Does your company pay more Income Tax than necessary? Find out how to detect it

1. Business Income Tax and the Gap Between Formal Compliance and Tax Efficiency

In Peru, third-rate income tax taxes net income earned by companies, calculated on the basis of their gross income minus the deductible expenses allowed by law.

However, there is often a significant gap between formal compliance and tax efficiency: many companies comply with reporting correctly, but do not strategically manage their tax burden.

This difference translates into a higher effective rate, resulting from a lack of comprehensive review of the tax closure.

In other words, it's not about paying more (or sometimes less artificially, through undue deferrals or deductions), but about paying what is fair within the legal framework through an appropriate use of determining tax obligations, the appropriate and timely use of deductions, and other alternatives available to you by law.

2. Technical causes that generate a higher payment of Income Tax

A specialized tax review makes it possible to identify precisely the factors that unduly increase the tax base. The most common of these are:

a) Errors in the recognition of income

As is known, a legal accrual criterion currently governs, which in many respects differs from the accounting criteria of IFRS 15. Failure to detect such differences may mean that taxes are made on a higher or lower basis in a given financial year.

b) Errors in the application of the principle of causality

According to Article 37 of the Income Tax Act, only expenses necessary to produce or maintain the source of income are deductible.

However, in accounting practice, many companies charge expenses that do not fully comply with this principle or lack documentary support or reliability (for example, representation expenses, donations or refunds without proof, services without deliverables, lack of traceability). These expenses are repairable by SUNAT, generating higher taxes payable and fiscal contingencies.

c) Temporary and permanent differences that have not been reconciled

The application of IFRS may create differences between the accounting result and the tax base (for example, provisions, depreciations, impairments, and others).
Failure to properly identify and reconcile these differences implies a loss of control over the determination of deferred tax and a possible overestimation of current income tax.

d) Tax losses and uncompensated credits

Article 50 of the LIR allows tax losses to be carried over under two systems (A or B). Not doing it or doing it incorrectly represents a strategic error: you pay taxes despite having compensable negative bases.
In addition, on-account payments, withholding and favorable balances are often underused.

e) Non-deductible or uncontrolled items

Personal expenses charged to accounting, provisions without supporting documentation, or objections for unreliable expenses directly affect the effective tax rate. Without a preventive audit, these items are consolidated in the annual DJ as inappropriate expenses.