Prepared by Salma Khalid.
Owing to differences in payroll tax obligations across LAC countries, we exclude social security contributions from total tax collection for comparability purposes.
The 1999–2017 period is chosen based on cross-country data availability. While Peru’s revenues were atypically low in 2017 owing to El Niño events, the net gain in the 1999–2018 period remains lower than in the comparator countries presented in the figure above.
The VAT gap is the overall difference between VAT revenues expected and the VAT revenues actually collected
The ratio of the actual VAT revenue to the theoretical revenue, widely used as an indicator of the overall efficiency and effectiveness of the VAT system.
The policy gap is a measure of the lost revenues relative to a theoretical maximum where the VAT rate is applied uniformly and without exemptions
According to the RA-GAP report for Peru, during 2007–14 VAT expenditures compared favorably with European countries who provide more exemptions on average.
In nominal terms, the two largest VAT tax expenditure are attributed to the agricultural sector (6.4 percent of total VAT collections and 2.4 percent of overall tax revenues in 2016) and the Amazonia region (5 percent of total VAT collections in 2016).
Tax stability agreements stabilize the income tax regime in force at the time of signing, such that stability agreements signed during the period of lower corporate tax rates will shield the taxpayers from changes in income tax rates while the agreement is in place
Analisis del Rendimiento de los Tributos 2018, Ministerio de Economia y Finanzas.
Inflation Report March 2019, Central Reserve Bank of Peru.
Weakness are found in the management of institutional risk, timeliness of VAT payments, stocks of tax arrears, scope of the audit process, time taken to resolve administrative reviews, and timeliness of refunds.
The number of control orders has increased by 43 percent in 2018 (reaching 84,316 cases) and the amount of tax revenues subject to control under these cases has reached 2,408 million soles, with a growth of 31 percent. SUNAT’s tax recovery from these control procedures has increased by 75 percent between 2017 and 2018.
This is in line with the practices of tax administrations in comparator countries. Hence, according to OECD’s Tax Administration Series Database, pay scales for the tax administration in Chile, Mexico, Brazil, Costa Rica, Argentina, and Colombia are unique.
Assuming growth of potential VAT in line with the growth of nominal GDP and a similar reduction of the VAT gap to 29 percent.
Regimen Especial del Impuesto a la Renta, which taxes firms based on their sales, hence creating no incentive to register purchase invoices, critical for control of VAT