## 1perea2022001

## Source details

**Canonical URL:** [1perea2022001](https://www.imf.org/-/media/files/publications/cr/2022/english/1perea2022001.pdf)

## Other formats

- [Markdown version](/-/media/files/publications/cr/2022/english/1perea2022001.pdf.md)
- [Structured JSON version](/-/media/files/publications/cr/2022/english/1perea2022001.pdf.json)

---

### Mission, scope, and context
- A technical assistance mission from the Fiscal Affairs Department (FAD) of the IMF visited Lima from August 12 to 26, 2019. The mission comprised Roberto Schatan (FAD and head of mission), Juan Carlos Benítez (FAD), and Isaias Coelho and José Madariaga (external advisers).
- Meetings held with Ministerio de Economía y Finanzas (MEF), Ministerio de Comercio Exterior y Turismo (MINCETUR), Ministerio de Producción, SUNAT, private-sector representatives, and tax specialists from EY, PwC, and Damma.
- Report scope: two main topics — tax regimes for small taxpayers (Chapter II) and tax treatment of Special Economic Zones (SEZs) (Chapter III). Emphasis on limited fiscal impact but significant social and political effects on formalization, regional positioning, and economic decisions.

### Macroeconomic and tax-administration context
- Peru noted for countercyclical macroeconomic policies, relatively high and stable growth, reduced poverty, low public debt, and high international reserves.
- Tax revenue collection described as comparatively low and declining in recent years.
- Key policy chronology:
  - 2014–2015: reforms to facilitate growth (low IRC rates, reduction in withholding schemes).
  - 2016–2017: focus on progressiveness and formality (reversal of IRC cuts, proposal to reduce VAT rates, system with better benefits for small taxpayers).
  - 2018–2019: selective consumption taxes (ISC) adjusted (2018: some fuels, cigarettes, vehicles, alcoholic and non-alcoholic beverages; 2019: some tobacco products added and used car rates raised).
- Tax administration initiatives: electronic invoicing adoption; additional inspection powers for SUNAT including a general anti-avoidance rule.

### Strategic perspective (high-level conclusion)
- Small-taxpayer regimes and SEZs are socially and politically significant despite limited fiscal weight.
- Peru should not sacrifice tax collection to improve other indicators when its tax collection is relatively low compared with peers.
- Core recommendation: simplify and rationalize small-taxpayer regimes to reduce arbitrage and improve formalization incentives; for SEZs either eliminate income tax exemptions or retain limited benefits tied to regional development and strict safeguards.

---

### Small-taxpayer regimes — coverage, fiscal magnitude, and informality
- Coverage and fiscal magnitude:
  - Special tax regime for small enterprises covers approximately 1.2 million active taxpayers, or 92 percent of the total.
  - These taxpayers bring in tax revenue amounting to barely 0.3 percent of GDP, that is, 8 percent of total corporate income tax.
- Informality:
  - Informality in Peru is between 60 and 70 percent, depending on measurement (ILO, see Box 2).
  - ENAHO (2016 responses to a 2014 question) reasons for not registering:
    - "Do not consider it necessary": 44.5 percent
    - "Business is small": 36.2 percent
    - "Work is casual": 11.4 percent
    - "Cannot bear the tax burden": 2.2 percent
    - "Paperwork is very complicated": 1.1 percent
- Structure and pressures:
  - A complex tax regime with multiple special regimes and privileges creates pressure on the remaining tax base and incentivizes requests for special treatment.

### Peru’s three simplified regimes (NRUS, RER, RMT) — descriptive findings
- NRUS (Nuevo Régimen Único Simplificado)
  - Applies only to natural persons and fulfills income tax, IGV, and municipal tax obligations via a fixed monthly fee (social security contributions excluded).
  - NRUS threshold: 23 units of taxation (Unidades Impositivas Tributarias – UIT) — implied IGV threshold at S/. 96,000 in the NRUS context.
  - Fixed monthly payments:
    - S/. 20 if annual sales do not exceed S/. 60,000 (Category 1).
    - S/. 50 if annual sales exceed S/. 60,000 but remain below S/. 96,000 (Category 2).
  - Coverage and revenue:
    - NRUS covers 607,000 active taxpayers, or 47 percent of taxpayers with third category income.
    - NRUS contributes just 0.69 percent of the tax revenue contributed by the third category.
    - NRUS payments currently range from US$71 to US$177 in regional comparison.
    - 94 percent of NRUS taxpayers fall under Category 1 (up to 14 UIT in sales).
  - Compliance and risks:
    - NRUS taxpayers can issue payment slips but not invoices; up to 6 percent of purchases made by a taxpayer under the general regime can be deducted based on payment slips (without an invoice).
    - Recommendation: study whether the 6 percent facility is a tax base loophole.
  - Policy stance: mission favors leaving NRUS unchanged except updating fees established in soles in 2003 (inflation-adjusted S/. 20 and S/. 50 would be S/. 31 and S/. 78 respectively) and allowing prepayments (6 or 12 monthly payments) with a small discount.

- RER (Régimen Especial de Renta)
  - Ceiling: 125 UIT (approximately US$155,000 annually).
  - Tax: 1.5 percent on gross income (term used loosely; legal "net income" defined as gross income less refunds, bonuses, and discounts).
  - Eligibility limits: annual gross income must not exceed S/. 525,000; enterprises with more than 10 workers or fixed assets (except real estate and vehicles) totaling more than S/. 196,000 do not qualify.
  - Distortions:
    - For businesses with profit margins above 5 percent, RER offers tax benefits compared to general regime, creating incentives to subdivide businesses and discouraging issuance of purchase invoices and formal employment.
    - RER taxpayers are also IGV taxpayers; mismatch in incentives creates arbitrage (example: issuing invoices that reduce buyer tax burdens and nullify combined IGV taxation).
  - Recommendation: eliminate RER and replace with net-income-based regime calculated on a cash-flow basis.

- RMT (Régimen MYPE Tributario)
  - Access threshold: annual sales up to 1,700 UIT (US$2.1 million).
  - Approximately 700,000 active taxpayers (source notes RMT has approximately 700,000 active taxpayers in summary; other tables list 317 thousand active taxpayers for RMT current — the report contains multiple regime-level counts by definition and active-payment status).
  - Structure:
    - Base calculated similar to general regime.
    - 10 percent rate applied to first 15 UIT of net income; profits exceeding 15 UIT taxed at general regime rate of 29.5 percent.
    - Lower accounting book requirements relative to general regime.
  - Outcomes and distortions:
    - RMT functions largely as a rate concession and did not attract informal-sector firms or those in RER.
    - Added complexity and additional thresholds that encourage subdivision of businesses.
  - Proposal from mission: eliminate RMT and create an intermediate regime between NRUS and the general regime.

### Mission’s proposed three-regime architecture and intermediate regime design
- High-level design:
  - Retain the general regime.
  - Maintain only two simplified regimes: NRUS (unchanged in medium term, fees updated) and one intermediate regime replacing RER and RMT.
- Intermediate regime (mission proposal)
  - Proposed upper threshold: 150 UIT (per MEF/SUNAT proposal).
  - Tax base: profit determined on a cash-flow basis (monthly and final returns; simplified accounting; no comprehensive balance sheets; purchase and sales records and simplified daily ledger required).
  - Immediate deduction of investments (except land) treated as current expenditure; depreciation schemes eliminated.
  - Consider a capital limit beyond which an enterprise cannot join the intermediate regime to prevent migration from the general regime.
  - Uniform tax rate: equal to the general regime income tax rate of 29.5 percent.
  - Rationale:
    - Simplicity through base calculation; immediate deduction of investments; fewer accounting books.
    - Encourages invoicing (purchase invoices recorded as cost) and formal employment.
    - Reduces arbitrage opportunities and incentives for subdivision and dwarfism.
    - Discourages progressive marginal-rate complexity because of collusion and principle-of-legal-person taxation mismatch.
- IGV considerations:
  - Keep NRUS to maintain VAT threshold at 23 UIT.
  - Lowering the IGV threshold risks invoice-credit abuses in absence of adequate supervision; electronic invoicing expansion mitigates these risks over time.
- Expected fiscal impact:
  - Mission estimate: proposed reform could represent an overall increase in tax revenue of 0.14 percent of GDP.
  - Updating NRUS fees would increase tax collection by S/. 74 million.
  - Most of the increase would come from RMT taxpayers migrating to the general regime.

### Detailed mission estimates (Table 5 key figures, verbatim)
- Total (current): 1,301 taxpayers, 19,072 Soles (millions), 3.56 % GDP.
- Total (proposed): 1,301 taxpayers, 19,838 Soles (millions), 3.71 % GDP.
- Collection impact: 766 Soles (millions), 0.14 % GDP.
- Regime-level figures (current and proposed, Soles (millions), % GDP; selected entries preserved verbatim):
  - NRUS: Current — 610 taxpayers, 132 Soles (millions), 0.02 % GDP; Proposed — 610 taxpayers, 206 Soles (millions), 0.04 % GDP; Collection impact: 74 Soles (millions), 0.01 % GDP
  - RER: Current — 268 taxpayers, 344 Soles (millions), 0.06 % GDP
  - RMT: Current — 317 taxpayers, 1,329 Soles (millions), 0.25 % GDP; Proposed — 510 Soles (millions), 0.10 % GDP; Collection impact: 238 Soles (millions), 0.04 % GDP
  - [<150 UIT]: Current — 267 taxpayers, 272 Soles (millions), 0.05 % GDP; Proposed — 1,052 Soles (millions), 0.20 % GDP; Collection impact: 437 Soles (millions), 0.08 % GDP
  - General regime (second row): Current — 106 taxpayers, 17,268 Soles (millions), 3.23 % GDP; Proposed — 17,268 Soles (millions), 3.23 % GDP

- Methodological notes (verbatim):
  - Estimates assume that, for the RER, the profit margin of enterprises under this regime is equivalent to that of their peers under the general regime (same income levels). The intermediate regime rate (29.5 percent) is applied to this margin.
  - Tax collection effect of eliminating the RMT results from applying estimated effective tax rates to profit recorded by taxpayers in the tier above and below 150 UIT. The rates used are (a) 20 percent, equal to the average of enterprises under the general regime in this income range, and (b) 16 percent, which corresponds to the rate of the first quartile of the distribution of effective rates observed in the general regime. The lower reference accounts for the fact that the base in the intermediate regime is lower than in the general regime.
  - Refers to active taxpayers that made payments under the regime in which they were registered.
  - Tax collection under the RER is determined by multiplying the reported gross income by the profit margin (tax base / gross income) under the general regime. The intermediate regime rate is applied to this product.

### Fiscal and administrative considerations, implementation
- Administrative cost of transition not high; simplified cash flow system similar to IGV mechanism.
- Electronic invoicing expansion and electronic payroll support feasibility (electronic invoicing mandatory above 150 UIT; plan to extend in December 2020 to enterprises above 23 UIT).
- Constraints: SUNAT’s limited capacity to oversee a very large number of micro taxpayers electronically; risk of continued abuses absent strengthened tax intelligence and risk analysis.
- Recommendations (small-taxpayer regimes, verbatim/paraphrased preserving proposals):
  - Replace RER and RMT with an intermediate monthly cash flow-based regime with base equal to income less costs.
  - For the new regime adopt the rate applicable to the general business income regime and the 150 UIT annual net income threshold.
  - Refrain from changing NRUS for the time being except update tax amounts and allow semi-annual or annual prepayment potentially at a discount.
  - Examine use of the allowance to have up to 6 percent of purchases with payment slips (without invoices) to determine whether there is a loophole and whether that limit should be revised.
  - Remove other enterprise-size definitions in tax legislation so that only NRUS/intermediate/general thresholds define enterprise size for tax purposes.

---

### SEZs — usage, benefits, problems, and legal/regulatory assessment
- Current SEZ landscape in Peru:
  - Four SEZs in operation: three SDZs located in Ilo, Paita, and Matarani, and the Tacna Free Trade Zone (FTZ). Two SDZs not in operation: Loreto and Tumbes. An SEZ in Puno is not in operation either.
  - Validity periods: SDZs until 2042; Tacna FTZ until 2032 or 2049 depending on legal interpretation; Puno SEZ valid until 2027.
  - SEZs date to 1989; main purpose: regional development and port modernization.
- Tax benefits in SEZs (scope and uniqueness):
  - Suspension of indirect taxes on imports while goods remain in the zone.
  - In Peru SEZ users also benefit from a full exemption from income tax and from the tax on distributed dividends (unusual but present in region).
  - Legal framework includes broad exemptions for "taxes created and to be created" to guarantee stability.
- Performance and transparency:
  - In 2018 the four SEZs generated US$47 million in exports and created over 1,400 direct jobs (MINCETUR figure); ZOFRATACNA reported 605 direct jobs in 2018 (data quality issues noted).
  - SEZs have attracted few relevant enterprises and created few jobs; official data quality on employment is poor; MINCETUR and SEZ web pages lack systematic and current data.
- Problems and risks:
  - Popular assessment: SEZ failures due to disadvantaged locations, government administration, lack of infrastructure, distance from markets, lack of skilled labor.
  - Risk to tax base if SEZ income tax benefits are granted to enterprises serving the domestic market or if SEZ creation is flexible without safeguards.
  - Income tax benefits for SEZs can risk violating WTO rules if used to supply domestic market and could attract investments that would occur regardless of tax incentives.
  - Tacna FTZ historically accounts for close to 20 percent of the country’s total contraband (MEFR, Report No. 143-2019-EF/62.01).
  - Drawback effective January 1, 2019: 3 percent.

### Proposed legislative reforms and mission assessment (MINCETUR vs MEF drafts)
- MINCETUR draft law (summary):
  - Consolidates SDZs and FTZs into single SEZ framework; removes regional development as law’s purpose; reproduces current tax benefits plus tax invariability clause; introduces phased income tax exemption schedule: full exemption for 15 years; 75 percent for next 10 years; 50 percent for following 5 years (Article 40(a)); allows SEZ creation by supreme decree (Article 11); does not condition tax benefit on export obligation; possible expansion of SEZs without MEF fiscal control.
  - Concerns: would permit SEZs in high-development areas with full income tax exemption, risking erosion of tax base and tax equity; reduces MEF authority over tax policy.
- MEF draft law (summary):
  - Proposes reduced income tax benefit: reduced rate of 20 percent for SEZs (MEF proposed income tax rate for SEZs: 20 percent).
  - Restricts beneficiaries to legal persons; requires minimum investment of US$5 million for tax benefit (US$10 million for mining and hydrocarbon sectors in Legal Stability Agreement context).
  - Excludes certain activities from income tax benefits (intellectual property exploitation, financial services, holding companies, logistics operating outside SEZ, resale under reshipment regime).
  - Proposes accelerated depreciation: annual depreciation rate of 20 percent (Article 24.1).
  - Denies benefits when a user carries out activities with related parties (Article 24(7)).
  - Maintains a weak link to regional development; existing SEZs to remain under current regimes until expiry (no standardization).
- Mission assessment:
  - MEF proposal reduces income tax benefit but poses risk to revenue if significant income tax benefits are retained without territorial/regional-development link.
  - Alternative recommended by mission: eliminate the income tax benefit (including dividend exemption) to permit flexible SEZ locations while protecting the tax base. If any income tax benefit is retained, it must be tied to disadvantaged-area regional development and include strict safeguards (BEPS/FHTP compliance).
  - All benefits, including indirect-tax suspensions, should be conditional on specific investment and employment targets.
  - Consolidate regulatory framework for present and future SEZs while respecting pre-existing investment contracts for their duration.

### International and legal constraints
- WTO and OECD considerations:
  - WTO/ASCM prohibits export subsidies; income tax benefits that subsidize exports or permit domestic-market discrimination risk WTO issues.
  - OECD BEPS Action 5 (2015) and Inclusive Framework: regimes must meet criteria to avoid being considered harmful tax practices (preferential treatment limited in size; job-creation and tangible investment focus; economic substance requirements; transparency and exchange of information).
  - OECD indicators of harmful regimes include low effective tax rates for mobile activities, ring-fencing, lack of transparency, and lack of economic substance requirements.
- Constitutional constraint in Peru:
  - Article 79 of the Political Constitution provides that tax exemptions must be approved by law with a qualified majority in Congress. Mission inclined to think new SEZs granting tax exemptions should be authorized by law rather than administrative decree.

### Recommendations on SEZs (verbatim list preserved)
- Eliminate the income tax exemption as a benefit for being located in an SEZ.
- If a partial income tax benefit is maintained in SEZs, ensure that its main purpose is the regional development of disadvantaged areas.
- If the tax benefits granted to SEZs are relative to indirect taxes on temporary imports, consideration could be given to authorizing SEZs with greater flexibility, while at all times addressing tax and customs control problems.
- Grant the tax benefit on the condition that specific investment and employment targets are met by the SEZ user.
- Consolidate the current regulations of the various existing SEZs, including the period of validity, as well as any new SEZs that are created into a single legal framework, considering the Single Window for Foreign Trade, except for the income tax treatment.
- Establish in a transitory article of the new law that current users will be able to maintain the treatment under the current law until their contracts with the SEZ expire.
- Consider the excessive benefit of the drawback for exporters as a widespread issue and resolve it in those terms.
- Create new SEZs by means of a law, in accordance with constitutional restrictions, irrespective of the law establishing the corresponding legal framework.
- Comply with WTO and BEPS Action 5 restrictions for SEZ purposes, that is, do not include highly mobile activities or logistics operating outside the SEZ.
- Allow reshipment, but without an income tax benefit.
- Subject users in SEZs to requirements on transfer prices established in the general income tax regime.

### Key SEZ numeric parameters and facts (verbatim)
- Exports from four SEZs in 2018: US$47 million.
- Direct jobs in SEZs in 2018: over 1,400 (MINCETUR figure); alternative report: 605 direct jobs (ZOFRATACNA).
- Drawback rate effective January 1, 2019: 3 percent.
- Income tax exemption phased schedule in MINCETUR draft: full exemption for 15 years; 75 percent for next 10 years; 50 percent for following 5 years (Article 40(a)).
- MEF proposed income tax rate for SEZs: 20 percent.
- Minimum investment required for tax benefit in MEF draft: US$5 million (US$10 million for mining and hydrocarbon sectors excluded in Legal Stability Agreement context).
- Proposed accelerated depreciation rate: annual depreciation rate of 20 percent (Article 24.1).
- Tacna FTZ contraband share: close to 20 percent of the country’s total contraband.

---

### Additional findings and international comparisons
- Simplified regimes in Latin America: average threshold similar to Peru (4.2 times per capita GDP); regional patterns show shift from presumptive gross-income regimes toward net-margin based regimes as electronic oversight improves (Chile example provided).
- No evidence that tax benefits focused on small enterprises increase aggregate employment more than benefits extended to all enterprises (International Tax Dialogue, 2007).
- Tax incentives alone rarely overcome weak local conditions; successful SEZs typically require complementary policies (infrastructure, market access, trainable labor, institutional framework).
- Peru’s corporate income tax rate context (2019): Chile 27 percent; Brazil 34 percent; Argentina 30 percent; Colombia 33 percent; Ecuador 25 percent; Bolivia 25 percent.

---

*Source: PREFACE and EXECUTIVE SUMMARY and selected chapters of 1perea2022001 (IMF mission report).*

### PREFACE ___________________________________________________________________________________________________ 6

### 1perea2022001 - PREFACE

### Mission and context
- A technical assistance mission from the Fiscal Affairs Department (FAD) of the IMF visited Lima from August 12 to 26, 2019.
- The mission comprised Roberto Schatan (FAD and head of mission), Juan Carlos Benítez (FAD), and Isaias Coelho and José Madariaga (both external advisers).
- The mission met with officials from the Ministerio de Economía y Finanzas (MEF), Ministerio de Comercio Exterior y Turismo (MINCETUR), Ministerio de Producción, SUNAT, private-sector representatives, and tax specialists from firms EY, PwC, and Damma.

### Scope of the report
- Two main topics: tax regimes for small taxpayers (Chapter II) and tax treatment of special economic zones (SEZs) (Chapter III).
- Emphasis: these regimes have limited direct fiscal impact but significant social and political effects on formalization, regional positioning, and economic decisions.

### Key findings on small taxpayer regimes
- Coverage and fiscal magnitude:
  - The special tax regime for small enterprises in Peru covers approximately 1.2 million active taxpayers, or 92 percent of the total.
  - These taxpayers bring in tax revenue amounting to barely 0.3 percent of GDP, that is, 8 percent of total corporate income tax.
- Informality:
  - Informality in Peru is between 60 and 70 percent, depending on measurement (ILO, see Box 2).
  - Taxes are only one factor in informality; employment and health regulations and benefits also strongly influence decisions.
- Complexity and arbitrage:
  - Peru currently has three simplified regimes (NRUS, RER, RMT), all optional to the general regime, with different tax bases and rates that create opportunities for arbitrage, artificial subdivision of businesses, and tax evasion.
  - A large portion of simplified-regime taxpayers are outside SUNAT’s effective scrutiny (no electronic invoices issued).
- NRUS (Nuevo Régimen Único Simplificado):
  - NRUS applies only to natural persons and fulfills all tax obligations (except social security contributions) via a very small fixed monthly fee.
  - NRUS threshold: 23 units of taxation (Unidades Impositivas Tributarias – UIT).
  - Debate: some analysts propose reducing the NRUS threshold and removing certain activities; others propose increasing the IGV threshold and separating NRUS from IGV. The mission favors leaving NRUS unchanged except updating fees established in soles in 2003.
  - SUNAT’s progress with electronic invoicing is expected to reach NRUS coverage soon; raising the threshold is not recommended at this time.
- RER (Régimen Especial de Renta):
  - RER ceiling: 125 UIT (approximately US$155,000 annually).
  - RER tax: rate of 1.5 percent on gross income (term used loosely to mean income before deductions under the legal rule “net income” is gross income less refunds, bonuses, and discounts).
  - Problem: high-profit-margin taxpayers (profit margin >5 percent of sales) prefer RER over general or RMT, creating a strong incentive to subdivide businesses; business costs and expenses (including payroll) are not deducted, inhibiting formalization.
  - The mission considers elimination of the RER necessary and recommends replacing it with a net-income-based regime calculated on a cash-flow basis.
- RMT (Régimen MYPE Tributario):
  - RMT access threshold: annual sales of up to 1,700 UIT (US$2.1 million).
  - RMT has approximately 700,000 active taxpayers.
  - RMT functions largely as a rate concession from the general regime (marginal rate of 10 percent for the first 15 UIT of net income) and has not attracted informal-sector firms or those in RER.
  - Proposal: eliminate RMT and create an “intermediate” regime between NRUS and the general regime covering current RER and most RMT taxpayers.
    - Proposed intermediate threshold: 150 UIT.
    - Proposed tax treatment: cash-flow taxation at the general regime rate of 29.5 percent.
    - Rationale: simplicity through base calculation, immediate deduction of investments, fewer accounting books, progressive structure with three regimes (NRUS, intermediate, general), and resolution of excessive arbitrage and lack of invoicing incentives.

### Key findings on Special Economic Zones (SEZs)
- Current SEZ treatment and usage:
  - There are currently four SEZs in operation, including the Tacna Free Trade Zone (FTZ).
  - SEZ users benefit from suspension of indirect taxes on imports while goods remain in the zone, and in Peru SEZ users also benefit from a full exemption from income tax and from the tax on distributed dividends (unusual but not unheard of in the region).
  - SEZs have attracted only a handful of relevant enterprises and created few jobs; official data quality on employment is poor.
- Problems and risk to tax base:
  - Popular assessment: SEZs have failed due to disadvantaged locations, government administration, lack of infrastructure, distance from markets, and lack of skilled labor.
  - A policy suggestion—allowing SEZs where private investors choose and retaining full tax benefits—risks eroding Peru’s tax base because SEZ tax advantages would be available to enterprises competing in the national market.
  - Income tax benefits for SEZs can violate WTO standards if used to supply the domestic market and could attract investments that would occur regardless of tax incentives.
- MEF proposal and mission assessment:
  - MEF proposes substantially decreasing the income tax benefit in SEZs to a reduced rate of 20 percent and allowing SEZ location flexibility with safeguards against harmful tax practices (BEPS/FHTP considerations).
  - The mission notes this poses a serious risk to tax revenue and argues that if income tax benefits are retained at any significant level, the connection to regional development must be maintained.
  - Alternative: eliminate the income tax benefit (including dividend exemption) to permit flexible location of SEZs while protecting the tax base.
- Regulatory and transparency issues:
  - Current legal framework for SEZs is a regulatory tangle with differing characteristics and terms across zones.
  - Consensus exists on the need to consolidate the regulatory framework for present and future SEZs, except for grandfathering income tax treatment for prior investments under their contract validity.
  - The mission recommends consolidating the regulatory framework for present and future SEZs, respecting pre-existing investment contracts for their duration, and applying a new legal framework to all subsequent investments that should not include the income tax benefit if location becomes flexible.
  - All benefits, including indirect-tax suspensions, should be conditional on specific investment and employment targets.
  - Significant improvements in production and transparency of information are required at both the SEZ user level and the regulating ministerial entity.

### Strategic perspective and overall recommendation
- Small-taxpayer regimes and SEZs are socially and politically significant despite limited fiscal weight.
- Peru should not sacrifice tax collection to improve other indicators when its tax collection is relatively low compared with peers.
- For small taxpayers: preserve NRUS (update fees), eliminate RER, replace RMT with a carefully designed intermediate cash-flow-based regime up to 150 UIT taxed at 29.5 percent, and simplify to reduce arbitrage and increase incentives to formalize and issue invoices.
- For SEZs: either eliminate the income tax exemption (including dividend exemption) to allow flexible and market-driven locations without eroding the tax base, or retain limited income-tax benefits but preserve the territorial/regional-development connection and tighten regulatory and transparency requirements; benefits should be conditional on investment and employment targets.

*Source: PREFACE and EXECUTIVE SUMMARY of 1perea2022001.*

### 1.      Peru has successfully dealt with the economic volatility of recent  years, standing

### 1.      Peru has successfully dealt with the economic volatility of recent years, standing out among its Latin American peers

### Overview and macroeconomic context
- Governments implemented prudent “countercyclical” macroeconomic policies that fostered relatively high and stable growth rates compared to those of the region, reduced poverty, and maintained low levels of public debt and high international reserve margins.
- Despite macroeconomic strengths, tax policy has been less successful, with tax revenue collection comparatively low for the region and declining in recent years.

### Tax revenue performance and policy chronology
- Tax revenue collection is comparatively low (see Figures 1 and 2 in the source).
- Recent policy chronology:
  - 2014–2015: Priority given to reforms to facilitate growth (examples: low corporate income tax (impuesto a la renta corporativo – IRC) rates and a reduction in withholding schemes).
  - 2016–2017: Measures focused on improving progressiveness and formality (the lowering of IRC rates was reversed, a reduction in value-added tax (VAT) rates was proposed, and a system with better benefits for small taxpayers was introduced).
- Some changes were made to selective consumption taxes (Impuestos Selectivos al Consumo – ISC); examples cited:
  - In 2018: rates applicable to some fuels, cigarettes, vehicles, and alcoholic and non-alcoholic beverages were raised.
  - In 2019: some tobacco products were added and used car rates were raised.
- Total collection levels are described as still at a record low.

### Tax administration and digitalization
- Increasing collection was entrusted to the tax administration (SUNAT) for improvement.
- Significant efforts included adoption of an electronic invoicing system.
- Additional inspection powers were given to SUNAT, such as a general anti-avoidance rule.
- Supporting references: E. Rojas et al., Peru – TADAT Performance Assessment (June 2017); Matthieu Bellou et al., Digitalization to Improve Tax Compliance: Evidence from VAT e-Invoicing in Peru (IMF Working Paper, June 2019).

### Structure and pressures in the tax regime
- General design of the tax regime has been fundamentally maintained: it remains complex and contains many privileges, coexisting with a very extensive informal sector.
- The abundance of tax benefits creates dynamics that increase pressure on the remaining tax base by expanding groups and sectors seeking special treatment.
- In the absence of a comprehensive review, the government must periodically address complaints or problems generated by special regimes.

### Special regimes: small taxpayers and SEZs
- Tax regimes specifically intended for small taxpayers and for Special Economic Zones (SEZs) have warranted special attention.
- Purposes and outcomes:
  - Intended to support decrease in the informal economy and development of disadvantaged regions.
  - Argued outcomes: informality continues to be high; the regime resulted in an unplanned tax sacrifice; investment and economic activity have not been significantly promoted in areas granted SEZ privileges.
  - The net social benefit of these measures for Peru is questionable.
- International constraints on SEZ tax advantages:
  - Community of countries more strictly tolerates tax treatments that may give rise to unfair tax competition.
  - Beyond WTO restrictions, efforts must avoid contravening OECD’s BEPS minimum standards (OECD (2015), Action 5 - 2015 Final Report).

### Formality, regional development, and appropriate policy instruments
- Formality and regional development are valid policy goals but are pursued through a broad strategy beyond taxation (infrastructure, skilled labor, public services, business chains, logistics).
- Tax incentives are an additional instrument; success or failure of projects does not necessarily hinge on tax incentives.
- Informality is influenced by labor regulation, access to financial services, contributions, and social security benefits.

### Report scope, structure, and objectives
- The report focuses on whether tax measures adopted and proposed for small taxpayers and SEZs are consistent with broader national tax policy objectives and whether they represent best practices or could be improved.
- Chapter II analyzes the regime for small taxpayers.
- Chapter III discusses tax treatment in SEZs and draft reforms proposed by the private sector and various instrumentalities.
- The report concludes with recommendations for improving these tax regimes, mindful of tax cost and international standards to avoid unfair tax competition.

### Tax regime for micro and small enterprises (overview)
- Objective: identify strengths and weaknesses of current taxation design for micro and small businesses and make recommendations to improve efficiency and neutrality to facilitate labor and business formalization.
- The mission analyzed reform ideas from MEF and SUNAT and studies by the World Bank Group and Macroconsult.

### Rationale behind special regimes for small enterprises
- Small businesses typically have little capital/technology and limited access to bank credit and export markets; tax and labor obligations add financial and administrative burdens that are relatively higher for small businesses.
- Costs of compliance with tax rules and regulations of general regimes in developing countries are estimated to be 5 percent of the gross income of a small business (International Tax Dialogue, 2013, p. 62).
- Tax compliance costs are regressive relative to businesses’ gross sales (World Bank Group, Perú: Recomendaciones de reforma de los regímenes tributarios para las MIPYMES, p. 25, Lima, 2018).
- Private-sector representatives state that pension and health system costs are as high as or higher than taxation-related costs; labor legislation is apparently the main obstacle to formalization (World Bank Group and Macroconsult references).

### International and regional experience with simplified regimes
- Simplified regimes for micro and small enterprises are common in Latin America; exceptions: El Salvador, Panama, and Venezuela.
- International experience shows regimes segment taxpayers by income, legal form, sector, number of employees, asset value, or surface area, then offer simpler tax treatment.
- Common Latin American approaches (2019):
  - Two main mechanisms to replace multiple taxes: (a) a fixed fee (Argentina, Brazil, Bolivia, Chile, Colombia, Ecuador, Peru, and Uruguay); (b) a rate lower than that of the general regime, usually on gross income of the SME.
  - Administrative complements: simplified accounting, reduced number of payments, reduced frequency of returns/payments, simplified tax-burden calculation.
- Threshold observations:
  - Average threshold in Latin America is similar to that in Peru: 4.2 times per capita GDP (Table 1).
  - Presumed tendency: shift from presumptive taxes based on gross income to those based on taxpayer’s net margin to better approximate profit given new IT oversight opportunities (example: Chile, Box 1).

### Chile example (Box 1)
- Chile’s regime:
  - Based on net profits for micro, small, and medium-sized enterprises.
  - Taxpayers taxed on difference between earned income (materially entered assets) and expenses effectively paid during the fiscal year.
  - Reliefs: released from obligation to keep certain accounting records; entitled to immediate depreciation and other simplified administrative benefits.
- Access limits:
  - Average annual income not greater than 50,000 tax units (Unidades Fiscales – UF) (approximately US$2,000,000) in the last three fiscal years, without exceeding 60,000 UF (close to US$2,400,000) in any of those periods.
  - For startups, effective capital less than or equal to 60,000 UF.
- Exclusion conditions include income composition rules and limits on shareholdings (20 percent threshold in certain conditions).
- Taxpayers may annually opt to exempt themselves from the first category tax (Impuesto de Primera Categoría) applied at a rate of 25 percent, under specified ownership conditions tied to the global complementary tax (Impuesto Global Complementario) with progressive personal tax rates from 0 to 35 percent.

### Definition of small enterprise and thresholds
- No internationally agreed concept for micro and small enterprises; countries use a variety of definitions (annual sales, number of employees, asset value).
- Prior to 2013 in Peru: micro = 1–10 employees and annual sales ≤ 150 UIT; small enterprise = 1–100 workers and annual sales ≤ 1,700 UIT (Supreme Decree 007-2008-TR).
- Since 2013, classification based solely on sales (Law 30,056).
- For tax purposes, thresholds for special regimes should reflect taxpayers’ compliance capacity; if a taxpayer can comply with the general regime, preferential regime access should not be granted.
- Access to tax formality should be easy, with moderate compliance costs and progression toward the general regime without significant discontinuity; multiple thresholds are recommended to enable progression.

### Peru’s special tax regimes for MSEs (summary)
- Peru has three special tax regimes for MSEs (2018): Nuevo Régimen Único Simplificado (NRUS), Régimen Especial de Renta (RER), and Régimen MYPE Tributario (RMT).
- Regimes accessible to persons with business income (third income tax category) below respective thresholds, for individuals or corporations meeting specific conditions under each regime.
- Special regimes apply only to business income and some independent services.
- Tax paid under any of these regimes may have a discharging effect, exempting the enterprise from any other income tax.
- Distributed dividends are taxed at a final income tax rate of 5 percent.

*Italic: Prepared from the IMF mission report text provided in the source content.*

### 23.      Natural persons with smaller business income in Peru can fulfill their tax

### Natural persons with smaller business income in Peru can fulfill their tax obligations under the NRUS regime

### NRUS design and eligibility
- Natural persons and undivided estates carrying out merchandise sales or providing services to end consumers, as well as natural non-professional persons in any trade (independent service providers), can opt into NRUS.
- Fixed monthly tax payments:
  - S/. 20 if annual sales do not exceed S/. 60,000 (Category 1).
  - S/. 50 if annual sales exceed S/. 60,000 but remain below S/. 96,000 (Category 2).
- The payment replaces income tax, general sales tax (Impuesto General a las Ventas – IGV), and municipal tax (Impuesto de Promoción Municipal – IPM).
- Special NRUS exemption: sales of up to S/. 60,000 per year of agricultural products in their natural state (producer or in food and produce markets).

### Compliance, invoicing, and recordkeeping under NRUS
- NRUS taxpayers can issue proof of payment, but not invoices (no transfer of IGV credit to other taxpayers).
- NRUS taxpayers are not required to keep accounting books but must keep proofs of payment issued and documents supporting their purchases.
- Reporting obligation is considered fulfilled when the monthly fee is paid, although SUNAT reserves the right to request additional information it deems necessary.

### Fiscal implications and risks associated with NRUS and payment slips
- In practice the NRUS upper threshold implicitly acts as the lower IGV threshold: businesses with sales below this threshold do not have to pay IGV.
- Up to 6 percent of purchases made by a taxpayer under the general income tax regime can be deducted based on payment slips (without an invoice).
  - Risk: deducting payment slips issued by NRUS taxpayers poses a serious risk to tax collection because information cross-referencing mechanisms are not yet developed to detect fraudulent issuance of slips.
  - Note: Taxpayers are not required to identify deductions made on invoices compared to payment slips, so SUNAT is unable to calculate the percentage that slips represent of taxpayers’ total deductions under the RMT and general regime.
  - Total sales recorded by taxpayers under the NRUS account for just 2 percent of total costs and expenses deducted under those two regimes.
- Recommendation: a study is recommended to determine whether the facility is a tax base loophole and whether the cap on the blind deduction remains appropriate.

### NRUS coverage and revenue contribution
- NRUS covers 607,000 active taxpayers, or 47 percent of taxpayers with third category income.
- NRUS contributes just 0.69 percent of the tax revenue contributed by the third category.
- 94 percent of NRUS taxpayers fall under Category 1 (up to 14 UIT in sales).

### Policy considerations and recommended NRUS adjustments
- General analyst consensus: keep NRUS without major changes to allow very small taxpayers to pay a fixed fee; otherwise a large influx into IGV could create administrative burden and tax risks.
- Electronic invoicing coverage among NRUS population is currently far from universal; mass Internet access and electronic wallets are long-term objectives.
- Suggested adjustments to restore initial NRUS design:
  - Update the fixed monthly amounts (currently S/. 20 and S/. 50 have remained unchanged for a long time).
    - Adjusted for inflation, the amounts of S/. 20 and S/. 50 would now be S/. 31 and S/. 78, respectively.
  - Offer option of making 6 or 12 monthly payments in advance, with a small discount for advance payment.
  - Advance payment would not entitle continued NRUS eligibility if sales exceed the threshold during the fiscal year.

### RER regime (Resumen Especial de Renta)
- RER applies to gross income as an approximation of presumed net income.
- Rate and eligibility:
  - Monthly tax corresponds to 1.5 percent of gross income.
  - Annual gross income must not exceed S/. 525,000 for the year.
  - Enterprises with more than 10 workers or fixed assets (except real estate and vehicles) totaling more than S/. 196,000 do not qualify for RER; societies of academics also excluded.
- Effects and risks:
  - Simpler and lighter tax burden compared to the general regime; for businesses with profit margins above 5 percent, RER offers a tax benefit compared to the general regime.
  - Calculation based on sales removes incentive to request purchase invoices and does not encourage labor formality (payment of salaries does not affect tax determination).
  - Strong incentive to omit sales, compromising income tax and IGV compliance.
  - RER taxpayers are also IGV taxpayers; unlike other countries, Peru’s IGV does not set an explicit minimum sales threshold for registration, but NRUS threshold (S/. 96,000) acts as implied IGV threshold.
  - Risk example: an RER taxpayer could issue an invoice for S/. 1,000 (pay S/. 15 of RER) to a general-regime buyer who would use it to reduce its income tax by S/. 295; issuing S/. 1,000 invoice would require the RER taxpayer to pay S/. 180 in IGV, but the buyer would take a S/. 180 credit, resulting in combined IGV taxation of zero.
- Recommendation: RER can be completely replaced with a better quality regime based on a (simplified) net income calculation given sufficient invoicing and recordkeeping coverage.

### RMT (Tax Regime for Micro and Small Enterprises) and system complexity
- RMT introduced preferential treatment as of 2017 for enterprises with annual sales up to 1,700 UIT.
- RMT base and rates:
  - Base calculated similar to general regime.
  - 10 percent rate applied to the first 15 UIT in profit; profits exceeding 15 UIT taxed at general regime rate of 29.5 percent.
  - Lower accounting book requirements relative to general regime (with thresholds for required books).
- Outcomes and distortions:
  - Introduction of RMT caused automatic migration of enterprises out of the general regime; general regime now has the lowest number of active taxpayers (8 percent of total).
  - 76 percent of RMT taxpayers report annual sales below 50 UIT, indicating limited effectiveness in encouraging movement to higher tax-burden tiers.
  - RMT added a fourth option to the small-taxpayer architecture, increasing complexity and creating additional thresholds (10 and 1,700 UIT) that encourage subdivision of businesses.
  - Informality in Peru remains very high despite regime proliferation.

### Profit sharing and its labor-market effects
- Peruvian law guarantees annual profit sharing to company employees; rates are 5, 8, or 10 percent depending on sector.
- Enterprises with fewer than 20 employees are exempt; hiring the twenty-first worker triggers profit sharing for all employees.
- Marginal cost of surpassing 20 employees is particularly high, incentivizing entrepreneurial dwarfism and discouraging growth.
- Policy mitigations proposed:
  - Method A: Start profit sharing at low rates that increase with each additional employee (example: trigger at 15 employees with 1 percent for 15 employees, 2 percent for 16, etc., up to the maximum rate).
  - Method B: Provide an exemption equivalent to 20 employees and multiply the statutory rate by coefficient (N-20)/N where N is number of employees.
  - Both methods aim to smooth the discontinuity at employee 21 and mitigate negative impacts on formal employment.

### Informality magnitude and context
- Estimates (2017):
  - 6,878,000 informal productive units.
  - Informal productive units generated 18.4 percent of Peru’s GDP.
  - Informal employment accounted for 72 percent of the economically active population (EAP):
    - About three-quarters worked for informal enterprises.
    - Close to one-quarter held informal occupations in formalized enterprises.

*Source: Chapter content on NRUS, RER, RMT, and informality from the provided IMF PDF excerpt.*

### 42.      The tax system and its administration are not among the main causes of informality

### 42.      The tax system and its administration are not among the main causes of informality

### Findings on causes of informality (ENAHO)
- ENAHO (2016 responses to the 2014 question) — reasons non-agricultural productive units gave for not registering with the tax administration:
  - "Do not consider it necessary": 44.5 percent
  - "Business is small": 36.2 percent
  - "Work is casual": 11.4 percent
  - "Cannot bear the tax burden": 2.2 percent
  - "Paperwork is very complicated": 1.1 percent

### Structure of small-business tax regimes and collection contribution
- Multiple regimes have high and multiple thresholds:
  - NRUS thresholds: 2.5 and 4.0 times per capita GDP
  - RER and RMT thresholds: 21.7, 121.3, and 294.7 times per capita GDP
- Contribution to tax collection:
  - General regime: 3.23 percent of GDP to Peru’s tax collection; accounts for 91 percent of collection from business income
  - RMT: 0.25 percent of GDP
  - RER: 0.06 percent of GDP
  - NRUS: 0.02 percent of GDP
  - RMT, RER, and NRUS together represent 92 percent of all taxpayers earning business income but contribute only 0.33 percent of GDP (sum of 0.25, 0.06, and 0.02 percent)
- Observed behavior and risks:
  - Configuration of thresholds resembles a progressive scale in which tax burden increases with income, creating arbitrage opportunities
  - Small-regime features encourage reporting of minimal net income (e.g., declaring just 15 UIT), disguising wage relationships as self-employment, business division among family members, issuance of apocryphal receipts, and sales without proofs of payment
  - Weak SUNAT controls exacerbate these abuses

### Macroconsult proposal (summary)
- Consolidate RER and RMT into a single regime based on cash flow; maintain NRUS but for a much smaller set of taxpayers (NRUS applied only to winery businesses and food and produce markets)
- Introduce an "intermediate regime" (between RUS threshold and general regime threshold) with progressive marginal rates on net business income: 1, 5, 10, 15, 20, and 30 percent
- Increase the general regime rate to 30 percent to align with income of natural persons
- Monthly submission of a final tax return to render an annual return unnecessary
- Criticisms noted in the source:
  - Progressiveness may not attract informal businesses because moderate marginal rates may not offset costs of formalizing labor relations and issuing invoices
  - Different rates create arbitrage opportunities (artificial transfer of income/costs)
  - Monthly returns for many micro taxpayers would raise compliance and processing costs and increase oversight burdens
  - Integrating most NRUS into intermediate or general regimes could require lowering the IGV threshold, adding risks due to current electronic oversight limitations

### World Bank proposal (summary)
- Restructure system into three segments:
  1. Micro business (natural person) — annual sales up to 7 UIT (S/. 28,350); tier exempt from personal income tax; pay a fixed amount instead of income tax, IGV, and health contribution
  2. Small business (natural person) — annual sales up to 38.5 UIT (S/. 156,000); contribution replaces income tax and IGV and is calculated as a percentage of sales: 0.2 percent for manufacturing, 3.5 percent for trade, and 8 percent for services
  3. Medium-sized enterprise — annual sales not exceeding 1,700 UIT (S/. 6,885,000); initially subject to general income tax regime with limited administrative simplification; medium term migration of natural persons to progressive personal income tax and legal persons to general regime; medium-sized and large enterprises would be IGV taxpayers
- Benefits and weaknesses (as presented):
  - Benefits: greater consistency in corporate income taxation; strengthening collection by reducing thresholds of preferential regimes; better harmony between business and labor income taxation; micro business regime linked to health/pension system as a formalization incentive
  - Weaknesses: preserves the presumed income system of the RER (rewards tax arbitrage and avoidance); increasing entry threshold for IGV to 38.5 UIT would remove enterprises with sales in that interval from IGV and run counter to trend of expanding IGV scope with electronic invoicing

### Mission’s proposed reform (three-regime framework and intermediate regime)
- High-level design:
  - Retain the general regime
  - Maintain only two simplified regimes for small taxpayers: NRUS (unchanged in medium term, with fee updates) and one intermediate regime replacing RER and RMT
- NRUS treatment:
  - Remain unchanged in the medium term except for updating fee amounts and allowing semi-annual or annual prepayment, possibly at a discount
  - Close to half of taxpayers fall under NRUS but it entails tax collection of less than 1 percent of third-category income
- Intermediate regime features:
  - Replace and merge RER and RMT into a substantially restructured regime
  - Lower threshold could be aligned with current NRUS border so current NRUS taxpayers are not affected
  - Proposed upper threshold for qualifying: 150 UIT (per MEF/SUNAT proposal)
  - Tax base: profit determined based on cash flow (monthly and final returns; simplified accounting; no comprehensive balance sheets; purchase and sales records and simplified daily ledger required)
  - Immediate deduction of investments (except land) — treated as current expenditure; depreciation schemes eliminated
  - Consider a capital limit beyond which an enterprise cannot join the intermediate regime to prevent improper migration from the general regime
  - Uniform tax rate equal to the general regime income tax rate: 29.5 percent
  - Rationale for uniform 29.5 percent:
    - Creates incentive to purchase with invoices (recorded as cost) and to formalize employees
    - Reduces opportunities for arbitrage between regimes
    - Rate progressiveness is discouraged due to collusion and mismatch with principle of legal-person taxation
- IGV considerations:
  - IGV not seen as problematic to the same extent as income tax; corporate income tax reform should minimally affect IGV design and application
  - Maintaining NRUS keeps the VAT threshold at 23 UIT
  - Lowering the IGV threshold by reducing NRUS threshold introduces invoice-credit risks where adequate supervision is lacking
  - Raising IGV threshold does not improve control or collection; electronic invoicing is expected to improve oversight over time

### Expected fiscal impact and operational considerations
- Mission estimate: proposed reform could represent an overall increase in tax revenue of 0.14 percent of GDP
- Most of the increase would come from taxpayers currently under the RMT who would move to the general regime
- Updating NRUS fees would increase tax collection by S/. 74 million
- Feasibility factors:
  - Progress in automating and digitalizing tax services (electronic invoicing mandatory above 150 UIT; plan to extend in December 2020 to enterprises above 23 UIT, covering current RER taxpayers)
  - Electronic payroll already implemented
  - Constraints include SUNAT’s current limited capacity to oversee a very large number of micro taxpayers electronically and the risk of continued abuses absent strengthened tax intelligence and risk analysis

*Source: Prepared by the mission with data provided by the MEF and SUNAT; text as provided in the content unit.*

### 63.      The incorporation of RER taxpayers into the intermediate regime could amount to

### 1perea2022001 - 63.      The incorporation of RER taxpayers into the intermediate regime could amount to

### Tax collection impact of incorporating RER into intermediate regime
- Incorporation of RER taxpayers into the intermediate regime could amount to close to S/. 200 million (0.04 percent of GDP).
- If all RER taxpayers were to raise their costs to make them equal to their income and thus empty the intermediate regime base, S/. 344 million in tax collection would be lost.
- Table 5 (Mission estimates with data provided by the MEF and SUNAT) — key entries (regime, taxpayers (thousands), collection Soles (millions), % GDP):
  - NRUS: Current — 610 taxpayers, 132 Soles (millions), 0.02 % GDP; Proposed — 610 taxpayers, 206 Soles (millions), 0.04 % GDP; Collection impact: 74 Soles (millions), 0.01 % GDP
  - RER: Current — 268 taxpayers, 344 Soles (millions), 0.06 % GDP
  - RI [23 - 150 UIT]: Current — 535 taxpayers, 542 Soles (millions), 0.10 % GDP; Proposed — 199 Soles (millions), 0.04 % GDP
  - RMT: Current — 317 taxpayers, 1,329 Soles (millions), 0.25 % GDP; Proposed — 510 Soles (millions), 0.10 % GDP; Collection impact: 238 Soles (millions), 0.04 % GDP
  - [<150 UIT]: Current — 267 taxpayers, 272 Soles (millions), 0.05 % GDP; Proposed — 1,052 Soles (millions), 0.20 % GDP; Collection impact: 437 Soles (millions), 0.08 % GDP
  - RMT [> 150 UIT]: Current — 50 taxpayers, 1,057 Soles (millions), 0.20 % GDP
  - General regime (first row): Current — 156 taxpayers, 1,312 Soles (millions), 0.25 % GDP; Proposed — 255 Soles (millions), 0.05 % GDP
  - General regime (second row): Current — 106 taxpayers, 17,268 Soles (millions), 3.23 % GDP; Proposed — 17,268 Soles (millions), 3.23 % GDP
  - Total: Current — 1,301 taxpayers, 19,072 Soles (millions), 3.56 % GDP; Proposed — 1,301 taxpayers, 19,838 Soles (millions), 3.71 % GDP; Collection impact: 766 Soles (millions), 0.14 % GDP

Notes on methodology from Table 5:
- Estimates assume that, for the RER, the profit margin of enterprises under this regime is equivalent to that of their peers under the general regime (same income levels). The intermediate regime rate (29.5 percent) is applied to this margin.
- Tax collection effect of eliminating the RMT results from applying estimated effective tax rates to profit recorded by taxpayers in the tier above and below 150 UIT. The rates used are (a) 20 percent, equal to the average of enterprises under the general regime in this income range, and (b) 16 percent, which corresponds to the rate of the first quartile of the distribution of effective rates observed in the general regime. The lower reference accounts for the fact that the base in the intermediate regime is lower than in the general regime.
- Refers to active taxpayers that made payments under the regime in which they were registered.
- Tax collection under the RER is determined by multiplying the reported gross income by the profit margin (tax base / gross income) under the general regime. The intermediate regime rate is applied to this product.

### Reconfiguration of the RMT and estimated gains
- Proposal: Split current active RMT taxpayers into two groups by gross income: below 150 UIT and above 150 UIT.
  - Group below 150 UIT (84 percent of active taxpayers) would become part of the intermediate regime; tax collection would increase approximately S/. 238 million (0.04 percent of GDP).
  - Group above 150 UIT would become part of the general regime; tax collection would increase by S/. 255 million (0.05 percent of GDP).
- Eliminating and restructuring the RMT would yield an estimated increase of S/. 493 million.

### Administrative cost and implementation considerations
- Administrative cost of transitioning from the RER and RMT to the proposed intermediate regime is not high.
  - The simplified cash flow system is similar to the IGV mechanism to which taxpayers are already accustomed.
  - Electronic invoicing already covers the RMT realm and is expanding into RER territory; progress with electronic payroll supports the new architecture.
- Expected compliance cost changes: There will not be significant increases in compliance costs.
- Thresholds established to define the NRUS, intermediate regime, and general regime should be the only references for determining enterprise size for tax purposes; other enterprise size definitions in other rules should be removed from tax legislation.

### Advantages of the new regime (as listed)
- The number of special regimes is reduced from three (NRUS, RER, and RMT) to two (NRUS and the intermediate regime).
- Presumptive taxation gives way to a more realistic measurement of profits, in line with the variation in profitability between enterprises.
- Disconnecting the regimes reduces opportunities for arbitrage and evasion (for example, an RER enterprise fraudulently invoicing a general regime enterprise).
- Reduced incentive for RER and RMT enterprises to split to continue benefitting from those regimes when sales grow.
- The tendency toward dwarfism (keeping an enterprise small to avoid higher tax brackets) is eliminated once there are no more tax discontinuities as the enterprise grows.
- Strengthened control capacity of electronic invoicing (through information cross-referencing).
- Income tax and IGV monitoring is mutually enhanced once the respective bases converge (except for labor costs).
- The incentive to invest is extended to small enterprises through accelerated deduction (immediate depreciation of fixed assets).

### Recommendations (policy proposals)
- Replace the RER and RMT used to tax MSE profits with an intermediate regime involving monthly cash flow-based determination with a base equal to income less costs.
- For the new regime, adopt the rate applicable to the general business income regime and the 150 UIT annual net income threshold.
- Refrain from making changes to the NRUS regime for the time being, but consider doing so when technological control conditions permit, except for updates to the tax amount, and allow semi-annual or annual prepayment potentially at a discount.
- Examine the use made of the allowance to have up to 6 percent of purchases with payment slips (without invoices) to determine whether there is a loophole and whether that limit should be revised.

### Special Economic Zones (SEZs) — background and Peru context
- SEZs are delimited geographic areas with a special regulatory framework for customs and taxes, providing infrastructure and services to attract private investment.
- For customs purposes, SEZs are an extraterritorial space where merchandise can be deposited without being considered admitted into the national territory; while goods are maintained in SEZs, they are not subject to tariffs, customs duties, the IGV, and the ISC, as applicable.
- SEZs typically promote exports of manufactured goods or services or the reshipment of merchandise; suspension of indirect taxes on imports functions like temporary imports.
- Some countries grant supplementary tax benefits (including full or partial income tax exemption) which may risk violating WTO rules against export subsidies or OECD minimum standards on harmful tax practices.

SEZs in Peru — key points:
- Peru currently has four SEZs in operation: three formally called special development zones (SDZs) located in Ilo, Paita, and Matarani, and the Tacna Free Trade Zone (FTZ). Two SDZs not in operation: Loreto and Tumbes. An SEZ in Puno is not in operation either.
- Validity periods: SDZs until 2042; Tacna FTZ until 2032 or 2049 depending on legal interpretation; Puno SEZ valid until 2027.
- SEZs in Peru date back to 1989; main purpose is regional development (job creation in disadvantaged areas) and modernization of ports.
- Eligibility: National or foreign natural or legal persons that enter into onerous use assignment contracts for lots in SEZs or exercise purchase options for land in SEZs; public bid process required.
- Administration: SEZs administered by a committee or management board attached to the regional government with administrative, economic, and financial autonomy; private administration recently allowed (Supreme Decree No. 005-2019 of August 2, 2019).
- Activities: SDZs and FTZs can host virtually any type of business except prohibited activities (e.g., sale of weapons and narcotics); repair/refurbishment of used vehicles prohibited as of 2011 (Law No. 29,303).
- No minimum investment requirement to be an SEZ user in Peru; no minimum hiring requirement. MEF plans to introduce a minimum investment amount.

### Tax benefits of SEZs in Peru
- Enterprises in Peru’s SEZs enjoy a practically full tax exemption, except for social security contributions.
  - Exemptions: IGV, IPM, and ISC on procured goods destined for export; tariffs and customs duties on imports with the same destination.
  - Enterprises established in SEZs for some years enjoy a full income tax exemption and are exempt from withholding tax on dividends distributed to shareholders of those enterprises.
- Legal framework includes a broad exemption for all “taxes created and to be created” to guarantee stability during the period of validity; intended to protect users and operators from tax law changes at central, regional, and municipal levels.
- Scope changes: The law now expressly states that commercialization of merchandise to the rest of the national territory is subject to tariff duties, the IGV, the ISC, the IPM, and other corresponding import taxes; this provision does not include income tax, so income from admission of merchandise from the SDZ into the national territory is income tax-deductible, which complies with WTO rules.
- Tacna FTZ: Article 7 provides users are exempt from income tax, the IGV, the ISC, the IPM, and “any other tax created or to be created.” Article 8 subjects operations with the rest of the national territory to taxes on sales, imports, and service delivery, omitting reference to income tax on such operations.
- The full income tax exemption is unusually generous compared with other countries in the region and is difficult to justify relative to national enterprises outside SEZs that serve the domestic market; granting the benefit only to exporting enterprises poses WTO risk.

Additional SEZ-specific points:
- Sales from the national territory to the SEZ are considered a virtual export: subject to an IGV rate of zero and refunded accordingly, which increases administrative burden for SUNAT and widens the zero-rate taxpayer network.
- Drawback increases recovery of tariff duties but may present WTO concerns because drawback amounts can be much higher than the tariff amount paid.

*Source: Mission estimates with data provided by the MEF and SUNAT; text from the provided IMF chapter/section.*

### 81.      The consensus among analysts in Peru is that SEZs have been unsuccessful. The

### 1perea2022001 - 81.      The consensus among analysts in Peru is that SEZs have been unsuccessful. The

### SEZ performance and diagnosis
- In 2018, the four SEZs in operation generated US$47 million in exports and created over 1,400 direct jobs (data caveat: MINCETUR employment number is uncertain; ZOFRATACNA reported 605 direct jobs in 2018).
- Consensus: SEZs in Peru have been unsuccessful because they have attracted very little economic activity.
- Identified explanations for poor outcomes:
  - Poor tax management.
  - Broader management failure by the State in administering the zones.
  - Lack of business readiness where SEZs are located: little infrastructure, distant connection to major foreign markets, lack of skilled labor and provider networks.

### Analytical critique of SEZ rationale
- Core argument: Locating SEZs in disadvantaged areas undermines their ability to attract investment; tax incentives alone cannot overcome weak local conditions.
- Implication: The original objective of promoting regional development may be at odds with making SEZs commercially viable.
- Policy tension: Allowing SEZs to relocate to high-development localities would amount to providing a tax subsidy to areas already benefiting from public investment, with adverse implications for national tax policy and revenue collection.

### Proposed reforms summarized (CIEN, MINCETUR, and MEF perspectives)
- CIEN conclusion:
  - Tax privileges are not attractive for investment because SEZs lack essential business factors (infrastructure, skilled labor, providers, market access).
  - Tax benefits cannot alone generate a successful investment dynamic.
- CIEN recommendation:
  - Change the rationale: SEZs should be instruments for increasing investment and employment with no geographic preference; private sector should decide SEZ location.
- MINCETUR draft law (overview):
  - Consolidates SDZs and FTZs into a single legal framework called SEZs (Article 6).
  - Removes regional development from the law’s purpose (Article 2); focuses on promotion of private investment, job creation, and export diversification.
  - Reproduces current tax benefits plus a tax invariability clause: SEZ users exempt from income tax, the IGV, the ISC, the IMP, and any other central, regional, or municipal government tax created or to be created (Article 40(a)).
  - Introduces a time-phased income tax exemption schedule: full exemption limited to 15 years; 75 percent exemption for the next 10 years; 50 percent exemption for the following 5 years (Article 40(a)).
  - Provides possible extension of exemptions if the user reinvests amounts representing a certain percentage of initial investment (draft unclear whether this refers to the first 15 years or the entire 30-year period).
  - Incorporates SEZ users into the Single Window for Foreign Trade regime; maintains SEZ customs regime.
  - Does not condition tax benefit on export obligation (compliant with WTO export subsidy rules); allows establishment of SEZs in high-development zones enabling domestic-market operation with full income tax exemption.
  - New SEZs could be created by supreme decree (MINCETUR authority, Article 11), reducing MEF’s governance over tax policy and transferring tax decision power to business promotion agencies; MEF’s role limited to monitoring and control of tax regime without authority to set tax expenditure limits (Article 19.2).

- MEF draft law (overview and differences):
  - Does not provide a full income tax exemption; instead would grant a reduction in the income tax rate to 20 percent.
  - Restricts SEZ beneficiaries to legal persons, excluding natural persons.
  - Simplifies customs procedures: entry of merchandise from national territory would not require export declaration but a simple registration; IGV benefits maintained as if export but drawback benefit lost.
  - Excludes certain activities from income tax benefits: exploitation of intellectual property, financial services, holding companies, logistics activities, resale under reshipment regime; aligns with OECD minimum standards on harmful tax practices.
  - Limits tax benefits for e-commerce sales from Tacna Trade Zone to resident natural persons in the rest of the national territory (Law 30,976 of July 3, 2019 referenced as precedent).
  - Requires a minimum investment of US$5 million for tax benefit eligibility (minimum established for Legal Stability Agreement entry, excluding mining and hydrocarbon sectors which require US$10 million).
  - Proposes accelerated depreciation: annual depreciation rate of 20 percent (Article 24.1) as an additional tax benefit tied to investment completion.
  - Denies benefits when a user carries out activities with related parties (Article 24(7)); raises concerns about limiting normal international value chains and transfer pricing alignment.
  - Maintains a weak link to regional development: SEZ creation factors include potential for new investment attraction, export diversification, technology transfer, job creation, and productive chains; regional development mentioned only tangentially.
  - Existing SEZs would remain under their current regimes until expiry; MEF draft would not standardize current regimes, potentially adding another system to existing variety.

### Governance, control, and fiscal considerations
- Concern: MINCETUR proposal and CIEN recommendation to allow private sector to locate SEZs risk concentrating tax subsidies in already advantaged areas and weakening national tax policy.
- Concern: MINCETUR draft’s ability to create unlimited SEZs by supreme decree reduces MEF oversight and could lead to uncontrolled tax expenditure.
- MEF draft aims to reduce distortions by taxing SEZ income (20 percent rate) and by excluding activities prone to profit-shifting; would increase tax authority control and reduce incentives for aggressive tax planning.
- Customs and enforcement issues:
  - Tacna FTZ historically accounts for close to 20 percent of the country’s total contraband (MEFR, Report No. 143-2019-EF/62.01).
  - Current SEZ administration and control mechanisms are weak or non-existent in many respects; effective implementation of investment requirements and accelerated depreciation benefits would require strengthened controls.

### Key statistics and legal parameters (verbatim)
- Exports from four SEZs in 2018: US$47 million.
- Direct jobs in SEZs in 2018: over 1,400 (MINCETUR figure); alternative report: 605 direct jobs (ZOFRATACNA).
- Drawback rate effective January 1, 2019: 3 percent.
- Income tax exemption phased schedule in MINCETUR draft: full exemption for 15 years; 75 percent for next 10 years; 50 percent for following 5 years (Article 40(a)).
- MEF proposed income tax rate for SEZs: 20 percent.
- Minimum investment required for tax benefit in MEF draft: US$5 million (US$10 million for mining and hydrocarbon sectors excluded in Legal Stability Agreement context).
- Proposed accelerated depreciation rate: annual depreciation rate of 20 percent (Article 24.1).
- Law referenced allowing e-commerce from Trade Zone to rest of country: Law 30,976 of July 3, 2019.
- Tacna FTZ contraband share: close to 20 percent of the country’s total contraband.

*Source: IMF mission review and draft law analysis as presented in the provided chapter excerpt.*

### 104.      Aside from a framework law that would govern SEZs, the MEF proposes that each

### 1perea2022001 - 104.

### SEZ legal framework proposal (paragraph 104)
- MEF proposes each new SEZ be established by a specific law (Article 5.1).
- Rationale: Article 79 of Peru’s Political Constitution provides that tax exemptions must be approved by law, with a qualified majority in Congress.
- Initiative would rest with the executive, based on a prior evaluation of convenience and opportunity contained in the joint favorable opinion of the Ministries of Production, Foreign Trade and Tourism, and Economy and Finance.
- Purposes and risks identified:
  - Necessary to respect the constitutional mandate and serve as a control mechanism against mass and indiscriminate expansion of SEZs, which could violate tax equity and jeopardize tax collection.
  - Alternative proposals rely on the SEZ framework law to authorize individual SEZs administratively; this would be more flexible but riskier for tax revenue and risk systematic tipping of the balance in tax equity driven by industrial promotion without major counterweights.

### Best practices and effectiveness of tax incentives (G: paragraphs 105–110)
- General findings from literature:
  - Tax incentives for investment are generally used with little effectiveness and efficiency in developing countries.
  - Economists skeptical about net benefits of aggressive, sustained tax incentive policies, especially exemptions from corporate income tax as in Peru’s SEZs.
  - Schemes that reduce the cost of investment (e.g., accelerated depreciation) are better rated than tax holidays affecting only net profit.
- Key arguments and evidence:
  - The tax burden is only one variable in investment decisions; tax system stability and simplicity are often more important.
  - Changes to SEZ rules and complex regulatory interpretation in Peru undermine stability.
  - Tax resource costs of incentives can be underestimated: distortion of relative prices, increasing marginal cost of replacing lost tax collection, avenues for tax avoidance opened by SEZs.
  - Tax collection loss can represent a shift in tax burden to the investor’s country of residence depending on that country’s dividend taxation regime.
  - Tax holidays are of little use to business start-ups (losses in early years) and disproportionately benefit profitable enterprises that would likely invest anyway, attracting opportunistic investment.
  - For each successful SEZ (e.g., China or South Korea), many failed projects exist, especially in low-income countries. Success typically requires complementary policies: competitive infrastructure, access to major markets, abundant trainable cheap labor, and a dependable institutional framework.
- Policy implication:
  - Analyze investment incentives as part of broader tax policy; align incentives with the country’s tax architecture.
  - Transparency in administration of tax benefits is crucial; requires complete and reliable public information on benefits and costs of SEZs.
  - Peru has substantial room for improvement: MINCETUR does not publish basic SEZ statistics, and SEZs do not provide systematized information.

### International considerations (H: paragraphs 111–116)
- Global context:
  - International concern for curbing unfair tax competition has risen; OECD adopted minimum standards to prevent unfair tax practices.
  - Peru joined the Inclusive Framework promoted by the OECD and has been subject to review and will be again, especially if it adopts a new SEZ regime.
  - WTO monitors and penalizes export subsidies; WTO/ASCM prohibits government subsidies for SEZs that grant tax deductions or direct tax exemptions conditional on export without extending benefits to domestic commercialization. Such discrimination existed previously but was eliminated in 2005; current regimes not considered contrary to WTO regulations.
- OECD criteria for low-risk special regimes (paragraph 112):
  - Preferential treatment is only granted to a small portion in terms of surface area or population relative to the country as a whole and is provided given the zone’s low level of economic development;
  - The regime is designed primarily to create jobs and attract tangible investment, rather than passive income;
  - Beneficiary entities must have economic substance (demonstrate job creation, minimum investment amounts, ownership of fixed assets);
  - The country agrees to have access to regime information (investment amounts, numbers of beneficiary entities, income tax-exempt amounts) and share them with the FHTP.
- OECD indicators of harmful regimes (paragraph 113):
  - No or low effective tax rates on income from geographically mobile financial and other service activities;
  - Regime is ring-fenced from the domestic economy;
  - Regime lacks transparency;
  - No effective exchange of information with respect to the regime;
  - Regime fails to require development of activities with economic substance.
- Other international risks (paragraphs 115–116):
  - Reshipment of merchandise from third countries, income tax-exempt in SEZs, can enable underinvoicing and avoidance of tariffs, VAT, and ISC in importing countries; risk reduced if exemption is eliminated.
  - International tax competition also includes reductions in tax burden via direct subsidies and transfers and general corporate tax rate reductions; SEZs play a significant role in this dynamic.
  - Peru’s corporate income tax rate context (paragraph 116 note): the corporate income tax rates in 2019 were as follows: 27 percent in Chile, 34 percent in Brazil, 30 percent in Argentina, 33 percent in Colombia, 25 percent in Ecuador, and 25 percent in Bolivia.

### Transparency on SEZ activity (I: paragraphs 117–119)
- Government-produced statistics on SEZs are scarce and poor quality:
  - MINCETUR is the SEZ regulatory body but lacks sufficient data to assess zone behavior.
  - Available information differs by zone and is incomplete: data on investment committed by zone users exist, but not on investment made; no systematic collection of wages and salaries; imports from SEZs (Customs has records) and sales inside the country are not systematically collected.
  - Employment data unreliable: 46 jobs reported for the Tacna FTZ while more than 500 enterprises are established there.
  - SUNAT does not regularly control VAT refunds generated by sales (virtual exports) in SEZs by national residents.
- SEZs themselves provide limited transparency:
  - SEZ web pages contain very few details. Example: Paita SDZ transparency section links to performance indicator reports, the most recent being fourth quarter of 2015, but files are inaccessible (“The page you are looking for does not exist”).
  - Matarani web page lacks information; Ilo SDZ provides slightly more information (users, activities, employment created, taxes applied on auxiliary services, fulfillment of institutional goals) but lacks exports/imports/transactions inside national territory.
- MINCETUR plans to standardize data collection from SEZs in 2019; submission is not penalized and MINCETUR lacks enforcement authority. Gaps remain wide and must be remedied before increasing number of authorized SEZs.

### SEZs and investment in Latin America (J: paragraphs 120–121 and figures)
- Context and findings:
  - Promoting private investment is a main reason behind proposals for new SEZs in Peru.
  - Peru’s SEZs have not had marked success in promoting investment, but Peru’s overall investment performance is competitive regionally.
- Comparative statistics and assertions:
  - Private-sector gross fixed capital formation (2012–2018 average) in Peru has been higher as a percentage of GDP than in Colombia, Costa Rica, and the Dominican Republic (some model SEZ countries).
  - Peru appears at the top as an FDI destination compared to the region (above 4 percent of GDP, see Figure 6).
  - Costa Rica outperforms Peru in FDI share but is a small economy; Peru attracts more investment than Colombia despite SEZs accounting for close to 40 percent of FDI in Colombia (source: Asociación de Zonas Francas de las Américas, 2016).
  - Total investment in Peru (including public investment) between 2010 and 2018 accounted for around 24 percent of GDP on average, higher than most countries in the region and on par with the Dominican Republic (source: WEO 2019).
  - Using SEZs to promote export diversification: Peru already diversifies its exports more than most Latin American countries (Figure 7), including Costa Rica and Colombia.
  - In Colombia, SEZs are responsible for 13 percent of the country’s total exports (UNCTAD 2019).
- Figures referenced (no datasets reproduced here):
  - Figure 5: Private-Sector Gross Fixed Capital Formation (2012–2018 average).
  - Figure 6: Net Foreign Direct Investment Flows (2010–2018 average) — Peru above 4 percent of GDP.
  - Figure 7: Export Concentration Index (1995–2018 average) — Herfindahl-Hirschman Index.
  - Figure 8: SEZ Tax Expenditure in Selected Countries (2017).

*Source: IMF staff analysis from the referenced chapter content.*

### 122.      Peru is one of the countries with the lowest tax collection in the region, and SEZs,

### 1perea2022001 - 122.      Peru is one of the countries with the lowest tax collection in the region, and SEZs,

### SEZs: tax expenditure, measurement issues, and risks
- SEZs in successful cases "generally represent a significant tax expenditure."  
- In the Dominican Republic and Costa Rica, SEZs "account for around 1 and 1.5 percent of GDP (Figure 8)."  
- Tax expenditure of SEZs can be underestimated because measurement often relies on the tax return prepared by SEZ users, which "many times simply operate as a cost center."  
- Reported profits (the basis for measuring tax expenditure) can be "artificially reduced" through transfer pricing and intra-group allocations, with profits shifted to parent companies or subsidiaries likely located in low-tax jurisdictions.  
- Expanding SEZs to increase investment in Peru "does not seem very intuitive," because:
  - SEZs risk capturing a high proportion of investments that "would be made anyway," and
  - they could "jeopardiz[e] the scarce tax collection."

### Discussion summary: principles and constraints
- The main reason for authorizing SEZs is "regional development," given that SEZs imply an income tax exemption.  
- Maintaining regional-development purpose is prudent to:
  - comply with the OECD’s minimum standards on harmful tax practices, and
  - avoid disrupting national tax policy, ceding the tax base, and generating unjustified tax advantages and distortions.  
- "As long as income tax benefits are granted, even if they are partial, the requirement for SEZs to be located in disadvantaged areas according to an established and objective criterion must be maintained."  
- Flexibility is possible when tax advantages are limited to indirect taxes on temporary imports only: in that case, "the conditions for the location and number of SEZs can be made more flexible" because distorting tax advantages are essentially eliminated.  
- "Full income tax exemption is excessive in any context." The report highlights the high likelihood of favoring investments that would occur anyway and the difficulty of justifying advantages over domestic market competitors.  
- Continuity of tax benefits should be linked to fulfillment of specific employment and investment targets; oversight and public information on SEZ user performance must be strengthened.  
- The new SEZ law should consolidate and standardize regulations covering current SEZs (except income tax treatment), including clarity on effective dates and applicability to current SEZs.  
- Any (partial or total) elimination of the income tax benefit must respect investments made under previous legal conditions: "SEZ users in operation should maintain their current tax regime until their contract expires."  
- Constitutional constraint: authorizing new SEZs that grant tax exemptions appears to require legislative action (law), not delegation to the executive, because the constitution protects Congress's authority to regulate imposition of taxes and exemptions. The mission is "inclined to think that any new SEZ should be authorized by its own law," though this risks creating a messy legal situation. If income tax benefit is completely eliminated, it is unclear whether the constitutional restriction still applies.  
- Promotion of investment and employment is typically a national tax policy objective; using SEZs to promote investment sporadically creates nontransparent, distortionary, and potentially harmful advantages for selected enterprises.

### Recommendations (verbatim list preserved)
- Eliminate the income tax exemption as a benefit for being located in an SEZ.  
- If a partial income tax benefit is maintained in SEZs, ensure that its main purpose is the regional development of disadvantaged areas.  
- If the tax benefits granted to SEZs are relative to indirect taxes on temporary imports, consideration could be given to authorizing SEZs with greater flexibility, while at all times addressing tax and customs control problems.  
- Grant the tax benefit on the condition that specific investment and employment targets are met by the SEZ user.  
- Consolidate the current regulations of the various existing SEZs, including the period of validity, as well as any new SEZs that are created into a single legal framework, considering the Single Window for Foreign Trade, except for the income tax treatment.  
- Establish in a transitory article of the new law that current users will be able to maintain the treatment under the current law until their contracts with the SEZ expire.  
- Consider the excessive benefit of the drawback for exporters as a widespread issue and resolve it in those terms;  
- Create new SEZs by means of a law, in accordance with constitutional restrictions, irrespective of the law establishing the corresponding legal framework;  
- Comply with WTO and BEPS Action 5 restrictions for SEZ purposes, that is, do not include highly mobile activities or logistics operating outside the SEZ;  
- All ow reshipment, but without an income tax benefit;  
- Subject users in SEZs to requirements on transfer prices established in the general income tax regime.

### Appendix I — Simplified regimes in Latin America: key findings and Peru specifics
- Simplified regimes aim to reduce compliance costs using (a) fixed fees and (b) reduced rates applied on a presumptive basis; administrative simplifications include simplified accounting and fewer payments.  
- Simplified fixed fee regimes typically target natural persons with business income; participation is voluntary and conditional on not exceeding thresholds based on gross income, gross sales, capital, asset value, or combinations.  
- Regional averages and Peru’s NRUS:
  - "The average thresholds are 4.2 times per capita income, 0.2 percentage points above the threshold established by the NRUS."  
  - "Average annual payments in the region range from US$373 to US$1,340."  
  - In Peru, NRUS payments "range from US$71 to US$177."  
- Presumptive simplified regimes (for SMEs) usually tax gross income; regional patterns:
  - "The average for the region, excluding Peru, is 54.5 times per capita GDP."  
  - "Paraguay has the lowest threshold at 2.8 times per capita GDP, whereas Peru stands out with the highest for the SME Tax Regime (294.7 times)."  
  - Peru uses a reduced fixed rate on gross income for smaller SMEs and progressive rates for larger SMEs, equating the maximum rate with the general regime rate.

### Appendix II — Simplified tax regimes and informality: determinants and evidence
- Responses to informality should be holistic (tax, labor, administrative, institutional); informality has many causes beyond taxes.  
- Labor taxes affect informality depending on labor supply and demand elasticities; empirical evidence:
  - "Kugler and Kugler (2009) find that 20 percent of the increase in labor taxes in Colombia after the 1993 reform was passed on to workers in the form of lower wages."  
  - "Heckman and Pagés (2003) ... finding that a third of labor taxes are passed on to wages in Latin America."  
- Changes in labor taxes can alter the relative cost of work vs. capital and thus investment incentives. Example: Colombia reduced contributions (lowering labor cost) while increasing corporate income tax (raising capital cost), creating an incentive to formalize certain workers.  
- Labor regulations tend to increase informal labor, unemployment, and inequality; greater labor market rigidity is associated with lower employment and higher informality.  
- Many micro enterprises remain informal for subsistence reasons; making formalization costly can lead to disappearance and increased poverty among dependent individuals.  
- Formality increases with enterprise size; large enterprises have higher productivity and require formal relationships.  
- Education and labor productivity are closely tied to informality: "Busso, Fazio, & Levy (2012) find that productivity in the informal sector in Mexico is approximately 50 percent lower than in the formal sector."

*Source: 1perea2022001 — IMF content provided.*

### 8.      There is no evidence that tax benefits focused on small enterprises increase

### 8.      There is no evidence that tax benefits focused on small enterprises increase

### Evidence on targeted tax benefits and employment/growth
- "There is no evidence that tax benefits focused on small enterprises increase aggregate employment more than a benefit that extends to all enterprises (International Tax Dialogue, 2007)."
- Benefits focused on small enterprises can have a negative effect on growth by creating a "small business trap" that motivates firms not to grow in order to maintain preferential treatment (IMF, 2012).

### Objectives and risks of simplified regimes
- Main objective: simplification in the private and public sector to facilitate tax compliance by small taxpayers (with little administrative capacity) and tax administration (with the aim of focusing on supervising larger taxpayers, which account for the largest share of tax collection).
- Simplified regimes should not aim to reduce the tax burden substantially; if the reduction is significant, the regimes become highly distortive and can:
  - Encourage division of enterprises.
  - Encourage underreporting to maintain eligibility.
- Emphasis: simplification, not tax arbitrage or significant tax-burden reduction.

### Informality — multiple causes and policy implications
- Informality has multiple causes beyond taxes and regulations.
- Other variables that can help reduce informality: education, development, trust in institutions, enterprise size, and productivity.
- Policy implication: tackling informality from a purely tax perspective might not yield expected results if other important factors are ignored.

### Appendix III — Procedure for Qualifying for an SEZ (SDZ and Tacna FTZ) — key procedural requirements
- Information required for SDZ pre-qualification: Name or business name, taxpayer identification number (Registro Único del Contribuyente – RUC), activity or activities to be carried out in the SDZ, documents supporting the project, land and infrastructure required, and other details required by the SDZ administration.
- Bid process (SDZ):
  - Provide a three-month guarantee for the assignment for use of the respective lot, which may be in the form of a bond letter, a cashier’s check, or cash.
  - The enterprise that offers the highest amount for the assignment for use of the land and the highest investment will be the successful bidder.
- Signing of contract (SDZ):
  - Provide a two-month guarantee for the assignment for use, valid for 12 months, renewable until the end of the contract, in an amount equivalent to 15 percent of the committed investment amount.
  - Once the assignment for use contract has been signed, the three-month guarantee provided to participate in the bid process will be returned.
  - If the contract is not awarded for reasons not attributable to the debtor, the guarantee will be returned at the end of the bid process.
- Tacna FTZ application and bid rules:
  - Submit an application with identifying details and powers, indicate economic activity (specifying national subdivisions), the investment amount, the volume and value of inputs and products, the level of employment to be generated, the surface area required, and other information depending on the format.
  - Applicant must deposit a guarantee corresponding to one month of the assignment for use.
  - Once the lot is awarded, the successful bidder has 10 calendar days to sign the contract and must deposit a two-month guarantee for the assignment for use, plus the first month’s installment, and any other documents set forth in the bidding rules.
- Note: "Each zone has additional requirements, as stated on the corresponding web pages, such as: Forms based on the economic activity to be carried out, the investment schedule form, a sworn declaration of the absence of any debts as a user or former user of the SDZ, and the payment of a processing fee."

### Appendix IV — Activities permitted in SEZs
- SDZ permitted activities include:
  - Industrial activities – Maquila and assembly.
  - Storage, transport, distribution, and commercialization of merchandise within SDZs, abroad, and in the rest of the national territory.
  - Packing, unpacking, labeling, fractioning, picking, packaging, bottling, placarding, freeze-drying, or preparing or conserving merchandise for transport.
  - Telecommunication activities.
  - Information technology activities.
  - Technical support, repair, refurbishment, remanufacture, repowering, servicing, and recycling of merchandise.
  - Science and technology research and development activities.
- Tacna FTZ permitted activities include:
  - Industrial activities – Agroindustrial activities – Assembly activities – Maquila activities – Logistics services – Information technology services – Science and technology research and development services – Human health research services – Infrastructure development services.
- Legal reference: "Article 7, Law 30,976 of July 2019."

### Appendix V — Tax benefits of Peruvian SEZs (scenarios)
- Scenario 1: Operations between SDZ / Tacna FTZ users
  - Users exempt from all taxes for the development of authorized activities, the transfer of goods, and service delivery.
- Scenario 2: Operations from SDZs / Tacna FTZ to foreign countries
  - SDZ / Tacna FTZ users exempt from all taxes.
- Scenario 3: Operations from the national territory to SDZs / Tacna FTZ
  - Income from goods to SDZs / Tacna FTZ is exempt from tariff duties imposed on their importation.
  - National enterprises that transfer goods from the country to SDZs / Tacna FTZ are considered to be exporting and may request a refund of the tariff duties and an IGV rebate.
  - To maintain the benefits, goods entering for maquila cannot be renationalized, but will have to be transformed, used, or exported.
- Scenario 4: Operations from foreign countries to SDZs / Tacna FTZ
  - Income from goods from foreign countries to SDZs / Tacna FTZ is exempt from tariff duties imposed on their importation.
- Scenario 5: Operations from SDZs / Tacna FTZ to the national territory
  - From Tacna FTZ to Trade Zone: These operations are subject to regular taxes on sales, imports, and service delivery. However, manufactured products pay the lowest tariff rate, in accordance with trade agreements signed with Peru.
  - Exception: Users are exempt from tariff duties when the goods are obtained from maquila, repair, and other processes that generate value-added for the goods.
  - The Tacna Trade Zone is the geographic area comprising the district of Tacna and the trade centers of the Alto de la Alianza district.
  - Merchandise that enters that zone from free warehouses in the Tacna FTZ is exempt from the IGV, the IPM, and the ISC, the only payment being a special tariff of 6 percent on the Cost, Insurance, and Freight value or the acquisition value, whichever is greater.
  - Legal reference: "Law No. 27,688, Law on the Tacna Free Trade Zone and Trade Zone, approved by Supreme Decree No. 142-2008-EF, published on 12/4/2008."

*IMF content unit: 1perea2022001 - 8.      There is no evidence that tax benefits focused on small enterprises increase*

---


_Source: https://www.imf.org/-/media/files/publications/cr/2022/english/1perea2022001.pdf_