Worldwide transfer pricing reference guide 2014

Bolivia
Taxing authority and tax law
Taxing authority: Servicio de Impuestos Nacionales.
Tax law: Law N° 843.
Relevant regulations and rulings
• Bolivian law does not contain transfer pricing specific rules. However, branches and other legal establishments of foreign companies in
Bolivia must maintain separate accounting records from that of its head office, and other branches and establishments abroad
• Transactions between Bolivian companies comprised of foreign capital and foreign companies and individuals who directly or indirectly
control the company, deemed to be similar to that entered into by independent parties. For this purpose, control is defined as the holding
of 50% or more of the capital or decision-making power in the company
• For the purposes of the above rules, a Bolivian company comprised of foreign capital, is a company that is directly or indirectly controlled
by companies and individuals residing or established abroad
• The legal acts conducted between a local company with foreign capital and a natural or legal person located abroad, that directly or
indirectly, controls it, will be considered for all purposes as performed between independent parties, when the agreed conditions adjust
to the normal practices of the market between independent parties
Based on the above mentioned:
• For Corporate Income Tax (CIT) purposes, tax authorities may challenge the deduction of any cost that is higher than market prices
• For determining the market prices, the authorities would use any procedure, so it is vital that the Bolivian company gathers support
documentation about the payments
• Any transfer pricing study generated outside of Bolivia will not be relevant for tax support purposes, but would only be considered as a
reference. Hence, it is highly recommended that the documents supporting the nature and substance of transactions between related
parties are maintained by the Bolivian company
OECD Guidelines treatment
Bolivia is not an OECD member, and the OECD Guidelines are not mentioned in Bolivia’s Income Tax Law and Regulations.
Priorities/pricing methods
There are no transfer pricing rules in Bolivia, but it must be noted that a draft of Investment Law, under review as of January 2014,
establishes the application of transfer pricing rules in Bolivia (this is a general rule).
Transfer pricing penalties
Not applicable.
Penalty relief
Not applicable.
Documentation requirements
For CIT deduction purposes, for costs paid to related parties a challenge risk would be reduced as long as:
• The payments respect the market values (evidence is required to demonstrate this)
• The payments are subject to Bolivian taxes (withholding if they are applicable)
• The nature and substance of the services are supported by original documents (invoice, result reports, etc.)
• The contracts are clearly stated (it is recommended to sign them in Spanish and to legalize them)
Worldwide transfer pricing reference guide
41