VAT, GST and Sales Tax in Bolivia

Summary

Name of the tax Value-added tax (VAT)
Local name Impuesto al Valor Agregado (IVA)
Date introduced Jul-86
Trading bloc membership None
Administered by Internal Taxes Service (http://www.impuestos.gob.bo)
VAT rate 13% (nominal rate)
14.94% (effective rate)
VAT number format 9999999999 (taxpayer identification number [NIT])
VAT return period Monthly
Thresholds
Registration Commencement of sales activity
Recovery of VAT by non-established businesses  No

Scope of the tax

VAT applies to the following transactions:

  • Sales of movable goods placed in Bolivia by taxable persons
  • All services rendered in Bolivia
  • Importation of goods
  • Leasing inside Bolivia

Taxation of digital services. Effective 20 December 2013, the Bolivian tax authorities published rules for the application of VAT on e-commerce. They include the following requirements:

  • The sales price of goods, stated on a website, must include the VAT amount.
  • The seller must deliver an invoice or an equivalent document issued electronically to the buyer.
  • The seller must indicate its tax identification number on its website.

Who is liable

A registered VAT payer is a business entity or individual that performs the following actions:

  • Sells movable goods
  • Sells movable goods on behalf of others
  • Renders any kind of services
  • Makes definitive imports (these are products that are purchased in foreign countries and brought into Bolivia)
  • Engages in the operational or financial leasing of movable or fixed goods

Group registration. Grouping for VAT purposes is not allowed under Bolivian law. Legal entities that are closely connected or are related parties must register for VAT individually.

Non-established businesses. A “non-established business” is a business that does not have a fixed establishment in Bolivia. A non-established business must register as a taxpayer if it makes “habitual” supplies of goods or services in Bolivia. Under the applicable regulation, “habitual” must be determined by weighing the nature, amount or frequency of the sales of movable goods and services.

A non-established business is not required to appoint a tax repre­sentative to register for VAT.

Reverse-charge services. In Bolivia, the reverse charge for ser­vices does not apply.

Tax representatives. The tax representative of a company is the legal representative resident in Bolivia and registered with the tax authority to act for the company in matters relating to VAT.

Registration procedures. Registration request should be submit­ted through the Virtual Office of the tax authority (http:// ov.impuestos.gob.bo/RegistroPadron.aspx) by filing Form MASI-001 (Request for registration). Once submitted, the Virtual Office will assign a file number to this request. A legal represen­tative must go in person to the tax authority and present the fol­lowing documents in hard copy:

  • Notarized incorporation deed
  • The legal representative’s valid identification document (ID)
  • Notarized power of attorney for the legal representative to act with authority for the applicant
  • Electric utility invoice for the branch domicile
  • Electric utility invoice for the legal representative’s domicile
  • Map (drawing) of the domiciles of the branch and the legal representative

Registration can be processed in one week if all documents are presented in correct form to the tax authority.

Late-registration penalties. Penalties for late VAT registration include the closing of the business until the situation is rectified.

Deregistration. In Bolivia, companies do not deregister. It is pos­sible, however, to deactivate the Tax Identification Number.

VAT rates

In Bolivia, VAT applies at a rate of 13% to supplies of goods or services, unless a specific measure provides an exemption. The effective rate of VAT is 14.94%, because VAT must be included in the sales price. Exports are taxed at a zero rate.

The following supplies are exempt from VAT:

  • Goods imported by members of diplomatic corps recognized in Bolivia
  • “Bonafide” introduced merchandise, up to a limit of USD1,000
  • Life insurance quotas (monthly payments with respect to a life insurance contract)
  • For securities registered on the Bolivian Stock Exchange, capi­tal gains generated by sales, results derived from the valuation processes determined by the Financial Supervisory Authority of Bolivia (Autoridad de Supervisión del Sistema Financiero, or ASFI) and results generated in the application of generally accepted accounting principles
  • Transfers of goods or assets subject to the securitization process (titularización) administered by the securitization association, at the beginning and end of the process (under this process, the goods must be transferred to an independent fund [patrimonio autonomo] and, when the process is completed, the goods are returned to the original owner)
  • Operations regarding sales or transfers of portfolios (financial intermediation, insurance and pension)
  • Interest from loans received by financial entities
  • Inbound tourism and lodging services for foreign tourists with­out a residence or address in Bolivia
  • Artistic events focused on production, presentation and promo­tion of theater, dancing, national folklore, painting, sculpture and movies of Bolivian artists, if they are sponsored or devel­oped in locations in Bolivia that are managed or owned by a municipal government or the Bolivian government
  • Since 2013, the sale of books printed in Bolivia or those imported by or published by Bolivian institutions

Option to tax for exempt supplies. Not applicable.

Time of supply

The time when VAT becomes due is called the “time of supply” or “tax event.” The tax event for goods is when the goods are delivered or when an act that implies the transfer of the ownership occurs. The tax event for services is the earlier of when the service is performed or completed, and when full or partial payment of the price is received.

Continuous supply of services. The continuous supply of services (electricity, water, and gas that is delivered to homes) must be invoiced on a monthly basis.

Imported goods. The tax event for imported goods is when the goods clear all customs procedures.

Recovery of VAT by taxable persons

A taxable person may recover input VAT (also known as credit VAT), which is VAT charged on goods and services supplied to it for business purposes. A taxable person generally recovers input VAT by deducting it from output VAT (also known as debit VAT), which is VAT charged on supplies made.

Input VAT includes VAT charged on goods and services supplied in Bolivia and VAT paid on imports of goods.

A valid tax invoice or import statement must generally accom­pany a claim for input VAT.

Recovery of VAT on purchases of special gasoline, premium gasoline or diesel from service stations is limited to the VAT paid on 70% of the purchase value.

Nondeductible input VAT. Input VAT cannot be recovered on purchases of goods and services that are not used for business purposes (for example, goods acquired for private use by an entrepreneur).

For deducting VAT credit with respect to transactions in an amount of 50,000 Bolivia bolívianos (BOB) or more, payment supports (checks, vouchers or other documents) issued by a financial intermediation entity regulated by the ASFI are required. These documents must have the following information:

  • Business name of the financial institution (issuer)
  • Transaction or operation number
  • Transaction date
  • Transaction amount

From 2016, payment supports for transactions of BOB50,000 or more must be reported on an annual basis, consolidating infor­mation from January through December regardless of ending fiscal year. The report is due between 5 and 9 February of the following year, depending on the last digit of the taxpayer’s iden­tification number (NIT).

If the report has errors or inconsistencies regarding the informa­tion submitted, a new report can be submitted without penalties until 30 days after the report’s deadline.

Examples of items for which input tax is nondeductible

  • Goods acquired that are not directly linked to obtaining taxable income, such as amusement activities for employees
  • Goods or services that do not have original documents like invoices

Examples of items for which input tax is deductible
(if related to a taxable business use)

  • Acquisition cost of inventories
  • Maintenance services of machinery

Refunds. If the amount of input VAT (credit VAT) recoverable in a month exceeds the amount of output VAT (debit VAT) payable, the excess credit may be carried forward to offset output VAT in the following tax period. The amount of input VAT is adjusted based on the variation of the Unidades de Fomento a la Vivienda (UFV), an index published by the Bolivian Central Bank that takes into account inflation.

A taxable person that overpaid VAT for a tax period because of an error may request a refund of the overpaid amount.

Partial exemption. Not applicable. Preregistration costs. Not applicable.

Recovery of VAT by non-established businesses

Bolivia does not refund VAT incurred by businesses that are not established in Bolivia nor registered for tax purposes.

Invoicing

Sales invoices and credit notes. A taxable person must provide a VAT sales invoice for all taxable supplies made, including exports (subject to VAT at a zero rate). A VAT invoice is required to support a claim for input VAT deduction.

A credit note can be used to reduce the VAT charged and reclaimed on a supply of goods and services. A credit note must contain the same information as a sales invoice, and it can only be used with respect to the devolution of goods (total or partial) and the rescis­sion of services.

Exports. Bolivian VAT is not chargeable on supplies of exported goods. However, to qualify as VAT-free, exports must be sup­ported by evidence that the goods have left Bolivia. The related input VAT can be reimbursed through the issuance of tax devolu­tion certificates (CEDEIMs) that can be negotiated as securities. Invoices for export transactions must be identified with the text “Commercial invoice for exports” (Factura comercial de export­ación) and must be specifically authorized by the tax authorities.

Foreign-currency invoices. If an invoice is issued in foreign cur­rency, for VAT purposes, the values must be converted to local currency (bolivianos). The value must be converted using the official exchange rate on the tax-event date published by the Bolivian Central Bank.

Electronic invoicing. Effective 1 January 2016, only invoices using the new virtual system are valid for tax purposes such as documenting VAT credits.

VAT returns and payment

Returns. VAT returns are submitted for monthly periods. Returns and payment in full are due between the 13th and the 22nd day of the month following the end of the return period. The due date depends on the last digit of the taxpayer’s identification number (NIT).

VAT liabilities must be paid in local currency (BOB) or in “Tax Refund Certificates.”

Special schemes. Not applicable.

Electronic filing and archiving. VAT returns must be submitted through the tax authority’s virtual platform.

Annual returns. Not applicable.

VAT purchases and sales book. VAT purchases and sales book must be submitted monthly through the tax authority virtual plat­form.

Penalties

Penalties are assessed for errors and omissions with respect to VAT reporting. The penalties include the following:

  • A penalty of UFV150 for individuals and UFV400 for business entities for not filing a tax return
  • A penalty of UFV150 for individuals and UFV400 for business entities for not filing a corrected tax return increasing the tax that should have been paid on the original tax return
  • A penalty of UFV1,000 for individuals and UFV2,000 for busi­ness entities for not submitting the VAT purchases and sales book
  • A penalty of UFV1,000 for individuals and UFV2,000 for busi­ness entities for not submitting the report regarding transactions in amounts of BOB50,000 or more
  • A penalty ranging from 20% to 100% of the tax due for unpaid VAT

In addition, interest and inflation adjustments based on changes to the UFV are assessed on unpaid VAT.

Criminal tax evasion may be punished by a term of imprisonment, depending on the severity of the case.