La Paz GMT -4
EY
20 de Octubre Avenue and Campos #2665
Torre Azul Building 16th Floor P.O. Box 2221 La Paz Bolivia
Indirect tax contact
Juan Pablo Vargas +591 (3) 342-9230 juan.vargas@bo.ey.com
Santa Cruz GMT -4
EY
Avenue Cristo Redentor and Cuarto Anillo Torre Empresarial MSC Building 13th Floor, office # 13-B Santa Cruz Bolivia
Indirect tax contact
Juan Pablo Vargas +591 (3) 342-9230 juan.vargas@bo.ey.com
A. At a glance
Name of the tax Value-added tax (VAT)
Local name Impuesto al Valor Agregado (IVA)
Date introduced 1 July 1986
Trading bloc membership Bolivia-Mexico ACE N°66
Bolivia-Chile AAP.CE N°22 Bolivia-Mercosur (Bolivia, Argentina, Brasil, Paraguay and Uruguay) AAP.CE N°36
Bolivia-Cuba AAP.CE N°47 Bolivia-Venezuela Andean community CAN (Bolivia, Colombia, Ecuador y Perú)
Administered by Internal Taxes Service (http://www.impuestos.gob.bo) Servicio de impuestos nacionales (SIN) & Administración tributaria (AT)
VAT rate
Standard 13%
Other Zero-rated (0%) and exempt
VAT number format 9999999999 (tax identification number [NIT]) (Número de identificación tributaria)
VAT return period Monthly Thresholds
Registration None (commencement of sales activity)
Recovery of VAT by non-established businesses No
B. Scope of the tax
VAT applies to the following transactions:
• Sales of movable goods placed in Bolivia by taxable persons
• All services rendered in Bolivia
• Importation of goods
• Leasing inside Bolivia
C. Who is liable
A registered taxable person is a business entity or individual that performs the following actions:
• Sells movable goods
• Sells movable goods on behalf of others
• Renders any kind of services
• Makes definitive imports (these are products that are purchased in foreign countries and brought into Bolivia)
• Engages in the operational or financial leasing of movable or fixed goods
Exemption from registration. VAT law in Bolivia does not contain any provision for exemption from registration. In situations where services and sales are performed habitually in Bolivia, registration for accomplishment of local taxes must take place.
Voluntary registration and small businesses. VAT law in Bolivia does not contain any provision for voluntary VAT registration, as there is no registration threshold (i.e., all entities that make taxable supplies are obliged to register for VAT).
Group registration. Group VAT registration is not allowed in Bolivia.
Non-established businesses. A “non-established business” is a business that does not have a fixed establishment in Bolivia. A non-established business must register as a taxable person if it makes “habitual” supplies of goods or services in Bolivia. Under the applicable regulation, “habitual” must be determined by weighing the nature, amount or frequency of the sales of movable goods and services.
Tax representatives. The tax representative of a company is the legal representative resident in Bolivia and registered with the tax authority to act for the company in matters relating to VAT.
A non-established business is not required to appoint a tax representative to register for VAT.
Reverse charge. In Bolivia, the reverse charge for services does not apply. Bolivia does not apply VAT on the importation of services that are performed outside of the country. When a service is purchased from abroad, it is not subject to VAT. There are no procedures to withhold this tax. On the other hand, when a local company provides services to a foreign company and the service is performed locally, then it must be subject to Bolivian VAT, even if the recipient is outside of Bolivia.
Domestic reverse charge. There are no domestic reverse charges in Bolivia.
Digital economy. There are no special or specific rules regarding the digital economy in Bolivia.
Taxable persons that provide digital services, such as marketplaces, delivery, streaming, educa tion, video games, online advertising and gambling from Bolivia should register and account for VAT in Bolivia. Therefore, resident persons (natural and legal) that use these digital media must incorporate (if the person is already registered) or register with the tax authority for the payment of taxes.
In the case of nonresidents, there are no rules for the payment of taxes in Bolivia.
Bolivia’s Congress had previously initiated discussions on a bill to impose 13% VAT on digital services provided from abroad to Bolivian residents, but this was subsequently discarded. At the time of preparing this chapter, it is not certain whether this project will be reconsidered.
There are no other specific e-commerce rules for imported goods in Bolivia.
Online marketplaces and platforms. No special rules exist for online markets or platforms in Bolivia. The general rules state only that the sale of goods through electronic commerce, within the national territory, made by natural and legal persons, are subject to the VAT, but there are no detailed procedures.
Registration procedures. A registration request should be submitted through the Virtual Office of the tax authority (http://ov.impuestos.gob.bo/RegistroPadron.aspx) by filing Form MASI-001 (Request for registration). Once submitted, the Virtual Office will assign a file number to this request.
To complete the procedure, the legal representative has to visit the tax authority offices in person and present the following documents (originals and copies):
• Notarized incorporation deed
• The legal representative’s valid identification document (ID)
• Notarized power of attorney for the legal representative to act with authority for the applicant
• Electric utility invoice for the company domicile
• Electric utility invoice for the legal representative’s domicile
• Map (drawing) of the domiciles of the company and the legal representative
Registration can be processed in one week if all documents are presented in the correct form to the tax authority.
Deregistration. In Bolivia, companies do not deregister. It is possible, however, to deactivate the tax identification number.
Changes to VAT registration details. Any change related to the registered information of a taxable person and the activity of the company should be communicated immediately to the tax administration.
The changes to VAT registration are simplified regime to special regime, inactivation of eco nomic activity, taxable person data, activity economy, legal representative, domicile of taxable person and legal representative, etc.
For the procedure, the taxable person should visit the tax administration office in person as soon as the modification occurs with the documents that support the changes.
D. Rates
The term “taxable supplies” refers to supplies of goods and services that are liable to a rate of VAT, including zero rate.
The VAT rates are:
• Standard rate: 13% (however, the effective rate is 14.94% because VAT must be included in the sales price)
• Zero-rate: 0%
The standard rate of VAT applies to all supplies of goods or services unless a specific measure provides for the zero rate or an exemption.
Examples of goods and services taxable at 0%
• Exports
The term “exempt supplies” refers to supplies of good and services that are not liable to VAT and that do not qualify for input tax deduction.
Examples of exempt supplies goods and services
• Goods imported by members of diplomatic corps recognized in Bolivia
• “Bona fide” introduced merchandise, up to a limit of USD1,000
• Life insurance quotas (monthly payments with respect to a life insurance contract)
• For securities registered on the Bolivian Stock Exchange, capital gains generated by sales/ purchase of the shares
• Transfers of goods or assets subject to the securitization process (titularización) administered by the securitization association, at the beginning and end of the process (under this process, the goods must be transferred to an independent fund (patrimonio autonomo) and, when the process is completed, the goods are returned to the original owner)
• Operations regarding sales or transfers of portfolios (financial intermediation, insurance and pension)
• Interest from loans received by financial entities
• Inbound tourism and lodging services for foreign tourists without a residence or address in Bolivia
• Artistic events focused on production, presentation and promotion of theater, dancing, national folklore, painting, sculpture and movies of Bolivian artists, if they are sponsored or developed in locations in Bolivia that are managed or owned by a municipal government or the Bolivian government
• Sale of books printed in Bolivia or those imported by or published by Bolivian institutions
Option to tax for exempt supplies. The option to tax exempt supplies is not available in Bolivia.
E. Time of supply
The time when VAT becomes due is called the “time of supply” or “tax event.” The tax event for goods is when the goods are delivered or when an act that implies the transfer of the ownership occurs. The tax event for services is the earlier of when the service is performed or completed and when full or partial payment of the price is received.
Deposits and prepayments. There are no special time of supply rules in Bolivia for advance pay ments. As such, the general time of supply rules apply (as outlined above). The only exception is for advanced payments for construction services for government entities, where the payments will not be subject to taxation until the work progress certificates are accomplished.
Continuous supply of services. For the provision of continuous services, when the taxable event is concluded at the expiration of each monthly period, the invoice may be issued up to the fifth business day of the month following the month in which the service was provided.
For the provision of continuous services subject to measurement or settlement, the taxable event is perfected in the determination of the price, as a result of the monthly measurement or settle ment of the service, as the case may be, or at the partial or total collection of the remuneration,
whichever is earlier. Given these scenarios, in no case may they be invoiced in a fiscal period subsequent to that of measurement or settlement.
Goods sent on approval for sale or return. For goods, the time of supply occurs when the title to the goods is transferred. For services, the time of supply occurs when partial or total payments are performed or when the service is finalized, whichever occurs first.
Reverse-charge services. In Bolivia, the reverse charge for services does not apply. As such there are no special time of supply rules.
Leased assets. For an operating lease (a normal rental without interest), the time of supply is on a monthly basis and the total amount charged must be taxable.
For a financial lease (a rental with the possibility of purchase at the end of the rental period), which includes capital and interest amounts, the time of supply is at the end of each installment/ quota (i.e., could be monthly, quarterly, biannual basis). In this situation, only the capital amount is subject to VAT.
Imported goods. The tax event for imported goods is when the goods clear all customs proce dures.
F. Recovery of VAT by taxable persons
A taxable person may recover input tax (also known as credit VAT), which is VAT charged on goods and services supplied to it for business purposes, provided that the taxable person has declared the invoices in the month in which they were issued. A taxable person generally recov ers input tax by deducting it from output tax (also known as debit VAT), which is VAT charged on supplies made.
Input tax includes VAT charged on goods and services supplied in Bolivia and VAT paid on imports of goods.
A valid tax invoice or import statement must generally accompany a claim for input tax.
Recovery of VAT on purchases of special gasoline, premium gasoline or diesel from service sta tions is limited to the VAT paid on 70% of the purchase value.
There is no set time limit for a taxable person to reclaim input tax in Bolivia. This mean that effectively the input tax (credit VAT) may be carried forward indefinitely until its complete recovery.
Nondeductible input tax. Input tax cannot be recovered on purchases of goods and services that are not used for business purposes (for example, goods acquired for private use by an entrepre neur).For deducting VAT credit with respect to transactions in an amount of BOB50,000 (bolivianos) or more, payment supports (checks, vouchers or other documents) issued by a financial intermediation entity regulated by the ASFI are required. These documents must have the following information:
• Business name of the financial institution (issuer)
• Transaction or operation number
• Transaction date
• Transaction amount
Payment supports for transactions of BOB50,000 or more must be reported on an annual basis, consolidating information from January through December regardless of ending fiscal year. The report is due between 5 and 9 February of the following year, depending on the last digit of the taxable person’s identification number (NIT).
If the report has errors or inconsistencies regarding the information submitted, a new report can be submitted without penalties until 30 days after the report’s deadline.
Examples of items for which input tax is nondeductible
• Goods acquired that are not directly linked to obtaining taxable income, such as amusement activities for employees
• Goods or services that do not have original documents like invoices
Examples of items for which input tax is deductible (if related to a taxable business use)
• Acquisition cost of inventories
• Maintenance services of machinery
Partial exemption. Input tax can be offset against output tax due. However, the input tax can only be offset if it has been incurred in relation to the taxable activities of the business. Where input tax relates to both taxable and exempt activities, it cannot be offset in full. This situation is referred to as “partial exemption.” In this sense, when the purchases of goods or services are in relation to taxable activities and nontaxable activities, the process is as follows:
• The tax credit will be appropriate directly to the operations taxed by VAT.
• When a direct appropriation is not possible, the tax credit shall be appropriated in the propor tion of the income taxed with respect to the total income taxed by the VAT of the business (proportionality).
Approval from the tax authorities is not required to use the partial exemption standard method in Bolivia. Special methods are not allowed in Bolivia.
Capital goods. There are no special input tax recovery rules on capital goods. Therefore, input tax incurred on capital goods can be offset with the output tax as per the normal rules. Only export companies that cannot offset the output tax with local sales that generate input tax can request a reimbursement.
When purchases of goods and services are intended to obtain income taxable and not taxable activities, the proportionality criterion shall be applied.
Refunds. If the amount of input tax (credit VAT) recoverable in a month exceeds the amount of output tax (debit VAT) payable, the excess credit may be carried forward to offset output tax in the following tax period. The amount of input tax is adjusted based on the variation of the Unidades de Fomento a la Vivienda (UFV), an index published by the Bolivian Central Bank that takes into account inflation.
A taxable person that overpaid VAT for a tax period because of an error may request a refund of the overpaid amount.
Pre-registration costs. Input tax incurred on pre-registration costs in Bolivia is not recoverable.
Bad debts. Input tax incurred on bad debts can be recovered in Bolivia. For purchases greater than BOB50,000 (equivalent to USD7,184) proof of bank payment is required. Otherwise, no other obligations are required in order to recover the input tax.
Noneconomic activities. Input tax incurred on purchases that are used for noneconomic activities is not recoverable in Bolivia.
G. Recovery of VAT by non-established businesses
Input tax incurred by non-established businesses in Bolivia is not recoverable.