Is income taxed in Peru based on real income? restrictions on the deduction of personal expenses in the income tax for individuals: the case of fourth and fifth category income

Abstract

This research analyzes the treatment of personal expense deductions under the Peruvian income tax system applicable to individuals receiving fourth and fifth category income. The aim is to determine whether this system allows for taxation based on real income or whether regulatory restrictions affect the constitutional principle of ability to pay. The objective was to analyze whether limitations on the deduction of personal expenses affect the determination of real income for personal income tax purposes in Peru. The research was conducted using a qualitative approach, with a descriptive scope and documentary design, through the analysis of tax regulations, specialized doctrine, and constitutional jurisprudence related to income tax on employment and the deduction of personal expenses. The results show that the current deduction system does not fully recognize various expenses essential to meeting taxpayers' basic needs, creating a discrepancy between actual disposable income and the tax base. Furthermore, a tension was identified between the objectives of administrative simplification and respect for the principle of ability to pay, which affects the fairness of the tax system. It is concluded that current restrictions limit the proper application of the ability-to-pay principle and hinder taxation based on actual income. Therefore, it is necessary to review the regulatory framework to strengthen tax fairness and the constitutional coherence of the Peruvian tax system