What taxes do companies pay in Bolivia?

What amount of taxes do companies pay? What obligations must they comply with? We will clarify your doubts about these and other questions. 

One of the first things someone wants to know when opening a company is what taxes companies pay, so they can comply with them and avoid penalties. But before knowing which taxes you must pay, you need to understand the tax obligations.

Main tax obligations of companies

Companies have formal and substantive obligations. Formal obligations include registering with the Bolivian Tax Authority (BTA), updating information in the Taxpayer Registry, filing declarations and paying taxes on time, keeping complete accounting records, issuing invoices, and retaining records for at least 8 years (the statute of limitations period).

Substantive obligations show which taxes companies pay, such as VAT, transaction tax, RC-VAT, and corporate income tax. Compliance with these obligations helps avoid potential sanctions and penalties from the BTA.

In summary, the tax obligations that companies must comply with are:

Concept	Description
Tax obligations – Law 2492, Art. 70.	– Registration with the BTA and obtaining the Taxpayer Identification Number (TIN). – Updating in the Taxpayer Registry. – Declaration and payment of taxes within the established deadlines. – Keeping complete accounting records. – Issuance of invoices. – Retention of records for at least 8 years. – Others.

Principle of Source in Bolivia

The source principle establishes that a country only taxes income generated within its borders.

In Bolivia, the principle of source is within the tax framework and is reflected in Law 843, article 42. This means that any income generated within the country, whether through goods, rights or activities, is subject to corporate income tax. Therefore, companies in Bolivia are subject to taxes on their activities within the country.

This is an important principle that companies must take into account when knowing which taxes to pay.

Validity of an invoice for tax credit

The requirements to benefit from the Tax Credit, established in articles 4 and 8 of Law 843, Supreme Decree No. 21530 and the different resolutions issued by the Tax Dispute Authority (TDA), are:

• It must be supported by the original invoice.
• The transaction must have effectively taken place.
• It is related to the taxable activity or line of business of the taxpayer.

These requirements allow taxpayers to benefit from the tax credit, even if there are errors or omissions on the invoice. Jurisprudential cases have been established that support this interpretation of the regulations, which means that these requirements are essential to validate any invoice.

Once the obligations, source principle and requirements for an invoice to be valid have been reviewed, let’s see what taxes companies pay in Bolivia.

What taxes do companies pay in Bolivia?

Companies generally pay the following taxes:

Value Added Tax (VAT)

• VAT applies to the sale of goods, provision of services and imports.
• The amount to be paid each month can be reduced by considering the monthly invoices declared as deductible and with the right to tax credit in the Purchase and Sales Record (RCV).
• Its tax rate is 13% and must be declared and paid monthly.
• The deadline for declaration depends on the last digit of the TIN.
• Form 200 is commonly used for its declaration, which is submitted through the Online Tax Administration System (OTAS), which is known as SIAT online.
• Click here for more details on VAT.

Purchase and Sales Record (PSR)

• The Purchase and Sales Record (PSR) is important to calculate and declare VAT and Transaction Tax, as it facilitates the declaration of purchase invoices that are deductible and reduce the VAT amount.
• It is mandatory to register and consolidate this document on a monthly basis.
• The deadline for declaration is until the 9th of the month following the period being declared – for example, January PSR must be consolidated by February 9th.
• Click here for more details on the PSR.

Transaction Tax (TT)

• Transaction Tax (TT) applies to the purchase and sale of movable assets, real estate, motor vehicles and other types of transactions.
• The monthly amount to be paid can be reduced through the amount paid of Corporate Income Tax (CIT).
• Its tax rate is 3% on total sales, and must be declared and paid monthly. The deadline for declaration depends on the last digit of the TIN.
• Form 400 is most commonly used for its declaration, which is also submitted through the OTAS.
• Click here for more details on TT. In addition, to learn more about offsetting TT against CIT, you can find more information here.

How are the forms submitted?

At this point, you may be wondering how companies consolidate the Purchase and Sales Register (PSR) and how they submit VAT Form 200 and TT Form 400. We have practical tutorials (in Spanish) on how to carry out these procedures when there is movement during the month, that is, when purchases and/or sales are registered, as well as when there is no movement. Below are the corresponding links:

• For submitting forms without movement:
  OTAS, without PSR and Forms 200 and 400 movement
• For submitting forms with movement:
  OTAS, real example of submitting PSR and Forms 200 and 400

Complementary Regime to Value Added Tax (RC-VAT)

• Under the RC-VAT regime, the company acts as a withholding agent for its employees.
• Its tax rate is 13%.
• The deadline for declaration depends on the last digit of the TIN.
• It is only declared in months where there is an amount in favour of the dependent or the tax authority (BTA) to declare.
• Form 608 is used for its declaration and is submitted through the OTAS.
• In the case of employee withholding, this only applies if they earn more than Bs.10,824.- per month, an amount that varies annually according to the national minimum wage.
• Click here to access the course (in spanish) where we teach how to do everything related to form 608 and the payroll tax return.

Withholding taxes

• The company acts as a withholding agent for purchases or individuals who do not issue invoices for the services they provide.
• The taxable base is the total amount of the service or goods to be paid.
• Forms are only declared in months where there is an amount to withhold.
• The deadline for declaring the withholding forms depends on the last digit of the TIN.
• For RC VAT withholding, Form 604 is used through the OTAS and has a tax rate of 13%.
• For TT withholding, Form 410 is used through the OTAS and has a tax rate of 3%.
• Here is an example, again in spanish, of how to fill out Form 410 and Form 604.
• For CIT withholding, Form 570 is used through the OTAS and has a tax rate of 5%.
• The following table shows in which cases TT, CIT and RC VAT withholding applies:

Click here for more details on withholdings.

Payment and form submission deadlines

The deadline for submitting and paying monthly taxes varies according to the last digit of the TIN:

• Ending «0» until the 13th of each month.
• Ending «1» until the 14th of each month.
• Ending «2» until the 15th of each month.
• Ending «3» until the 16th of each month.
• Ending «4» until the 17th of each month.
• Ending «5» until the 18th of each month.
• Ending «6» until the 19th of each month.
• Ending «7» until the 20th of each month.
• Ending «8» until the 21st of each month.
• Ending «9» until the 22nd of each month.

Corporate Income Tax (CIT)

• CIT taxes the net profits obtained by the company in a fiscal year (one year).
• The CIT rate is 25% and is settled annually according to the company’s line of business and closing date.
• The fiscal year-end for commercial companies is December 31st. They have 120 days after to file and pay the CIT (Corporate Income Tax).
• Form 500 is used for its declaration, which is submitted through the OTAS.
• In addition, Form 605 is used to submit financial statement information digitally. Although this form does not generate an additional tax, it complements CIT obligations.
• You can get more details on IUE by clicking here, on Form 605 by clicking here and on submitting Financial Statements by clicking here.
• The following table details (in spanish) the requirements for the preparation and physical or digital submission of Financial Statements. Those requiring physical submission, and those corresponding to digital submission, must include the following documentation:
• Submission of Financial Statements.

Municipal License

At the municipal level, companies are obliged to pay the Municipal License to town halls. This tax is linked to the use of public goods and the obtaining of authorizations for economic activities. Fees vary by municipality and are paid annually. If operations cease, the company must also close the municipal license; otherwise, debts will accumulate year after year.

Commerce: Types of companies, payment to SEPREC and mandatory bookkeeping

Types of Companies in Bolivia

Bolivia law stipulates various types of companies under Article 126 of the Commercial Code These include:

Business Registry (SEPREC)

SEPREC is the public business registry service in Bolivia that confers legal personality and merchant status on commercial companies and sole proprietorships.

Each year, companies engaged in commerce in Bolivia must make an additional payment known as the business registry renewal, made to SEPREC. This renewal is mandatory and is submitted according to the company’s fiscal year-end date.

The following article teaches (in spanish) how to complete the renewal and pay the Business Registry fee to SEPREC. Click here to access it.

Mandatory Bookkeeping for Companies

The obligation for companies to maintain accounting records (journals, ledgers and inventories) is established in Bolivian Supreme Decree 24051 and the Bolivian Commercial Code (Law 779). Per Article 36 of the last law mentioned, all merchants must keep adequate accounting and retain in good condition the books, documents and correspondence supporting their activities.

The Bolivian Tax Code (Law 2492) in Article 70 details taxpayer obligations to support taxed activities and transactions through accounting books, general and special ledgers, invoices, tax notes and other public instruments.

Furthermore, the Commercial Code mandates that merchants must maintain journals, ledgers, inventories and balances books. These books must be bound, paginated and certified by a public notary, as stipulated in Article 40.

Auxiliary books may also be presented depending on the company, and those who choose to validate such records must also have them notarized.

In addition to maintaining the mentioned books properly bound and notarized, the commercial code establishes other elements of accounting books (language, prohibitions, record retention). Click here to read more on this.

Processes on the SIN Website that Companies Must Complete

OTAS Online Platform

OTAS is a portal integrating several BTA services, such as:

• Tax Declarations (form filing).
• Tax debt inquiries.
• Payment plans.
• Tax processes.
• Tax declaration certification.
• Refund requests in favor of the taxpayer.
• Others.

Through SIAT, companies can complete various processes. Two important parts of OTAS that must be considered are:

• Digital Biometric Registry (PBD)

The PBD is a registry of all taxpayers in Bolivia, including all companies, administered by BTA. Processes that can be completed on the PBD include:

• Data modification.
• Replacement of display document (of TIN).
• Electronic certification of the TIN or registration certificate.
• Replacement of the virtual card.
• TIN deactivation.

Failure to update PBD data results in fines.

• Tax Mailbox

The tax mailbox is an OTAS section where companies receive important electronic notifications. If BTA sends a notification and the company has not checked the mailbox within 5 business days, it is considered automatically notified. This generates an electronic notification certificate visible upon mailbox access, indicating the notification date.

Through the tax mailbox, companies can receive various documents such as tax assessment notices, charges notices, administrative resolutions and other document types. This notification method is supported by Law 2492, giving it legal validity.

It is very important that companies stay attentive to tax mailbox notifications, as defined response deadlines vary by document type.

How much tax do companies pay in Bolivia?

Based on the information we have, companies generally pay at least the following tax amounts: 13% VAT (with the possibility of offsetting in the PSR), 3% TT and 25% CIT (which helps offset TT payments).

It is important that companies carefully declare their taxes, as BTA is constantly seeking to increase collection. They scrutinize expenses registered as deductibles and invoices used to discharge VAT (using tax credits).

All Taxes in Bolivia

Companies involved in other activities may be liable for additional taxes. Below are all Bolivian taxes:

• Value-Added Tax (VAT)
• Transaction Tax (TT)
• Corporate Income Tax (CIT)
• Complementary VAT Regime (R-VAT)
• Specific Consumption Tax (SCT)
• Tax on International Air Travel (TIAT)
• Special Tax on Hydrocarbons and Derivatives (STHD)
• Direct Tax on Hydrocarbons (DTH)
• Financial Transactions Tax (FTT)
• Gaming Tax (GT)
• Gaming Participation Tax (GPT)
• Tax on Large Fortunes (TLF)
• Departmental Tax on Gratuitous Transfer of Property (DTGTP)
• Municipal Transfer Tax (MTT)
• Real Estate Property Tax (REPT)
• Motor Vehicle Property Tax (MVPT)

Click here for more details on all Bolivian taxes.

Key Abbreviations:

• BTA: Bolivian Tax Authority
• CIT: Corporate Income Tax
• OTAS: Online Tax Administration System
• TT: Transaction Tax
• VAT: Value Added Tax
• TIN: Tax Identification Number
• PBD: Digital Biometric Registry
• PSR: Purchase and Sales Record
• RC – VAT: Complementary Regime to Value Added Tax
• SEPREC: Business Registry Service
• TDA: Tax Dispute Administration

Conclusion

In conclusion, companies operating in Bolivia must adhere to various tax obligations, including VAT, transaction tax, and corporate income tax. Maintaining accurate records and timely filing of tax returns are crucial to avoid penalties or complications with the Bolivian Tax Authority (BTA). Understanding the procedures to fulfill these obligations through the Online Tax Administration System (OTAS) is vital for all companies.

For further inquiries or assistance, feel free to contact us via WhatsApp; we speak English.
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