Trying to understand IGV...business experts please help?

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tomfoolery
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Trying to understand IGV...business experts please help?

Postby tomfoolery » Sat Oct 27, 2018 1:40 am

IGV hurts my brain! Here is what I want to figure out:

Company #1 is a peruvian company based in Arequipa. They specialize in transportation and tourism in Peru. They attract clients with their website, and through online advertising.
Company #2 is based in Mexico, owned by a Mexican dude. He also specializes in transportation and tourism in Peru, because the owner lived for many years in Peru. They also attract clients with their website, and through online advertising.
Company #3 is based in Lima, Peru. They provide transportation by Ferraris. They don't really have a website, other people just contact them directly when they need their services.

Carlos is a wealthy tourist coming to Peru. He wants to hire a private driver with a Ferrari car to take him to Asia Beach so that he can swim there. Carlos looks up "private transport by Ferrari" in google and he sees Company #1 or Company #2.

Is Company #1 at a competitive disadvantage because they need to pay IGV when they purchase services from Company #3? Can Company #2 offer a lower price than the peruvian company because they don't need to add an extra 18% when they purchase services from Company #3?


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Alan
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Re: Trying to understand IGV...business experts please help?

Postby Alan » Mon Oct 29, 2018 12:34 pm

I´ll take a run at this...

Company 3 still needs to charge IGV to company 2 on the rental by law, since the service they provide is provided in Peru. They are evading tax by not providing company 2 with a factura.

Company 1 could enter into the "off the books" game, but they would also be party to tax evasion. Company 1 could (and should) charge the tourist IGV on the service they provide (including their markup) and Carlos can claim a refund when he leaves the country. Company 1 needs to register in the "Registro de Establecimientos Autorizados" in order for this to happen. (see https://www.perutributos.com/noticia/de ... xtranjeros)
tomfoolery
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Re: Trying to understand IGV...business experts please help?

Postby tomfoolery » Mon Oct 29, 2018 4:47 pm

Thanks for that explanation, that is very helpful.

I can understand why companies evade the IGV, considering an 18% sales tax on top of a corporate tax of 30% on profit would turn almost all tourism into a non-profit activity LOL. Maybe I should create an ONG.

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