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Detracción, withholding, and retention: how much cash you need

Updated on 22/10/2026

A job can be profitable on paper and still leave you out of money halfway through. What you bill doesn't arrive in full or on time: part goes to your detracción account, part is withheld by the client, and the rest arrives at 30, 45, or 60 days.

What gets deducted when you get paid

  • Detracción (SPOT): a percentage of the total including IGV that the client deposits into your Banco de la Nación account; you can only use it to pay taxes. For many services it's 12%, and 4% for construction contracts. Check the current rate for your activity with SUNAT.
  • IGV withholding: if your client is a withholding agent, it keeps 3% of the total and pays it to SUNAT on your behalf. It doesn't apply to amounts already subject to detracción.
  • Retention: some clients retain between 5% and 10% of each progress billing until the end of the project.

Example: S/ 100,000 + IGV service, paid at 45 days

  • Invoice total: S/ 118,000
  • 12% detracción: S/ 14,160 to your detracción account
  • 5% retention on the value: S/ 5,000 held until closeout
  • Reaches your account: S/ 98,840, only on day 45
  • Meanwhile you've already paid payroll, materials, and rentals

If you finance that gap with a credit line or your own cash, that financing cost is part of the project cost. A 20% margin can drop several points.

How to quote with this in mind

  • Ask for an advance payment that covers mobilization and the first month of payroll.
  • Bill progress in short periods (biweekly or monthly) instead of at the end.
  • Include the cost of financing in your overhead when payment terms are long.
  • Negotiate replacing the retention with a performance bond.

MIVA Cost's Is it worth it? feature builds the week-by-week cash flow with your payment terms, detracción, withholding, and retention, and tells you how much money you need and how much you really make.

Frequently asked questions

Is detracción an expense?

No. It's your money, but you can only use it to pay taxes; if there's a surplus, you can request its release from SUNAT. But while it sits there, you can't use it to pay payroll or suppliers.

Is detracción calculated on the price including IGV?

Yes, on the total amount of the transaction, including IGV.

This guide is for reference only and does not replace advice from an accountant or lawyer.