General Sales The General Sales Tax (IGV) is one of the most important taxes in Peru's tax system . This tax directly affects consumers , as it applies to a wide variety of products and services . With a standard rate of 18 % , the IGV can generate significant changes in the prices consumers must pay , affecting both their purchasing power and their income .habits It is one of the most important taxes in Peru's tax system. This tax directly affects consumers, as it is applied to a wide variety of products and services. With a standard rate of 18%, the VAT can generate significant changes in the prices consumers must pay, affecting both their purchasing power and their consumption habits. In this article, we explore the impact of the VAT on Peruvian consumers and the economic and social consequences resulting from its application.calcular igv peru

What is VAT and how does it affect consumers?

indirect, meaning it is not levied directly on consumers ' income , but on commercial transactions . It is applied to the sales value of products and services within the country , as well as to imports . In simple terms , the final consumer is the one who bears the cost of the tax .The VAT is an indirect tax , meaning it is not levied directly on consumers' income, but rather on commercial transactions. It is applied to the sales value of products and services within the country, as well as to imports. In simple terms, the end consumer bears the cost of the tax, since the sales price of products increases by 18% due to the VAT.

For example, if a consumer purchases an item priced at S/100, they will have to pay an additional S/18 in VAT, resulting in a final price of S/118. This price increase directly impacts people's purchasing power , especially those in the lower social classes.

Economic impact of VAT on consumers

1. Increase in prices of products and services

The most obvious effect of the VAT is the increase in the prices of goods and services. This tax is applied to a variety of products, from food to clothing and technology. Although some essential products, such as basic foodstuffs and medicines, are exempt or have reduced rates, most goods are taxed at 18% VAT, which increases the final cost for consumers.

This price increase can have a particularly negative impact on low-income households, as they spend a larger portion of their income on essential goods. For example, food products, which tend to be heavily taxed, are most affected by the poorest, increasing economic inequality .

2. Social inequality and regressiveness of the IGV

The VAT is a regressive tax , meaning it affects low-income households more than high-income ones. For the former, the percentage of income spent on consuming VAT-taxed products is much higher than for wealthier households. This creates social disparity , as the most vulnerable segments of the population bear a higher indirect tax burden, which could worsen their economic situation.

On the other hand, people with higher incomes can afford luxury goods or services that are less subject to VAT, which exacerbates inequality in resource distribution.

3. Change in consumption habits

As product prices increase due to the VAT, many consumers begin to adjust their spending habits . Low- and middle-income families are forced to prioritize their spending, limiting purchases to essential goods such as food and basic goods, while reducing purchases of luxury items or additional services. This change in habits can lead to a decline in quality of life and affect overall well-being.

In some cases, consumers choose to purchase products on the informal market , where they avoid paying the VAT. This not only affects the state's tax revenue but also contributes to the growth of informality, which can have long-term negative consequences for the economy.

How to mitigate the impact of VAT on consumers?

Although the VAT is essential for financing the state and developing infrastructure and public services, there are several ways the government could mitigate its impact on the most vulnerable consumers.

1. Exemptions or reductions in essential products

One of the most effective measures to reduce the impact of the VAT is tax exemptions or rate reductions on essential products such as food, medicines, and healthcare services. This measure would help ease the tax burden on low-income households, ensuring that basic goods are accessible to all segments of the population.

2. Promotion of market formalization

The formalization of trade is another key aspect of reducing the impact of the VAT. By promoting business formalization, the state could increase tax revenue and provide a more regulated environment for consumers. This would also ensure that products are of high quality and that prices reflect the true value of goods and services.

3. Tax education

Tax education is essential for consumers to understand how the VAT works and how they can make more informed decisions about their purchases. Improving transparency about how VAT revenues are used can also generate greater trust in the tax system and increase consumers' willingness to comply with their tax obligations.calcular igv peru

Conclusion

The VAT (Income Tax) has a significant impact on Peruvian consumers, affecting both their purchasing decisions and their spending power. Although the tax is essential for government financing, its regressive effect and rising product prices can exacerbate economic inequalities in society. Through measures such as exempting essential products , promoting market formalization , and providing tax education , the negative impact of the VAT can be mitigated and greater tax equity promoted in the country.