All companies in Bolivia are subject to corporate income tax (CIT) at a rate of 25%. The taxable base is the profit arising from financial statements prepared in accordance with Bolivian generally accepted accounting principles (GAAP), adjusted for tax purposes (i.e. by non-deductible and non-taxable items) as per the requirements established in the tax law and regulations.
Bolivia taxes the income generated by corporations following the 'income source' principle (i.e. on a territorial basis). Therefore, income arising from goods and assets located or utilised economically within Bolivian territory and from any activity carried out within the country is considered Bolivian income source. Hence, such income is subject to CIT, regardless of the nationality/residence of the parties involved in generating such income or the place where the contracts were subscribed.
Additional income tax on certain financial institutions
Financial institutions (except for development banks) with a return on equity index higher than 6% must pay an additional income tax of 25%. This additional income tax cannot be offset against the transaction tax (see below), nor can it be considered a deductible expense for CIT purposes.
Surtax on extractive activities
There is an additional 25% CIT that affects only extractive activities of non-renewable natural resources (mining and oil/gas). This additional tax is calculated on the same basis as the normal CIT, except that two additional deductions are allowed: (i) up to 33% of the accumulated investment as of 1991, and (ii) 45% of the gross revenue of each extractive operation (e.g. a field or a mining site), with a threshold of 250 million bolivianos (BOB) for each extractive operation.
Special taxes on mining companies
In addition to the general CIT of 25% and the 25% surtax on extractive activities, all mining companies are also subject to an additional tax, calculated on the taxable net profits, at the following rates:
- 12.5% if the mining company carries out exploitation activities.
- 7.5% if the mining company carries out manufacturing activities with raw minerals that add value.
Mining companies are also subject to mining royalties at a rate of between 1% and 7% (depending on the kind of mineral), calculated on the total sales price. Note that there is a 60% discount on the rates of mining royalties if minerals are sold within the Bolivian market. Mining royalties can be offset against CIT if official mineral prices are lower than the prices established by the tax law; however, in this case, mining royalties paid will not be deductible for CIT purposes. On the contrary, if official mineral prices are higher than the prices established by the tax law, then mining royalties will be considered a deductible expense for CIT purposes. Note that mining royalties paid on minerals and metals that are not included in the tax law can always be offset against CIT.
Tax on gross income (transaction tax)
The tax on gross income (also known as transaction tax) generally taxes gross income arising from the performance of any economic or commercial activity (including non-profitable activities) at a rate of 3% on a monthly basis. However, exceptions exist for the sale of investments (as defined by the Stock Exchange Law) and the sale of minerals, oil, and gas within the local market, as long as such sales will ultimately be exported.
In essence, corporations pay either CIT or transaction tax, whichever is higher. From an administrative perspective, CIT is due and paid at the end of each tax year and is considered an advanced payment of transaction tax, while transaction tax is due monthly. If during the year the cumulative monthly transaction tax due exceeds the CIT prepayment, the taxpayer will be subject to transaction tax on a monthly basis until the end of the tax year. For example, a corporation pays CIT for the 2019 fiscal year in April 2020. This payment is considered a prepayment for the transaction tax due between May 2020 and April 2021.
Local income taxes
There are no departmental or local taxes on income in Bolivia.