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Bolivia - Indirect Tax Guide

Bolivia - Indirect Tax Guide

Explore the requirements and rules that apply to Indirect Taxes in Bolivia.

Explore the requirements and rules that apply to Indirect Taxes in Bolivia.

Lady carrying pink cloth bundle on her back Bolivia

General

Types of indirect taxes (VAT/GST and other indirect taxes).

VAT.

Are there other indirect taxes?

An excise tax: impuesto al consumo específico (ICE).

Special Tax on Hydrocarbons: Impuestos Especial a los Hidrocarburos (IEHD).

What supplies are subject to VAT?

VAT taxable:

  • sale of goods
  • service contracts, any provision of services and any other provision
  • imports of goods

What are the standard or other rates (i.e. reduced rate) for VAT/GST and other indirect taxes?

VAT Standard rate: 13 percent (effective rate 14.94 percent). Exemptions: 0 percent on exports. VAT paid in export-related purchases or expenses may be recovered through tax refund requests.

For VAT-excluded or exempt transactions, VAT on expenses or purchases related to VAT-exempt income may not be computed or recovered in these instances:

  • financing transactions generating interest income
  • purchase and sales of shares, debentures, securities and credit title transactions
  • sales or transfers resulting from reorganizations
  • capital contributions
  • imports made by country-accredited diplomats
  • life insurance premiums
  • book imports and sales
  • the sales into Bolivia (internal market) of minerals and metals in the first commercialization phase performed by mining cooperatives
  • goods that introduce by travelers (personal articles, without commercial objectives)
  • activities produced and diffused by Bolivian artists
  • others based on specific laws.

ICE

Cigarettes and tobacco are taxed at the ad valorem rates ranging from 50 to 55 percent. Motor vehicles are taxed from 0 to 80 percent. Alcoholic beverages are subject to a lump sum tax per liter. An additional 0 to 10 percent tax on the sale price of some types of beverages is levied.

Not subject to ICE:

  • imports made by country-accredited diplomats
  • taxed goods destined for export
  • vehicles which transport up to 18 people (including the driver), for example a van or a bus
  • vehicles built and equipped for health services, except if diesel powered.

ICE – the aliquots of this tax are updated by the tax administration, each management based on the variation of the Unidad de fomento a la vivienda (UFV) (inflation referential index).

IEHD – the maximum rate of this tax is BOB3.50 per liter or equivalent unit of measurement that corresponds according to the nature of the product. This rate is updated according to the annual variation of the UFV.

VAT/GST registration

Who is required to register for VAT/GST and other indirect taxes?

VAT: Individuals, organizations and corporations that regularly sell goods, render services or undergo definitive imports and rentals.

ICE: Individuals, organizations and corporations that produce or import drinks, alcoholic beverages, cigarettes and vehicles. It applies to products sold by their producers (e.g. the first sale) and to importers of such goods.
IEHD: individuals, organizations and corporations that market hydrocarbons or their derivatives in the internal market.

Is voluntary registration for VAT/GST and other indirect taxes possible for an overseas company (e.g. if the annual turnover is below the relevant VAT/GST and other indirect taxes registration threshold)?

Registered companies must be domiciled in Bolivia. A foreign company cannot voluntarily register for VAT if it does not have a permanent establishment in Bolivia.

Are there any simplifications that could avoid the need for an overseas company to register for VAT?

The foreign company does not need to register for VAT if it does not have permanent residence in Bolivian territory.

Does an overseas company need to appoint a fiscal representative?

Foreign companies (branches, etc.) located in Bolivia to carry out economic activity, and that are subject to some of the taxes established in Law 843, have the obligation to register in the National Register of Taxpayers to obtain the Tax Identity Number (NIT).


Which forms and supporting documentation does an overseas company need to submit for VAT/GST and other indirect tax registrations?

Applicable only to the foreign companies that register in Bolivia.

Is grouping* for VAT/GST and other indirect taxes possible?

No.

VAT/GST compliance

How frequently are VAT/GST and other indirect tax returns submitted?

  • VAT: monthly.
  • ICE: monthly.
  • IEHD: monthly.

What are the exchange rate rules in your country?

There is a floating exchange rate. The Central Bank of Bolivia regulates and provides the exchange rates.

International Supplies of Goods and Services

Exports – Goods

How are exports of goods treated?

The exports are taxable with tax rate 0 percent. Exporters can recover VAT tax credit.

Exports – Services

How are exports of services treated for VAT/GST purposes?

The exports are taxable with tax rate 0 percent. There are no specific rules regarding VAT treatment on exports of services.

Imports – Goods

How are goods dealt with on importation?

The imports are taxed by the VAT (rate is 14.94 percent). Additionally, depending on the imported good, the ICE and IEHD may also be subject to indirect taxes.

Imports – Services

How are services brought in from abroad treated for VAT purposes?

The importing of services is not taxed by VAT.

VAT/GST recovery

Can an overseas company recover VAT/GST and other indirect taxes if not registered for VAT/GST locally?

No.

Are there any exemptions with the right to recover or deduct input VAT?

VAT paid on export-related purchases or expenses may be recovered through a tax refund request.

Are there any restrictions to the deduction of input VAT?

VAT on expenses or purchases related to VAT-exempt income may not be recovered.

Tax points

When is VAT/GST due on a supply of goods or services?

The expiration of the VAT payment is based on the last digit of the Tax Identity Number (NIT), starting on the thirteenth of the month following the period in which the VAT was generated for the NIT that ends in zero; the fourteenth for the NIT that ends in 1; the twenty-second for the NIT that ends in 9.

Invoices

Is a business required to issue tax invoices?

Yes.

Is it possible/mandatory to issue invoices electronically?

Yes.

Is it possible for the vendor to issue an invoice (i.e. self-billing)?

No.

Record-Keeping Requirements

How long must records and invoices be retained?

Documents and invoices must be kept for 8 years and extended for 2 more years in special situations.

Can the invoices be stored abroad?

The tax credit must be backed by an original document, consequently the invoices must be easily accessible to the taxpayer if they are required by the tax administration.

Audits

Do tax audits take place on a regular basis?

No, at the discretion of the tax authority.

Are audits done electronically in your country (e-audit)? If so, what system is in use?

Yes, in the Integrated Tax Administration System II (SIRAT II).

What penalties can arise from non-compliance?

Omission of taxes: fine of 100 percent of the unpaid taxes, adjusted for inflation.

Tax fraud: prison sentence of 3 to 6 years, and a fine of 100 percent of the unpaid taxes, adjusted for inflation.

Special Indirect tax rules

Are there any special rules for the sale of a company by one taxpayer to another where VAT is not due on the sale?

Yes, in general, the sale of shares or capital and any other company reorganization is not subject to VAT. If a company sells its assets and liabilities (without involving a transfer of shares or capital), assets and liabilities might be subject to VAT.

Are there unique specific indirect tax rules that you would not expect to find in ‘standard’ VAT jurisdictions?

Yes, VAT is included in the price and not shown separately.

Does a reverse-charge mechanism apply for goods or services?

No.

Are there indirect tax incentives available (e.g. reduced rates, tax holidays)?

Goods exports and international road transport have a 0 percent tax rate with right of recovery.

Rulings

Are rulings and decisions issued by the tax authorities publicly available?

Yes they are available at Estado Plurinacional de Bolivia.

For further information please contact:

Carola Jáuregui Cisneros
Tax Partner in Charge
KPMG in Bolivia
E: cjauregui@kpmg.com
T : +591 33 43 4555

Footnote

*By ‘grouping’ we mean: either a consolidation mechanism between taxpayers belonging to the same group (payment and refund are compensated but taxpayers remain distinct) or a fiscal unity for VAT/GST purposes (several taxpayers are regarded as a single taxpayer).

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