Managing Corporate Taxation in Latin American Countries - Bolivia

  1. Income Tax

    1.1. General Aspects

    1.1.1. Income Tax Rate

    The general statutory corporate income tax rate for Bolivian entities including Bolivian branches of foreign companies is 25%.

    1.1.2. Taxable Base

    All revenues are subject to income tax unless otherwise excluded by law from the taxable base. Excluded Items of Income are subtracted from Gross Income, i.e., the sum of All Items of Income realized by the taxpayer. The result is the Gross Taxable Income from which Costs and Expenses are deducted. The after- deductions result is the Net Taxable Income to which a 25% tax rate is the Resulting Income Tax from which applicable Tax Credits are subtracted to find the Income Tax Liability.

    1.1.3. Minimum Taxable Income

    There is no minimum Net Taxable Income.

    1.1.4. Deductions

    As a general rule all costs and expenses are deductible provided that they are related to the income producing activity. Any costs or expenses related to Excluded and/or Exempted Items of Income are not deductible. Some costs and expenses are limited or forbidden, depending on the facts and circumstances of each case, e.g., related party charges (interests), commissions, among others.

    1.1.5. Depreciation

    Tangible fixed assets' depreciation is deductible. Depreciation term varies depending on the nature of the asset; 20 years for real estate, 10 years for all other tangible fixed assets, except for motor vehicles and computers for which regulations establish a 5-year term. Intangibles with a fixed cost may also be depreciated in five years. Globally used methods are generally accepted in Bolivia for tax purposes, e.g., straight-line method, declining balance method, etc.

    1.1.6. Transfer Pricing

    Bolivia has not developed any transfer pricing rules. As a basic premise, all transactions carried out through by related parties should be carried out as if they were deemed to be independent parties.

    1.1.7. Tax Losses Carry-forward / Carry-back

    A Bolivian taxpayer can carry-forward tax losses for an unlimited period of time.

    There is no carry-back possibility.

    Tax losses can be credited towards (and are capped by) the taxpayer's net income for the deduction's taxable year. Therefore, a tax loss deduction cannot generate further tax losses.

    Tax losses cannot be transferred to other taxpayers (not even to the shareholders), except as provided in the cases of reorganizations. There are three types of tax-free 36 – an overview of main corporate taxes in selected jurisdictions 2010 reorganizations authorized by Bolivian law (statutory tax-free mergers, statutory taxfree spin offs and statutory tax-free transformations). In all cases, the tax attributes of the target company are transferable to the surviving or resulting corporation. In the case of tax-free mergers the above-mentioned general limitations still apply.

    Nonetheless, in this case tax losses are transferable to the new or surviving entity. For tax-free spin-offs part of the tax losses of the target entity are transferred to the resulting entities. A limitation was set forth by a decree supreme limiting the carry forward of losses resulting from any of the previous reorganizations in a period of four years. In light of the previous limitation, and taking into account...

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