Economy of Peru

Exports and Imports

In 2023, Peru's exports were valued at approximately $60 billion. The country’s main exports include minerals such as copper, gold, and zinc, as well as agricultural products like coffee, asparagus, and avocados. Manufactured goods and textiles are also significant export items.
Imports for the same period were around $50 billion, consisting mainly of machinery, vehicles, fuels, and chemicals. Consumer goods and raw materials for manufacturing also make up a large portion of imports.

Infrastructure

Peru has been making substantial investments in infrastructure to support economic growth and connectivity. The country has about 140,000 kilometers of roads, with around 20,000 kilometers paved. Major infrastructure projects in recent years include expansions of highways, the construction of new bridges, and the improvement of Lima's Jorge Chávez International Airport.
In 2023, the government allocated approximately $4 billion to infrastructure projects, with significant contributions from public-private partnerships and international funding.

Balance of Trade

With exports valued at $60 billion and imports at $50 billion, Peru enjoyed a trade surplus of approximately $10 billion in 2023. This positive balance of trade is largely driven by the mining sector, which accounts for a significant portion of the country’s export revenue. The trade surplus supports the country’s foreign exchange reserves and economic stability.

Fiscal Policy

In 2023, the Peruvian government’s expenditure was around $55 billion, focusing on healthcare, education, infrastructure, and social programs. The fiscal deficit was approximately 3% of GDP, or around $7 billion. Government revenue, largely derived from taxes and export duties, was estimated at $48 billion. Efforts to enhance tax compliance and broaden the tax base are ongoing to ensure fiscal sustainability and reduce the deficit.

Monetary Policy

Peru's central bank, the Banco Central de Reserva del Perú (BCRP), is responsible for the country’s monetary policy. In 2023, the inflation rate was approximately 3%, reflecting the central bank's efforts to maintain price stability. The BCRP uses interest rate adjustments and monetary controls to manage inflation and stimulate economic growth. The local currency, the Peruvian sol (PEN), is managed to ensure stability against major currencies.

Trade Agreements

Peru is an active participant in several trade agreements, enhancing its market access and investment opportunities. It is a member of the Pacific Alliance, which includes Chile, Colombia, and Mexico, promoting regional trade and economic integration. Peru also has bilateral trade agreements with major economies, including the United States, China, and the European Union, facilitating diversified export markets and attracting foreign direct investment.

Environmental Regulations

Environmental conservation is a priority for Peru, given its rich biodiversity and natural resources. The government has implemented strict environmental regulations to protect forests, marine areas, and wildlife. Key initiatives include the establishment of national parks and protected areas, sustainable mining practices, and efforts to reduce deforestation and pollution.
In 2023, the government invested around $300 million in environmental protection projects, including reforestation programs, water conservation efforts, and initiatives to combat illegal mining and logging.

Tax System in Peru

Capital Gains Tax: In Peru, capital gains are generally subject to a tax rate of 5% for individuals. For non-resident individuals, the capital gains tax rate is higher, typically around 30%.
Corporate Tax Rate: The standard corporate tax rate in Peru is 29.5%. However, small and medium-sized enterprises (SMEs) may benefit from reduced rates under certain conditions. Additionally, companies operating in specific sectors or regions may be eligible for tax incentives and deductions.
Sales Tax: Peru imposes a Value Added Tax (VAT) of 18% on most goods and services. This VAT rate includes a 2% municipal promotion tax. Certain essential goods and services, such as basic food items and medical supplies, may be exempt from VAT or subject to a reduced rate.
Property Tax: Property tax in Peru is levied annually by local municipalities and varies depending on the value of the property. The tax rate ranges from 0.2% to 1% of the property's assessed value. Property owners are required to pay this tax based on the valuation conducted by the local authorities.
Payroll Tax: Employers in Peru are required to contribute to social security at a rate of 9% of an employee's gross salary. Employees contribute 13% of their gross salary to social security. These contributions cover various benefits, including health insurance, pensions, and unemployment benefits.
Tax Deductions and Credits: Peru offers several tax deductions and credits to reduce the tax liability of individuals and businesses. Individuals can deduct expenses related to health, education, and mortgage interest, among others. Businesses can benefit from deductions for investments in research and development, environmental projects, and job creation incentives.
Tax Compliance: The efficiency of tax collection in Peru has been improving due to the efforts of the National Superintendency of Customs and Tax Administration (SUNAT). SUNAT has implemented electronic filing systems and stricter enforcement measures to increase compliance and reduce tax evasion. The compliance rate has been gradually improving, contributing to higher revenue collection.
Tax Burden: The overall tax burden in Peru, representing the total amount of taxes paid by individuals and businesses relative to the economy, is moderate. In 2023, the tax-to-GDP ratio was approximately 16%, reflecting the balance between generating government revenue and promoting economic growth. This moderate tax burden aims to encourage investment and consumption while ensuring sufficient funding for public services and infrastructure.