THE INFORMALITY OF

BUSINESS IN PERU REMAINS A

CHALLENGE
Business informality is and will be one of Peru's biggest problems. According to figures from the
Lima Chamber of Commerce, in 2017 there were three informal companies for every formal
company. However, it is with the Covid-19 pandemic and the strict quarantines in Peru that a series of
consequences could be generated, which contributed to an increase in business informality in Peru.
Therefore, it is estimated that the above-mentioned figures are going to increase for approximately
two years.
It should be known that approximately 17.7% of Peru's GDP will be made up of informal productive
units, socio-political problems will influence the political crisis and international events will not
favour this problem. However, institutions such as the Superintendencia Nacional de los Registros
Públicos (Sunarp) have implemented mechanisms that will seek to increase the incorporation of
companies as a measure to encourage formalization.
During 2021, around 430 companies were incorporated in Peru through the Sociedades por Acciones
Cerradas Simplificadas (SACS) modality. This modality, promoted by the government as a result of
the pandemic, will be created with the purpose of being an alternative that should encourage the
formalization of micro, small and medium-sized companies with greater speed and the use of 100%
digital mechanisms. This is an important step forward that could lead to a reduction of informality in
Peru; however, it would be necessary to implement more mechanisms that favour this modality.
On the other hand, formalization will involve very high costs, which discourages entrepreneurs. A
World Bank study reported that it may be necessary to reduce tax burdens, strengthen labour law
enforcement, entrepreneur education, and remove disincentives to formal employment. In Peru,
distrust in the state, especially as a tax administrator, will lead to a resistance to formalization on the
part of the entrepreneur, which results in a vicious circle of a country with weaker economic
performance, fewer resources to combat crises and, ultimately, greater poverty.