Peru to cut VAT rate to 14% by 2016

The Peruvian standard VAT rate is to be cut twice over the next two years.

The current headline VAT ( Impuesto General a las Ventas IGV) rate is 15%.  A new draft law, introduced this week, proposes cutting it to 15% on 1 January 2015.  If the budget consolidation continues to plan next year, it will then be cut again to 14% in 2016.

There will be no change to the additional sales tax, Impuesto de Promoción Municipal IPM, which is charged at 2% in addition to IGV, will remain unchanged.

Basic foodstuffs, public transport, some financial services and exports will remain exempt from IGV.