all extractive fields. The 18% royal prerogatives consist of the following:
• A regional royal prerogative equal to 11% of the gross hydrocarbon production from oil wells, which is paid to the region where the hydrocarbons are produced
• A national royal prerogative equal to 1% of the gross hydrocarbon production
• An amount equal to 6% of the gross hydrocarbon production in oil wells, which is paid to the National Treasury after the deduction of the necessary amounts for the management of the contracts
Capital gains. In general, capital gains are taxed in Bolivia.
Administration. The law specifies the following tax year-ends, which vary according to the type of business.
Business Tax year-end
Industry (including oil and gas)
Agriculture and agribusiness
Mining
All other businesses
31 March
30 June
30 September
31 December
Annual tax returns and financial statements must be filed with the Internal Revenue Service (IRS) and income tax paid within 120 days after the end of the tax year. Advance payments are not required except for mining companies, which must make payments of income tax when they export minerals or metals.
Debts owed to and credits due from the state are adjusted to reflect changes in the Unidad de Fomento de Vivienda (UFV), which is the inflation index established by the Central Bank of Bolivia.
Fines and interest charges apply to late tax payments and other non-compliance with tax obligations. Under Act No. 812, the interest is calculated based on the age of the debt. The following are the interest rates:
• 4% until the last day of the fourth year
• 6% until the last day of the seventh year
• 10% until the last day of the eighth year
The tax code provides that fraud exists if a tax debt exceeds an amount equal to 10,000 UFV, calculated as of the date of determination of the fraud.
Under Act No. 812, dated 30 June 2016, the statute of limitation for tax audits is eight years.
The statute of limitation period may be increased by two years if the entity does not comply with the obligation to register, registers under a different tax regime, commits tax crimes or carries out commercial and/or financial operations with companies located in countries with low or null taxation (there is a list of countries and regions that is periodically updated).
Withholding taxes. Local entities, including Bolivian permanent establishments of foreign companies, that pay Bolivian-source income to foreign beneficiaries must withhold 12.5% of the amounts paid. For this purpose, Bolivian-source income includes
all dividends, interest payments, branch remittances, royalties, professional service fees (includes consulting, expert services, and technical, commercial or other advice), commissions and other income. In general, Bolivian-source income is revenue that is derived from assets located, placed or economically used in Bolivia, or from activities developed in Bolivia. This rule applies regardless of the nationality, address, or residence of the recipient of the income or the parties involved in the activities, or where the relevant contract is executed. For services, the withholding is applied to beneficiaries who carry out the work outside of Bolivia.
For dividends paid by Bolivian companies, the withholding tax is payable when the dividends are actually paid, remitted or credited. However, branch profits are deemed remitted when the corporate income tax return is due (120 days after the end of the tax year; see Administration).
Dividends. The 12.5% withholding tax on payments to foreign beneficiaries applies to dividends paid by Bolivian companies (see Withholding taxes). Dividends received from Bolivian companies subject to Bolivian corporate income tax are not taxed.
Foreign tax relief. The Bolivian tax code does not provide foreign tax relief.
C. Determination of taxable income
General. Taxable income is the revenue reported in the companies’ financial statements prepared in accordance with generally accepted accounting principles in Bolivia, subject to certain adjustments for tax purposes. In general, all expenses necessary to generate income and to maintain the existence of the company (for example, contributions to regulatory-supervisory organizations, contributions for social benefits and certain national and municipal taxes) are deductible. Donations and other gratuitous transfers to nonprofit organizations that are exempt from income tax may be deducted up to a maximum limit of 10% of taxable income derived in the year of the donation or gratuitous transfer.
Certain expenses are not deductible, including the following:
• Personal withdrawals by owners or partners
• Corporate income tax
• Bonuses and other benefits that are not paid to employees within the time period in which the annual form must be presented for the year of payment
• Interest paid to related parties, to the extent it exceeds, for foreign loans, the London Interbank Offered Rate, plus 3%, or, for local loans, the official lending rate. In addition, interest paid to related parties may not exceed 30% of the interest paid to third parties
Royalties paid with respect to mining activities are creditable or deductible, depending on the price of the minerals and subject to certain limits established by law.
Revenue and expenses are reflected in the year they are accrued.
Nature of tax
in December 2023, Law 1546 was enacted to approve the government budget for the 2024 fiscal year; this law extended the application of the ITF until 31 December 2028;
Additional financial aliquot (tax rate) for corporate income tax; applicable to financial entities, financial leasing companies, general deposit warehouses, investment fund management companies, brokerage firms and securitization companies, regulated by the ASFI, insurance and reinsurance companies, regulated by the Autoridad de Fiscalización y Control de Pensiones y Seguros (APS); tax applicable if return on equity exceeds 6%; tax is neither deductible nor able to be offset
Social security contributions
Employer
BOB13,000
Christmas bonus (Aguinaldo); general paid between 1 December and 20 December each year; if employment is less than a year, the bonus is reduced pro rata
Second Christmas bonus (second Aguinaldo); must be paid if Bolivian gross domestic product increases by more than 4.5% One
Termination compensation; bonus for termination of employment; amount depends on length of employment and whether the employee was fired or resigned Various
E. Miscellaneous matters
Foreign-exchange controls. The Bolivian currency is the boliviano (BOB).
No restrictions are imposed on foreign-exchange transactions, including the repatriation of capital and the remittance of
dividends and royalties abroad. A system of free-floating exchange rates exists in Bolivia. No special registration requirements apply to foreign investment.
The current exchange rate is BOB6.96 = USD1.
Transfer pricing. In July 2014, Act No. 549 introduced a transferpricing regime in Bolivia, effective from the 2015 fiscal year. Under this regime, commercial and/or financial transactions performed between related parties must be valued using the arm’slength principle. The transactions must be valued as if they were performed between unrelated parties in comparable markets.
The following methods may be used to value transactions between related parties:
• Comparable uncontrolled price
• Resale price
• Cost-plus
• Profit-split
• Transactional net margin
• Notorious price in transparent markets (applicable to the import or export of commodities)
For this purpose, the IRS may verify if the transactions are valued according to the above methods and make any adjustments or revaluation if the agreed value, regardless of the adopted legal form, does not conform to the economic reality or causes lower taxation in Bolivia.
In April 2015, the IRS issued Normative Resolution No. 10-008-15, which imposes the following obligations:
• If annual operations with related parties are greater than BOB15 million (USD2,155,172), a transfer-pricing study and Form No. 601 must be delivered to the IRS.
• If annual operations with related parties are between BOB7,500,000 (USD1,077,586) and BOB15 million (USD2,155,172), only Form No. 601 must be delivered to the IRS.
• If annual operations with related parties are less than BOB7,500,000 (USD1,077,586), the company must retain information to demonstrate that the operations were made at market values.
In January 2017, the IRS issued Normative Resolution No. 101700000001, which established a tax-haven list that included 76 “low tax countries and regions.” This list was updated in March 2018 by Normative Resolution No. 101800000006, and then included 82 “low tax countries and regions.” In February 2019, Normative Resolution No. 101900000002 added Curaçao to the tax-haven list of “low tax countries and regions.” Parties from these jurisdictions must be considered related parties if any commercial or financial transaction occurs with them.
In Bolivia, the interquartile formula is not applied to calculate the range of value differences. Normative Resolution No. 10-000815 established certain formulas to calculate the ranges.
Reorganizations. Profits arising from company reorganizations, which are mergers, divisions or transformations, are not subject to corporate income tax. Regulations on reorganizations are expected to be issued in the near future.