Bolivia

Transfer Pricing Regulations in Bolivia

Since September 2015, transfer pricing rules have been governed by Law 516 on Investment Promotion, Law 549, or the Law of July 21, 2014, by Supreme Decree No. 2227 of December 31, 2014, and Board Regulatory Resolution No. 10-0008-15 of April 30, 2015 (Transfer Pricing in Transactions Between Related Parties).

Article 2 of Law No. 549 of July 21, 2014, amends Article 45 of Law No. 843 and incorporates Articles 45 bis and 45 ter into the aforementioned Law, establishing the transfer pricing regime applicable to commercial and/or financial transactions carried out between related companies for the purposes of determining corporate income tax, incorporating, among other things, the arm’s-length principle, the definition of related parties and the valuation methods for transactions carried out by them, as well as the documentation and supplementary information to be submitted.

The regulation refers to the Tax Administration’s authority to make adjustments to a Bolivian company when it identifies transactions with its related parties that were not conducted at market values (the “arm’s length” principle). To this end, it establishes the valuation methods for such transactions, which are based on the applicable OECD Guidelines on Transfer Pricing for multinational enterprises and tax authorities.

Related-Party Rules in Bolivia

According to Article 2 of Law No. 549 of July 21, 2014, which amends Article 45 of Law 843, parties are considered related when a natural or legal person participates in the management, control, or administration of, or holds equity in, another company; or when a third party directly or indirectly participates in the management, control, or administration of, or holds equity in, two or more companies.

Supreme Decree No. 2227 of December 31, 2014, which regulates Law No. 549 of July 21, 2014, on Transfer Pricing, defines related parties in the following cases.

1. A domestic individual or legal entity that participates, directly or through third parties, in the management, control, administration, or ownership of one or more foreign companies, or in branches, affiliates, or subsidiaries of foreign companies conducting operations within the national territory.
2. A foreign individual or legal entity that participates directly or through third parties in the management, control, or administration of, or holds equity in, one or more domestic companies or branches, affiliates, or subsidiaries of foreign companies operating within the national territory.
3. A natural or legal person operating within the national territory that maintains direct or indirect commercial and/or financial relationships with natural or legal persons domiciled in, or conducting operations in, countries or regions with low or no taxation.
4. A branch, affiliate, or subsidiary within the country that conducts business with its parent company abroad, all under the same parent company.
5. Commercial and/or financial transactions between a branch, affiliate, or subsidiary located within the country and another abroad under the same parent company.
6. Commercial and/or financial transactions between a domestic company and a foreign company, where the owners, shareholders, partners, managers, board members, or senior executives are related by blood up to the fourth degree of kinship or by marriage up to the second degree of affinity.

Formal Obligations: Informative Affidavits

Taxpayers subject to the scope of application of the Transfer Pricing regulations must meet the following conditions:

• Taxpayers whose annual transactions with related parties are equal to or greater than Bs15,000,000 must file Electronic Form 601, as well as the Transfer Pricing Study (EPT).
• Taxpayers whose annual transactions with related parties are equal to or greater than Bs7,500,000 and less than Bs15,000,000 must file Form 601.
• Taxpayers whose annual transactions with related parties are less than Bs7,500,000 are required to retain the necessary documentation to demonstrate that their transactions with related parties were conducted at market prices.

Formal Requirements

1. Transfer Pricing Study (EPT): This must be prepared in both physical and digital formats, written in Spanish (Castilian), expressed in bolivianos, and include the signature of the Legal Representative or the holder of the Tax Identification Number (NIT), as applicable.

The price or value of the transaction with related parties, as well as that of comparable transactions, must be expressed in bolivianos (Bs). To this end, when the transaction was conducted in a different currency, the taxpayer must convert those amounts to bolivianos.

• Informative Affidavit of Related-Party Transactions: Electronic Form 601—Informative Affidavit of Related-Party Transactions—must be used by all taxpayers subject to this regulation.

Electronic Form 601—Informative Affidavit of Transactions with Related Parties—must be completed using the Da Vinci application; updates to the application and instructions for completion will be available on the National Tax Service website at www.impuestos.gob.bo.

Deadline for Filing Annual Tax Returns.

Electronic Form 601 and the EPT must be filed within the deadline established for filing the Corporate Income Tax (IUE) return and making the corresponding payment, depending on the type of business activity.

Penalties for Noncompliance

Notwithstanding the taxpayer’s determination, as declared and filed via Electronic Form 601 (Informative Affidavit of Related-Party Transactions) and the Technical Transfer Pricing Study – ETPT, the National Tax Service may, for tax purposes, make any adjustments it deems necessary.

Furthermore, penalties for failing to file the ETPT or Form 601, or for filing them late, with errors, or with incomplete information will be subject to fines ranging from 50% to 100% of the maximum penalty established in Article 162 of Law No. 2492 of the Tax Code. It should be noted that payment of the fine does not exempt the taxpayer from the obligation to submit and file the specified information.

Additionally, Annex I (sections 3.23 through 3.31) of RND 10-0033-16 establishes the following violations:

A penalty of 5,000 UFV for taxpayers who fail to file Form F-601 or the EPT in digital format within the established deadline.

A penalty of 2,500 UFV for taxpayers who submit Form F-601 or the EPT after the established deadline, either in physical or digital format, or with formatting errors, incomplete information, or failure to comply with the provisions.