Bolivian tax law changes in response to COVID-19
On 28 May 2020, the Bolivian government approved Supreme Decree 4249, which extended the filing and payment due date of CIT for fiscal year end 31 December 2019 applicable to taxpayers characterized as “other” (i.e. not applicable to taxpayers characterized as principal or large) to 31 July 2020. Said decree also established that CIT payment for the same fiscal period can be made in instalments for the amount due (up to three, on a monthly basis) without application of restatement for inflation, interests and penalties. This benefit will be applicable provided taxpayers pay 50% of CIT until 31 July 2020. Also, Supreme Decree 4249 determined that taxpayers who had paid annual CIT for fiscal year end 31 December 2019 until 29 May 2020 may amend their CIT returns until 31 July 2020 without application of restatement for inflation, interests and penalties (in case said amended return originates a balance in favour of the BTA).
Previously, the Bolivian government had approved Supreme Decree 4198 last 18 March 2020, which included a series of temporary tax measures in the framework of the national emergency due to the COVID-19 outbreak (some which were broadened by the issuance of Supreme Decree 4249). Below, there is a summary of the main tax measures adopted by said decree:
- The corporate income tax (CIT) payment due date for fiscal year end 31 December 2019 was extended from 29 April 2020 to 29 May 2020, and CIT payment for the same fiscal period can be made in instalments (up to three, on a monthly basis) without application of restatement for inflation and interests, and it is not necessary constitution of guarantees. This benefit will be applicable provided taxpayers pay 50% of CIT before 1 June 2020. This provision did not differentiate between taxpayer’s categories.
- Taxpayers will be allowed to offset annual CIT against transaction tax in an increased proportion, provided CIT for the fiscal year end 31 December 2019 is paid by 15 May 2020. The increased proportion is envisaged to be 1 to 1.1 times or 1 to 1.2 times, depending on the taxpayer’s categorisation size (i.e. the Bolivian Tax Authorities [BTA] are providing an incentive for those taxpayers who paid CIT by the above indicated date to offset annual CIT paid against transaction tax for an additional 10% and 20%). This benefit will not be applicable in case of transfers of goods and rights subject to public registry (e.g. real estate, vehicles).
- Donations to hospitals and health centres will be considered tax deductible for CIT purposes at up to 10% of the net taxable income for the fiscal year ended as of 31 December 2019.
- Input value-added tax (VAT) from personal consumption of goods and services related to nutrition, health, and education of family members incurred by independent professionals will be considered for determination of their VAT liability (i.e. these input VAT will be offset against output VAT arising from performance of their independent activities).
- A reduction of the taxable base for transaction tax was established, where VAT effectively paid will not be included in the taxable base of this tax (note that transaction tax is paid on final price, including VAT). This benefit is envisaged for three and six months, depending on the taxpayer’s categorisation size.
- Deadlines applicable to judicial procedures before the BTA and Customs Office are suspended until the next working day in which the national sanitary emergency is completed.
On 27 March 2020, the BTA issued Administrative Resolution 102000000006 (AR 102000000006), which extended the due date of monthly tax returns and payments of February 2020 and March 2020 (with due dates of March and April, respectively) to those tax obligations of April 2020 (with due date of May 2020).
Subsequently, on 8 May 2020, Administrative Resolution 102000000010 (AR 102000000010) was issued, which further extended monthly tax returns and payments of February, March, April and May 2020 to those tax obligations of June 2020 (with due date of July 2020). Also, said Administrative Resolution extended the filing due date of annual Financial Statements, Transfer Pricing documentation and Tax Schedules for fiscal year-end 31 December 2019 until July 2020.
Other relevant measures recently approved include:
- The Santa Cruz de la Sierra municipal government has determined discounts on real estate and vehicles annual property taxes for 2019, payable during 2020.
- Deferral until 31 December 2020 on custom duties payment for the importation of supplies, medicines, medical devices, equipment, reagents, and fever detectors, acquired or donated, related to COVID-19 and as detailed in the annex of Decree 4192.
- Extensions on the payment of social security contributions.
Electronic billing system connection requirement
On 18 May 2020, the BTA approved Administrative Resolution 101800000026 (AR 101800000026) that abrogates the electronic billing system approved on 22 November 2018. Said electronic billing system had an implementation date as from 1 June 2020 for taxpayers listed in Group I according to the last postponement of this regime.
Despite said electronic billing system was abrogated, currently it is still applicable the Virtual Billing System (Sistema de Facturación Virtual) which regulates different billing modalities of electronic and manual billing.
Low or nil taxation jurisdictions
On 15 February 2019, Administrative Resolution 101900000002 was issued, which updated the countries/regions considered low or nil taxation jurisdictions for tax purposes. For CIT and transfer pricing purposes, such updated list is applicable as from its issuance date, except for taxpayers with fiscal year-end as of 31 March and 30 June, whose application is for fiscal year 2020 and onwards (i.e. as of fiscal year-end 31 March 2020 and 30 June 2020).
Interest income from public debt
Later in December 2019, the Bolivian government passed Law 1267, which approves the government budget for the fiscal year 2020. Among different provisions set forth by this Law, this norm authorises the Ministry of Economy to carry out public debt operations in external capital markets for an amount up to 1.5 billion United States dollars (USD), including an exemption treatment on interest. In this regard, Law 1267 exempts from CIT interest income from public debt through the issuance of securities in external capital markets, and for the provision of legal, financial, and other advisory services related to the operation of public debt in external capital markets.