If you would like to establish a business presence in South America, Peru is a fantastic place to do so. The country is home to the Andes Mountains and Machu Picchu. With a large workforce and growing GDP, a variety of businesses enjoy plenty of opportunities, especially those in manufacturing, fishing, mining, and tourism.
When you decide to expand to Peru, you’ll need to set up your Peru payroll. Although this task sounds relatively simple, a complicated tax structure and a high chance of being audited means you’ll need to pay extra attention to matters of compliance or choose Peru payroll outsourcing. Globalization Partners can help you stay compliant and set up your Peru payroll quickly.
Taxation Rules in Peru
Employers must make multiple contributions, which include giving 9% of their payroll to the National Health System (RPS). If you offer an additional health plan, you can get a credit for part of that expense. Employers also contribute an average of 11.5% of their gross salary to ASPs, which are private entities that manage pension funds for retirement, disability pensions, and funeral costs. If you operate in an industry with risky work, you are required to have supplementary insurance for employees.
Peru operates under a progressive personal income tax scale with rates ranging from 8% to 30%. However, tax rates typically change every year. Non-residents in the country only have to pay taxes on income earned in Peru at a rate of 30%. Other tax rates include:
- 18% of gross earnings for VAT
- 29.5% for corporate income tax
- 13% for social security
Peru Payroll Options for Companies
You can choose from four main Peru payroll options when setting up your payroll:
- Remote: Remote payroll is an excellent option for companies that only want to operate one payroll among multiple countries. However, your employees in Peru will have different compliance standards than employees at the parent company.
- Peru payroll processing company: You can work with a local payroll processing company to set up your Peru payroll on your behalf. However, you will still be held liable for any of the company’s mistakes.
- Internal: Larger companies may have more resources to operate an internal payroll at the office of their Peru subsidiary. However, this option can be more expensive because you would have to hire the necessary staff.
- Globalization Partners: You can also work with a global PEO such as Globalization Partners. Our Peru payroll outsourcing services take the stress out of determining how to set up your Peru payroll and stay compliant.
How to Set Up a Payroll in Peru
You will need to establish a subsidiary or choose a subsidiary alternative before you can pick a Peru payroll option. Start by registering the name of your business with the Peruvian Public Registry. You’ll then need to get a deed, minutes, and accounting books notarized by the Portal Servicios Ciudadano y Empresas. Employers must also receive a Certificate of Registration and a tax ID number to pay employees.
Peru allows a standard probationary period of three months; this can be extended to six months to high-level/management positions. If you terminate an employee, you’ll need objective grounds or cause to do so with documentation. Try to give employees at least six calendar days of written notice. An employee who is dismissed without cause typically receives up to 12 months of severance pay.
Payroll Processing Company in Peru
Globalization Partners offers a Peru payroll outsourcing option that frees up your time and reduces stress. Contact us today to learn more about our services.
THIS CONTENT IS FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE LEGAL OR TAX ADVICE. You should always consult with and rely on your own legal and/or tax advisor(s). G-P does not provide legal or tax advice. The information is general and not tailored to a specific company or workforce and does not reflect G-P’s product delivery in any given jurisdiction. G-P makes no representations or warranties concerning the accuracy, completeness, or timeliness of this information and shall have no liability arising out of or in connection with it, including any loss caused by use of, or reliance on, the information.