La Paz GMT -4
EY
Avenida 20 de Octubre No. 2665
Esquina Campos
Sopocachi
Edificio Torre Azul, Piso 16
La Paz
Bolivia
Executive and immigration contact
Juan Pablo Vargas
+591 (2) 243-4313
Fax: +591 (2) 214-0937 Email: juan.vargas@bo.ey.com
Santa Cruz GMT -4
EY
Avenida Cristo Redentor y 4to. Anillo
Edificio Torre Empresarial MSC, Piso 13 Oficina No. 13-B Santa Cruz Bolivia
Executive and immigration contact
Juan Pablo Vargas
+591 (3) 342-9230
Fax: +591 (3) 337-3035 Email: juan.vargas@bo.ey.com
A. Income tax
Who is liable. All individuals domiciled or resident for tax pur poses in Bolivia are subject to personal income tax (Régimen Complementario al Impuesto al Valor Agregado, or RC-IVA) on their total worldwide income. Nonresident individuals are taxed on Bolivian-source income only.
A work permit (visa) or similar documentation does not change resident status in Bolivia. A foreigner may obtain this permit if he or she fulfills certain requirements, most importantly, the obtainment of a resident visa.
Domicile is defined as residence in a particular place with the intention of staying there. The intention is proved through facts and circumstances, including employment in Bolivia or moving one’s family into the country.
Income subject to tax
Employment income. In general, taxable income includes all wages, salaries, prizes, bonuses, gratuities, compensations and allowances in cash or in kind. It also includes fees for directors and trustees and salaries for owners and partners.
The following items are not included in taxable income:
• Salaries, fees or allowances received by diplomatic personnel, official personnel of diplomatic missions accredited in Bolivia and foreign employees employed by international organizations,
foreign governments or foreign international organizations, as a direct reason of his or her position
• Christmas bonuses (the first one is mandatory, and the second one is mandatory only if annual growth of the country is higher than 4.5%)
• Social benefits resulting from indemnities and evictions, in accordance with existing legal rules
• Pre-family, wedding, birth, lactation, family and burial allow ances received according to the Social Security Code
• Retirement and pension income, sick allowances, and profes sional risk allowances
• Life pensions given to persons who were members of the army in any war or life pensions given to members of the army who were injured in peace time
• Per diem and representation payments, evidenced by local or foreign invoices if they are company-related expenses
Investment income. Dividends paid to Bolivian residents are not subject to personal income tax. Residents are taxed on interest and royalties received.
Nonresidents are subject to a 12.5% withholding tax on divi dends, interest and royalties.
Self-employment and business income. Self-employed persons are subject to the following taxes:
• Value-added tax (VAT) at a rate of 13%. This tax is paid on a monthly basis.
• Transactions tax at a rate of 3% on each service rendered. This tax is paid on a monthly basis.
• Corporate income tax at a rate of 25% (tax is calculated according to special rules). Up to 50% of the income tax can be offset by a tax credit equal to 13% of the purchase invoices obtained during the tax year. This tax is paid on an annual basis.
Directors’ fees. Directors’ fees not supported by a local fiscal invoice are taxed in the same manner as other personal income.
Taxation of employer-provided stock options. The Bolivian tax law does not specifically address the taxation of employer-provided stock options. Based on the nature of the Bolivian personal income tax, employees are taxed on stock options when the ben eficiary acquires the right and can use or transfer the option.
Capital gains and losses. Capital gains derived by individuals are subject to personal income tax. Capital losses can offset capital gains.
Deductions and tax credits. For personal income tax on employees, the following tax deductions may be claimed with respect to taxable income:
• Employee contributions to social security institutions (12.71%) and national solidarity contribution (1%, 5% or 10%, depend ing on the total amount of the salary)
• The nontaxable minimum amount, which equals two minimum national salaries per month. The current minimum salary is BOB2,164 (USD311)
160
In addition, the following credits may be claimed with respect to the tax on the taxable income of employees:
• 13% of two minimum national salaries
• The VAT credit remaining after offset against VAT
Rate. The personal income tax rate is 13%, which equals the rate of VAT.
B. Tax on inheritances
Inheritances are subject to the Free Transmission of Goods Tax. This tax applies to each legal act involving the free transfer of movables, real estate, shares and rights subject to registration.
The beneficiaries of the transfers must pay the tax. The tax rates are the following:
• Parents, children and spouse: 1%
• Brothers, sisters and their descendants: 10%
• Other relatives, legatees and free donees: 20%
C. Social security
Contributions. Employers and employees are required to make long-term and short-term social security contributions (SSCs) based on the total monthly remuneration. The following are the contribution rates.
Employer Employee Institution % %
Short Term – SSC Healthcare entity (a) 10 Long Term – SSC (b) Housing Fund (Fondo de Vivienda [Provivienda], or FV) (c) 2 Professional risk (d) 1.71 Solidary contribution (e) 3 0.5 Retirement fund (f) 10 Common risk (g) 1.71 Administration commission (h) 0.5 National Solidarity Contribution (i) 1/5/10
(a) For contributions to the Healthcare entity, employees receive short-term health insurance, which covers medical care related to pregnancy, illnesses and acci dents.
(b) The long-term SSCs are mandatory and are paid on the basis of 60 national minimum wages, equivalent to BOB129,840 (USD18,655).
(c) Based on this contribution, employees can obtain credits for the purchase or construction of a house.
(d) Based on this contribution, employees receive full or partial coverage for dis ability and death from accidents at the workplace.
(e) This contribution is aimed to distribute funds among the less-favored insured.
(f) This is a mandatory contribution to support employee’s retirement.
(g) Based on this contribution, employees receive full or partial coverage for dis ability and death in accidents out of the workplace.
(h) This contribution is aimed to reward the Pension Fund for managing and administrating the collected contributions.
(i) Under Act No. 65 of December 2010, this contribution is aimed to accumulate funds that are then distributed among the less-favored insured. The following are the percentages of the contributions:
• 10% of the difference between the total earned and BOB35,000
• 5% of the difference between the total earned and BOB25,000
• 1% of the difference between the total earned and BOB13,000
Employers must withhold the employee contributions. They can pay these withholdings until the last working day of the following month.
Contributions of foreigners. Under Act No. 65 of December 2010, expatriates must make social security contributions in Bolivia. This law also provides that contributions can be transferred to the expatriate’s home country if the following conditions are ful filled:
• The expatriate ends his or her employment relationship and definitively leaves the country.
• The expatriate has not accessed his or her pensions in Bolivia.
• A bilateral or multilateral social security agreement is in effect with the destination country.
The Bolivian authorities have not yet established an application procedure to achieve the abovementioned transfer.
Totalization agreements. Bolivia has signed the Ibero-American
Multilateral Agreement on Social Security. Countries that have effectively implemented this agreement are Argentina, Bolivia, Brazil, Chile, Ecuador, El Salvador, Spain, Paraguay, Peru, Portugal and Uruguay.
Expatriates can request the transfer of their contributions to other countries after they leave Bolivia. However, transfer procedures are not currently available.
D. Tax filing and payment procedures
Tax must be paid monthly when it is paid by a withholding agent and quarterly when it is paid directly by a taxpayer. The tax must be paid at the same time the tax return form is filed. The tax return form must be filed between the 13th and 22nd day of the month following the end of the reporting period. The due date is determined by the last digit of the Tax Identification Number (Número de Identificación Tributaria, or NIT).
E. Double tax relief and tax treaties
Bolivia has signed tax treaties with Argentina, France, Germany, Spain, Sweden and the United Kingdom. It has also signed the Andean Pact, which includes a tax treaty with Colombia, Ecuador and Peru.
F. Migration regime
In May 2013, Act No. 370, which describes the new migration regime, was issued. This law provides requirements for entry into Bolivia. It restricts the entry of undocumented foreigners as well as foreigners who have a criminal background or are not economically solvent. The regulatory Supreme Decree No. 1923 of March 2014 includes the visas described below.
G. Temporary visas
Tourist visas. Tourist visas are valid for 30 days and can be renewed for two more periods of 30 days each (that is, 90 days per year). Tourists can obtain these visas in their home countries if a Bolivian consulate is located there.
Specific object visas. Specific object visas are valid for 30 days and are renewable twice (that is, first renewal for up to 90 days, and second renewal for up to 180 days).
Other temporary visas. Other temporary visas can be obtained for one year and are renewable for up to two more years.
Cancellation of visas. A temporary visa is canceled if the expatri ate, without the express authorization of the migratory authority, exceeds the terms of absence from the country. The following are the applicable terms of absence:
• Tourist visas: 8 days for each validity period
• Specific object visas and other temporary visas: 90 continuous or discontinuous days
H. Work visas and self-employment
Expatriates who want to engage in remunerated activities in Bolivia must apply for a visa or residence permit that entitles him or her to work. The most common of these documents are the provisional work permits for tourists, subject-to-contract visas and temporary visas (see Section G). Except for provisional work permits, these permits may be obtained after the expatriate has entered the country. Individuals may also obtain the documents before their arrival through a Bolivian consulate abroad.
Foreign nationals may establish businesses in Bolivia if they comply with all legal requirements. Companies may be headed by foreign nationals who are resident or domiciled in Bolivia for tax purposes.
The visas mentioned above allow individuals to reside and work in Bolivia. In addition, foreigners need to obtain a Foreign Tax Identification in order to be able to open a bank account, be reg istered in payroll and obtain a rental contract, among other actions.
I. Residence visas
Bolivia issues the following types of residence visas:
• Officials: Members of the consular and diplomatic corps.
• Temporary: Expatriates who want to work or perform other legal remunerated activities in Bolivia. This visa may be granted to individuals who have relatives in Bolivia or who intend to make investments that are considered advantageous for Bolivia.
• Subject-to-contract: Valid for one to two years, and may be renewed for an additional one- to two-year period.
• Student: Valid for up to one year and may be renewed for addi tional one-year periods, as many times as necessary.
• Political refugee: Issued to foreign nationals who intend to establish permanent residence in Bolivia.
• Permanent residence: An indefinite visa that grants to the expa triate the same rights as an ordinary Bolivian national, except for the right to vote and work at public offices.
In general, foreign nationals must submit all or some of the fol lowing items when applying for visas and permits:
• An application form
• Passport and documents proving current visa status
• Foreign national identification card
• Documents that prove professional status
• Documents that prove marital status
• Documents that evidence the activities that an applicant will perform in Bolivia, such as a labor contract, or documents that prove that the applicant has been accepted in a college or edu cational institution
• A certificate proving that the applicant has no criminal record (if the applicant has left the country for a period of three months or more, an international document proving no criminal record is required)
• Document proving economic solvency (bank statements, labor contract or others)
• A current photo of the applicant
• Payment for the procedure, which varies in relation to the type of visa (for specific types of work permits, the payment could be UFV160, UFV960 or UFV2,510 [USD54, USD327 or USD855]; UFV is an abbreviation for Unidad de Fomento a la Vivienda, which is a Bolivian index referring to inflation and changes daily)
A residence visa is canceled if the expatriate, without the express authorization of the migratory authority, is absent from the coun try for more than two consecutive years.
J. Family and personal considerations
Family members. Family members of foreign personnel do not need separate or individual visas for residing in Bolivia. In addi tion, the children of foreign personnel do not need student visas to attend schools in Bolivia, but they must apply for dependent visas. A separate work visa must be obtained by any family member of a working foreign national who intends to work in Bolivia.
Driver’s licenses. Foreign nationals may not drive legally in Bolivia using their home country driver’s licenses. However, they may legally drive in Bolivia with an international license while the license is in force. Bolivia has driver’s license reciprocity with a few countries. To obtain a Bolivian driver’s license, a for eign national must take a basic written exam, a technical exam, a basic practical driving test and a basic medical exam.