Countries › Peru › Guide › 6. Taxes › Tax loss carryforward in Peru: the four year system, the unlimited 50 percent system, and how to choose

Tax loss carryforward in Peru: the four year system, the unlimited 50 percent system, and how to choose

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Last verified: 2026-10-28 · Status: Stable

Domiciled companies choose, in the annual return, between offsetting a net business loss against the next four years' income in full (system a) or with no time limit but against only 50 percent of each later year's income (system b). If no choice is made SUNAT applies system a), and the system cannot be changed until accumulated losses are used up. There is no loss carryback, losses from speculative derivatives are ring fenced, and SUNAT can audit losses within the normal limitation periods.

USD figures use S/ 3.452 per US dollar, the banking system selling rate published by the Superintendencia de Banca, Seguros y AFP for 27 October 2026, from the Banco Central de Reserva del Perú statistics series PD04640PD. UIT based amounts use the 2026 UIT of S/ 5,500 set by Decreto Supremo Nº 301-2025-EF. Conversions are for orientation only.

Key facts

Loss carryforward, system a)	4 yearsLIR art. 50 a), as of 2026-10-28 · in force
Loss carryforward, system a)	4 yearsLIR art. 50 a), as of 2026-10-28 · in force
Loss offset cap, system b) (unlimited time)	50 % of net incomeLIR art. 50 b), as of 2026-10-28 · in force
Annual offset cap under system b)	50 % of net incomeLIR art. 50 b), as of 2026-10-28 · in force
Loss carryback	not allowed textLIR art. 50 (carryforward only), as of 2026-10-28 · in force

The rule

1. Domiciled taxpayers can offset their total net business loss of Peruvian source from one year under one of two systems: a) against net business income of the four following years, with any balance lost after that; or b) with no time limit, against 50 percent of the net business income of each following year. Taxpayers with exempt income must include it when computing the offsettable loss.
Example: A 2025 loss of S/ 1,000,000 against 2026 income of S/ 800,000: system a) offsets S/ 800,000 and leaves S/ 200,000 for up to three more years; system b) offsets S/ 400,000 and carries S/ 600,000 with no time limit. / Loss US$289,687, income US$231,750: system a) offsets US$231,750; system b) offsets US$115,875.Texto Único Ordenado de la Ley del Impuesto a la Renta (Decreto Supremo Nº 179-2004-EF), as substituted by Decreto Legislativo Nº 970, Art. 50 first to third paragraphs, 2006-12-24 official text · verified 2026-10-28

2. The system is chosen when filing the annual return. If the taxpayer does not choose, SUNAT applies system a). Once chosen, the system cannot be changed unless the accumulated losses of prior years have been fully used.Texto Único Ordenado de la Ley del Impuesto a la Renta (Decreto Supremo Nº 179-2004-EF), Art. 50 fifth and sixth paragraphs, 2006-12-24 official text · verified 2026-10-28

3. Under both systems, Peruvian source losses from derivative contracts entered for purposes other than hedging can only be offset against net income from derivatives with the same purpose; this does not apply to financial system companies for intermediation derivatives. SUNAT can audit losses being offset under either system within the Tax Code limitation periods.Texto Único Ordenado de la Ley del Impuesto a la Renta (Decreto Supremo Nº 179-2004-EF), Art. 50 fourth and last paragraphs, 2006-12-24 official text · verified 2026-10-28

4. Losses from the 2020 tax year under system a) can be offset over five years starting in 2021 instead of four.Decreto Legislativo Nº 1481, as noted in the SUNAT consolidated text of the Ley del Impuesto a la Renta, Art. 4, 2020-05-08 official text · verified 2026-10-28

5. SUNAT's power to determine tax lapses after four years (six if no return was filed), counted from 1 January of the year after the annual return due date, so loss computations from old years can be reviewed while they are still being used.Texto Único Ordenado del Código Tributario (Decreto Supremo Nº 133-2013-EF), art. 43 as substituted by Decreto Legislativo Nº 953, Art. 43 and art. 44 numeral 1, 2004-02-05 official text · verified 2026-10-28

Feature	System a)	System b)
Time limit	4 years after the loss year	None
Annual offset	100% of net income	50% of net income
Default if no choice	Yes	No
Best for	Losses expected to be used quickly	Long ramp up projects
Switching	Only once accumulated losses are exhausted	Only once accumulated losses are exhausted

Peru's two loss systems compared

Worked example

A Peruvian start up loses S/ 1,000,000 (US$289,687) in 2025 and earns S/ 800,000 (US$231,750) in 2026.
Under system a) it pays no 2026 tax and keeps S/ 200,000 for 2027 to 2029, when the four year window closes; under system b) it pays 29.5 percent on S/ 400,000, S/ 118,000 (US$34,183), but keeps S/ 600,000 with no expiry.

Step by step

Project taxable income for at least four years before filing the first loss year's return.
Choose system a) or b) in that annual return; silence means system a).
Track losses by year of origin under system a) so none expire unused.
Keep the records supporting losses until the limitation period for the last year that uses them has passed.

Common traps

The choice is locked in until accumulated losses are exhausted.
Under system b) a profitable year still pays tax on at least half its income.
Losses of speculative derivative positions cannot shelter operating income.
SUNAT can still challenge the original loss when it is used years later, within the limitation period.

Sources

Related: Peru country profile · live dashboard · central bank and release calendar · our posts on X · where Argentina is involved, see The Argentine Thread guide

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