NEW BUDGET 2025 IN BOLIVIA: TAX BENEFITS FOR INDUSTRY AND COMMERCE

The Bolivian Law No. 1613, enacted on January 1, 2025, approves the General State Budget (PGE) for the fiscal year 2025 and introduces several provisions that may be of interest to businesses and economic actors in Bolivia. These measures aim to promote industrialization, import substitution, and economic reactivation.

Key Provisions:

1. Tax Incentives for Industrialization: To encourage industrialization and reduce import dependency, the PGE 2025 establishes an exemption from the Value Added Tax (VAT) and customs duties for the importation and commercialization of capital goods and industrial plants. This benefit applies to sectors such as agriculture, industry, construction, and mining, facilitating the acquisition of machinery and equipment necessary for productive development.

2. VAT Exemptions on Hydrocarbon Imports: To ensure the supply of fuels in the domestic market, the importation of crude oil, gasoline, and diesel oil is exempted from VAT. This measure aims to mitigate the impact of international prices and ensure the continuous supply of these essential resources.

3. Incentives for Profit Reinvestment: The PGE 2025 introduces incentives for foreign companies to reinvest their profits in the country. Depending on the percentage of reinvestment, partial exemptions are granted on the Corporate Income Tax for Foreign Beneficiaries (IUE-BE). For instance, a reinvestment of 25% to 49.99% of profits results in a 10% exemption on the corresponding tax.

4. Use of Virtual Assets by Public Companies: Public companies are authorized to use virtual assets to fulfill contractual obligations. This provision allows greater flexibility in financial transactions and could influence how payments and contracts are managed in the public sector.

These provisions of the PGE 2025 present both opportunities and legal challenges for businesses and economic stakeholders in Bolivia.

For the official text of Law No. 1613, please refer to the Gaceta Oficial del Estado Plurinacional de Bolivia.

The MTEPS regulates the salary increase applied to workers for the 2024 fiscal year.

 On May 1, 2024, the Bolivian government promulgated Supreme Decree No. 5154, which aims to establish a 3% increase in the basic salary and a 5.85% increase in the National Minimum Wage, resulting in a new amount of Bs.2,500. It applies to all private sector workers. It will be retroactive from January 2024, must be paid by May 31, 2024, and reported to MTEPS by June 30, 2024. In the public sector, it applies to the following sectors: Health, Fiscal Teaching, Departmental Service of Social Management, Armed Forces, and Bolivian Police.

Tax incentives for the importation of flex-fuel technology vehicles and hybrid vehicles.

Supreme Decree No. 5142 of April 10, 2024. Supreme Decree 5142 implements customs and financial tax policies to incentivize the importation and manufacturing of flex-fuel technology vehicles, as well as tax incentives for importing hybrid vehicles. The objective is to "encourage the use of plant-based additives through the importation of flex-fuel technology vehicles, diversifying the energy matrix, and modifying the tax treatment for the importation of hybrid vehicles." The rates for the Customs Duty (GA) and the Specific Consumption Tax (ICE) for the importation of flex-fuel technology motor vehicles will be zero percent for three years, while the rates for the Customs Duty and the ICE for the importation of self-recharging hybrid vehicles will be 10%.

New Regulation for the Registration of Foreign Investment in the Plurinational State of Bolivia. Board Resolution No. 043/2024 of March 26, 2024.

The president of the Central Bank of Bolivia (BCB), Edwin Rojas, presented the "Online RIOF System" (RIOF) developed by the Issuing Entity to facilitate the timely submission of this statistical information, allowing the creation of various specialized documents that it publishes, such as the "Balance of Payments and International Investment Position Report," the "Foreign Private Capital in Bolivia Report," and the "Private External Debt Report."

Corporate/M&A

Disclosing duties

Bolivia has regulations to transparently disclose information and identify the holders of bearer shares. Official Gazette, April 5th, 2023. - With the purpose of disclosing information transparently and identifying the holders of bearer shares, this Supreme Decree aims at requiring commercial companies with bearer shares to submit information to the Authority for Business Supervision - AEMP. The companies must report current and future shareholders through an affidavit by the company’s legal representative. Non-compliance may result in fines and other legal actions.
Commercial Registry Before April 1st, 2022, the commercial service registry was carried out in Bolivia by the Foundation
for Business Development. The latter has been replaced by the Plurinational Service of Commercial Registry or Seprec. However, registration for merger operations were enabled in the Seprec only after January 16th, 2023, while the registration for spin-offs is still suspended until further notice.

Tax

Gold Law

Law No. 1503 of May 5th, 2023, authorized the Bolivian Central Bank to purchase gold in the domestic market to strengthen the international reserves. The law provides tax exemptions, including Value Added Tax (VAT), for gold transactions.