us that people or local entities that pay or credit to non-domiciled
beneficiaries, income of any kind, must withhold and pay to the treasury the
applicable taxes.

The withholdings according to categories are as follows:

● First category: Gross Income less 20%

● Second category: The entire gross income, except for capital recovery
invested.

● Third category: The entire gross income, except for capital recovery, and
international income.
● Fourth category: Gross income less 20%

● Fifth category: The entire gross income.

Income from Foreign Source:

Depending on the income level of the taxpayer, IR tax rates are progressive
from 8% to 30%, which includes foreign income added to the net labor income.
The payment to taxpayers for results from foreign sources.

When calculating the Annual Income Tax, the Income of Foreign Source
mentioned in the Earned Income (Fourth and/or Fifth category).

The Second Category Net Income is determined solely by the inclusion of the
Foreign Source Income, which can be obtained through the alienation of shares
and other securities that meet one or more of the 2 conditions indicated in
Article 51 of the Income Tax Law establishes that the titles are registered on the
Lima Stock Exchange and are sold through a mechanism of centralized
negotiation of Peru (CAVALI)As long as they are registered in the abroad and
sold through a negotiation process abroad, in order to achieve an Integration
Agreement with these entities'. The MILA – Integrated Market Latin America
has already established agreements with Chile and Colombia.

This is currently the case with income from a foreign source obtained through
disposal of shares and other securities will be added and offset each other, and
if produces an indirect loss, this will be added to the Second Category Net
Income for its alienation in the case of Income from a Foreign Source, which is
generated othrough the sale of securities without complying with the
assumptions of article 51 of the Law, it is not included in the Second Category
Income but must be added to the Labor Income.

It should be noted that it is considered income from a foreign source because

the entities Issuers of these securities do not have their headquarters in Peru.

Losses that arise in countries or territories with low or no taxes.

Examples of income from foreign sources:

• Income from financial advice provided in Switzerland.

• Transfer of a footwear brand registered in another country and exploitation

outside the country. Peru.

• Income from renting apartments abroad.

• Profits received from companies based abroad.

• Income from the sale of shares issued by a Chilean company, traded on the
Colombian Stock Exchange (BV).

• Income from the sale of shares issued by an Argentine company, traded on

the BVL.

• Income from the sale of shares issued by a Colombian company, traded on

the BV of Brazil.

• Income from the sale of shares issued by foreign companies and traded in BV
from other countries.

• The income from the sale of shares from a Colombian to a Peruvian, issued by
a Colombian company negotiated in the BV of Chile.

• Income for technical advice provided in another country.

Exception

Foreign income is added to second category net income only in exceptional

cases, if they come from the sale of shares and other securities that meet one
of the two conditions defined in article 51 of the Law of the Income tax.

- That they are registered in the Public Registry of the Peruvian Stock Market

(Lima Stock Exchange) and that they be sold through the Central Mechanism

of State Negotiation (CAVALI).

- That they are registered abroad and that they are sold through a foreign
negotiation mechanism, as long as there is a Negotiation Agreement Integration
subscribed with these entities. They have currently subscribed agreements with
the countries of Chile and Colombia with which the MILA – Latin American
Integrated Market.

Foreign Source Income from the Disposal of Shares and Other Securities
furniture will be added and offset each other and if a net income results, this will
be will add to the Net Income of the Second Category produced by the disposal
of the referred goods.

If Foreign Source Income is generated from the sale of securities furniture,

without fulfilling any of the assumptions of article 51 of the Law, not must be
added to the Second Category Income, but must be added to the Work Income.

Important It should be noted that they are considered income from abroad,
since the issuing entities of these titles are not located in Peru. Losses are not
taken into account suffered in countries or regions with low or zero tax rates.

CONCLUSIONS:

The tax paid abroad with respect to income from a foreign source that exceeds
the cost that could be credited against the Peruvian Income Tax, It should be
deductible for tax purposes. However, the different conclusions time the tax was
paid with respect to Peruvian source income; every time In such a scenario, the
tax paid will not be deductible for tax purposes. determine the tax paid abroad
must be attributed to the foreign source the expenses for its generation,
therefore, the effective rate of the tax paid in the foreigner will be calculated
considering the rate applied to the net income. The credit is granted with
respect to taxes that meet the characteristics of the Income taxation. Therefore,
income taxes paid abroad do not meet this requirement.