Income tax in Bolivia
Taxation Researcher | March 15, 2020
Residents are taxed on their Bolivian-sourced income. Married couples are taxed separately.
Bolivian residents can be taxed in two separate ways:
- Individual entrepreneurs (Impuesto sobre las utilidades de las empresas)
- Employees and certain independent individuals (Régimen complementario al impuesto al valor agregado, RC-IVA)
Income earned by individuals is generally taxed at a flat rate of 13%. Income from business and professional activities are taxed at the corporate tax rate of 25%.
Taxable income is categorized into the following: (1) business income, (2) investment income, and (3) employment income. It encompasses specifically:
- Rents received from the letting and subletting or other forms of exploitation of immovable or movable property and rights thereon by non-entrepreneurs
- Investment income in the form of dividends, interest, profit sharing, life annuities, life insurance proceeds and any other income from movable capital. Stock dividends are exempt.
- Employment income in the form of wages, salaries and complementary amounts, overtime, profit-sharing, perquisites, incentives, prizes, bonuses, commissions, fringe benefits (including rent-free accommodation, housing and other allowances, allowances for travel and representation expenses) and in general, any ordinary or extraordinary remuneration
- Fees of members of a board of directors or directorate or a supervisory board of companies, and wages of the partners and of the owner of a sole proprietorship
- Any regular income derived by individuals from non-business-related activities.
The taxable income is gross income less expenses and other deductions. For self-employed professionals, their net income is deemed to be 50% of their gross income; therefore, the effective tax rate for professionals is 12.5% (25% tax on 50% of gross income).
Income earned from leasing properties to individuals is taxed at the individual tax rate of 13%.
Income earned from leasing properties to businesses and professionals is taxed at the corporate tax rate of 25%.
Capital gains realized from selling real property to individuals are taxed at the individual tax rate of 13%.
Capital gains realized from selling real property to businesses and professionals are taxed at the corporate tax rate of 25%.
Value Added Tax (VAT)
The VAT is levied on the leasing of Bolivian real estate at the standard VAT rate of 13%. The taxable income is the net rental income, deemed to be 50% of the gross rent.
Property Tax (Impuesto a la propiedad de bienes inmuebles)
The property tax is levied on the assessed cadastral value of the property, as determined by the local tax authorities. The tax rates are progressive, depending on the property value.
|TAX BASE, BOB (US$)||TAX RATE|
|Up to 200,000 (US$28,986)|
|200,000 - 400,000 (US$57,971)|
|400,000 - 6 million (US$869,565)|
|Over 6 million (US$869,565)|
|Source: Global Property Guide|
Corporate income tax is levied on income and capital gains earned by companies at 25%. Expenses incurred in generating and necessary in maintaining such profits are deductible.