Social security contributions
Pension funds are administered privately, and only employees contribute toward their retirement pension. The contribution rate is 12.71% calculated on gross salary with a threshold of 60 minimum national salaries per month (i.e. approximately 19,400 United States dollars [USD]). This payment is registered under the individual account of each employee.
In addition, employees who earn more than 13,000 bolivianos (BOB) per month are subject to a supportive social contribution determined on a scale system from 1% up to 10% over the gross salary. Social tax charges are determined over the gross salary, including any compensation granted to the employee in-kind/cash.
Note that, according to the Pension Fund Law (Law 065), income arising from capital investment made in the country and abroad in the way of interest, dividends, or any kind of income obtained as a result of such investment are subject to a supportive social contribution determine on a scale system from 1% up to 10%. In this regard, it is important to mention that this social security contribution has not yet been collected due to the lack of further regulations.
Value-added tax (VAT)
VAT is levied on the sale of movable goods and provision of services carried out within Bolivian territory at a rate of 13%, including definitive importations. Since this tax is included in the final price, the effective tax rate amounts to 14.94% (13%/87%).
Note that there is a VAT reimbursement regime for individuals with average monthly income up to BOB 9,000. The amount to be reimbursed is 5% of purchase goods included in fiscal invoices. In order to access this regime, individuals must register before the tax authorities.
Property tax on real estate and vehicles
Real estate and vehicles are annually subject to a property tax calculated at different rates based on a scale value determined by the municipal government. See the Other taxes section in the Corporate summary for more information.
On 28 December 2020, the Executive approved a law on a wealth tax (‘Impuesto a las Grandes Fortunas’ in Spanish) on resident and non-resident individuals who own a net wealth exceeding BOB 30 million as of 31 December of each year, with progressive rates between 1.4% and 2.4%. This tax has entered into force from 2020 onwards.
The law introduces relevant changes to the Bolivian tax system, which traditionally has followed the source or territoriality principle. In this sense, the law considers both assets located in Bolivia and abroad as taxable wealth in case of resident individuals.
This law also introduces a definition of tax residence for wealth tax purposes.