In Bolivia, employers have a responsibility to contribute to the country's social security system, which encompasses pensions, healthcare, and other social benefits. The general employer contribution rate is 16.71% of the employee's gross salary. However, for employers in the mining sector, the contribution rate is slightly higher at 18.71% of the gross salary.

Breakdown of Contributions

The contributions are broken down as follows:

• Pension Fund (AFP): 12.71%
• National Health Fund (CNS): 10% (This covers short-term illness and maternity)
• Professional Risk Insurance: This varies slightly based on the industry
• Employer Solidarity Contribution (Pro-Bolivia): 3%

Housing Fund (FOVI)

Employers are also obligated to contribute to the National Housing Fund (FOVI). The contribution rate for this is 2% of employees' gross salaries.

Other Potential Contributions

There may be other potential contributions that employers are subject to. For instance, there may be a contribution of 0.5% of the employee's gross salary into the Educational Fund (FOPE). The specific requirements for this contribution can vary.

Employees in Bolivia are required to contribute to the country's social security system for coverage such as pensions, healthcare, and other benefits. The contribution rate is 12.71% of the gross salary. This is broken down into Pension Funds (AFP) at 10%, National Health Fund (CNS) at 2.25%, Disability, Death, and Old Age (RC-IVA) at 0.5%, and the Solidarity Fund at 0.5% (applies for salaries above a certain threshold).

Mandatory Deductions

• Social Security Contributions:
  • Contribution Rate: 12.71% of gross salary
  • Breakdown:
    • Pension Funds (AFP): 10%
    • National Health Fund (CNS): 2.25%
    • Disability, Death, and Old Age (RC-IVA): 0.5%
    • Solidarity Fund: 0.5% (applies for salaries above a certain threshold)

Employees are also subject to the withholding of income tax (Impuesto a las Utilidades de las Empresas) based on a progressive tax rate structure.

• Income Tax (RC-IVA):

Potential Additional Deductions

Depending on the agreement with the employer, a 0-2% deduction for the Housing Fund (FOVI) might be withheld. If applicable, union membership fees may also be deducted from an employee's salary.

• Housing Fund (FOVI): 0-2% deduction (depending on the agreement with the employer)
• Union Dues: If applicable

Important Considerations

The Solidarity Fund contribution has a minimum salary threshold above which it becomes applicable. Income tax rates and social security contributions can be subject to updates. For the most current information, always refer to official Bolivian government resources or consult a tax advisor.

• Salary Thresholds: For Solidarity Fund contribution
• Tax Changes: Always refer to official Bolivian government resources or consult a tax advisor for the most current information.

In Bolivia, Value Added Tax (VAT) is referred to as Impuesto al Valor Agregado (IVA). The standard IVA rate in the country is 13%.

VAT on Services Rendered in Bolivia

Services provided within Bolivia are generally subject to the standard 13% IVA. This is applicable whether the service provider is a Bolivian business or a foreign entity. However, certain service categories may be exempt from IVA. These exemptions are typically related to essential sectors like healthcare, education, or financial services.

VAT on Services from Outside Bolivia (Imports)

Bolivia may apply a "reverse charge" mechanism to services received from abroad. In this case, the recipient of the service in Bolivia becomes responsible for calculating and paying IVA, even if the service provider is foreign. Therefore, it's essential to determine if imported services are considered taxable in Bolivia to avoid non-compliance with the reverse charge mechanism.

Specific Situations Affecting VAT on Services

Bolivia has specific considerations and potential regulations regarding VAT on imported digital services depending on the nature and provider of the service. Providing services across borders may involve complex VAT considerations depending on the place of supply and consumption.

Staying Compliant

The official source for tax information is the Servicio de Impuestos Nacionales. For complex situations, international transactions, or to ensure complete compliance with VAT regulations in Bolivia, it is recommended to consult a tax advisor specializing in Bolivian law.

Bolivian companies investing in new assets within specific productive sectors may be eligible for tax credits against Income Tax and/or VAT. This can be up to a certain percentage of the investment value. Businesses importing machinery, equipment, and raw materials for specific sectors can also benefit from certain exemptions or reductions of import duties.

Tax Incentives in Specific Sectors

Companies in the exploration and exploitation phase of the mining and hydrocarbon sectors receive a 0% VAT rate and are exempt from certain additional taxes. Tax benefits exist for companies investing in value-added activities in the agricultural and manufacturing sectors in specific geographic zones. Hotels and tourism-related businesses may receive tax reductions and exemptions under certain conditions.

Regional Tax Incentives

Businesses located within specific designated zones can benefit from VAT and import duty exemptions, as well as reduced Income Tax rates. An example is the Zona Franca Comercial e Industrial de Cobija (Zofracobija).

Additional Potential Incentives

Some municipalities may offer additional incentives like land tax reductions or tax holidays.

Important Considerations

Incentives often have strict eligibility criteria based on sector, type of investment, location, or job creation goals. Qualifying for tax incentives normally requires an application and approval process from relevant government agencies. Tax laws and incentives in Bolivia are subject to revision. It's advisable to consult the Servicio de Impuestos Nacionales or get professional advice for the latest information.