Damalion Bolivia desk
Doing business in Bolivia
Welcome to Bolivia! The South American country with great potential for investment and growth.
Bolivia has recently aroused interest among foreign investors and entrepreneurs. The country enjoys a unique position in South America due to its connections to most of the continent’s countries. It is also a popular destination for firms that want to test unsaturated markets.
Bolivia provides a lot of opportunities and advantages for entrepreneurs looking to enter the Latin American market. The country can be seen as a bridge that connects other Latin American countries. And in terms of investment, there are no limitations on foreign investments or foreign currency controls.
Starting a business in Bolivia is a very interesting opportunity for many investors and entrepreneurs since the nation has seen more trade and improved business opportunities.
Overall, Bolivia is a great place to do business, with a friendly and welcoming business culture, potential market opportunities, and a young, educated workforce.
Advantages of Doing Business in Bolivia
- Bolivia’s economy has been growing steadily over the past decade, and this has provided a favorable environment for businesses to thrive.
- Bolivia has abundant natural resources such as natural gas, minerals, and fertile lands for agriculture, providing opportunities for investments in mining, energy, and agriculture sectors.
- Bolivia has a reasonably low cost of living and a young, educated workforce that is reasonably inexpensive compared to other countries in the region.
- The Bolivian government has implemented policies to attract foreign investment, including tax incentives, streamlined processes for business registration, and investment protection.
- Bolivia is centrally located in South America, and this has provided easy access to a large market of over 300 million people in neighboring countries such as Brazil, Argentina, Chile, Paraguay, and Peru.
- Bolivia has a developing infrastructure, with good road and air connections to neighboring countries. The Internet and telecommunications networks are also improving, making it easier to do business remotely.
- Bolivia has untapped market potential, with a growing middle class and a large population of young people who are becoming increasingly tech-savvy. This presents opportunities for businesses to offer innovative products and services.
- Bolivia is a member of MERCOSUR, meaning it has access to the big economic block in the southern part of the continent. Bolivia is also part of the World Trade Organization and other treaties with South American countries that enables the free flow of goods and labor.
Overall, Bolivia offers a favorable business environment with a strategic location, government support, a growing economy, and tourism potential.
Bolivia has a legal system that is based on civil law. The Bolivian Constitution is the supreme law of the country and it establishes the fundamental rights and duties of Bolivian citizens. The Constitution also establishes the division of powers between the executive, legislative, and judicial branches of government.
The Bolivian legal system is based on codes, which are comprehensive and systematic compilations of laws, such as the Civil Code, Commercial Code, Criminal Code, and Labor Code. These codes are constantly updated to reflect changes in the legal environment.
The Bolivian judiciary is independent and is composed of a Supreme Court, Departmental Courts, and lower district courts.
Foreign investment in Bolivia
Foreign investment in Bolivia has been increasing steadily in recent years, as the country has a favorable business environment and offers various incentives to foreign investors.
To encourage foreign investment, the Bolivian government has established investment promotion agencies, such as Pro Bolivia and the Investment Promotion Agency, to assist foreign investors in navigating the regulatory environment and identifying investment opportunities.
Foreign investors are also allowed to own 100% of their businesses in Bolivia, with no restrictions on repatriating profits or capital. However, it is important to note that there are certain sectors where foreign ownership is restricted or prohibited, such as in the media and defense industries. Also, local and foreign investors may be subject to regulation if they are involved in the Mining, Oil, Gas, Electricity, Transport, Telecommunications, Gaming, and Agribusiness industries.
Overall, foreign investment in Bolivia offers opportunities for high returns on investment, and the Bolivian government is supportive of foreign investment and has implemented policies to make it easier for foreign investors to do business in the country.
Entity Choice in Bolivia
Bolivia offers several business structures that are available to investors and entrepreneurs looking to do business in the country. The most common business structures in Bolivia include:
Individually Owned Company (Empresa Unipersonal)
This is the simplest form of business structure in Bolivia. It is a company form that is owned by a single person.
- It is owned and operated by a single person who is responsible for all business decisions and liabilities.
- This structure is easy to set up and maintain but does not protect personal assets.
- There is no legal distinction between the owner and the business.
Corporation (Sociedad Anonima or S.A.)
A corporation is a legal entity that is owned by shareholders and managed by a board of directors.
- This structure provides limited liability protection to its owners and can raise capital through the sale of shares.
- Corporations are more complex to set up and maintain and require more legal and financial obligations.
- Management is the responsibility of the corporation’s board of directors, which included three to twelve individuals.
- It can be constituted in two ways, either by a single act or by the public subscription of shares.
Limited Liability Company – LLC (Sociedad de Responsabilidad Limitada – S.R.L.)
An LLC is a business structure that provides limited liability protection to its owners.
- It may have between two and twenty-five partners.
- It is easy to set up and maintain, and owners are not personally liable for the company’s debts or liabilities.
- Capital shares must also be paid in full at the time of the company incorporation.
- It is managed by its members, and the members are not personally liable for the debts and obligations of the LLC.
This is a business structure in which two or more individuals or entities join together to run a business.
- There are two types of partnerships in Bolivia: general partnerships and limited partnerships.
- In a general partnership, all partners share the profits and losses equally
- In a limited partnership, both general partners are responsible for the management of the business, and limited partners are only liable for the amount of capital they have invested.
- Partnerships are easy to set up and maintain but do not protect personal assets.
A branch office is an extension of a foreign company in Bolivia.
- This structure allows foreign companies to conduct business in Bolivia without the need to establish a separate legal entity.
- Branch offices are subject to the same legal and financial obligations as local companies.
- The foreign company is responsible for all debts and obligations incurred by the branch office in Bolivia.
- It has legal representation and enjoys management independence in the activities established by the parent company.
It is recommended that individuals consult with a local attorney or accountant before setting up a business in Bolivia to ensure compliance with all legal requirements. If you are interested in starting a business in Bolivia, contact your Damalion expert now.
The banking system in Bolivia is considered to be stable and well-regulated. This banking system is comprised of a variety of financial institutions, including commercial banks, development banks, microfinance institutions, and savings and loan cooperatives.
Some key features of the banking system in Bolivia include:
The Bolivian Central Bank (BCB) is responsible for regulating the banking sector and managing the country’s monetary policy. It sets capital requirements, conducts regular audits, and monitors the activities of banks to ensure compliance with banking laws and regulations.
Types of Banks
There are various types of banks operating in Bolivia, including commercial banks, development banks, savings and loan banks, and microfinance banks. These banks offer a range of banking services to individuals, businesses, and government entities, including savings accounts, checking accounts, loans, credit cards, wire transfers, and foreign currency exchange.
Opening a bank account in Bolivia
To open a bank account in Bolivia, you must have the status of a temporary resident. In addition to this, you’ll also require your foreigner’s ID card, your passport, proof of an income, an address in the country, and an initial deposit.
Once you meet the above conditions, then you can open either a checking account, savings account, or a fixed-term deposit.
With the right paperwork, it’s not difficult to open a bank account in Bolivia but it may be a little difficult to choose the appropriate bank for your business. In addition, you need a clear knowledge of the paperwork you’ll be filling out, currency rates and exchange, and other significant details. Contact your Damalion experts now and let us help.
If you decide to relocate to Bolivia, either for business or its suitable lifestyle, you are mandated to do this the legal way and get a resident visa.
Type of Residency in Bolivia
Bolivia offers several options for obtaining residency, including the following:
- Work Visa: if you are offered a job in Bolivia, you can apply for a work visa. This visa requires a job offer from a Bolivian employer, and the employer must provide evidence that they were unable to find a Bolivian citizen to fill the position.
- Investment Visa: this is for high-net-worth individuals who make a significant investment in Bolivia. This visa requires a specified minimum investment and can be used to start a business or make other investments (in any sector) in the country.
- Retirement Visa: if you are over the age of 50 and have a specified minimum monthly income, you can apply for a retirement visa. This visa allows you to live in Bolivia without the need for a work permit.
- Family Visa: if you have family members who are Bolivian citizens or permanent residents, you may be eligible for a family visa. This visa allows you to live in Bolivia with your family members.
Student Visa: if you plan to study in Bolivia, you can apply for a student visa. This visa is valid for the duration of your studies and requires proof of enrollment in a recognized educational institution.
Permanent residency in Bolivia
If you plan to relocate permanently to Bolivia, you can obtain a Permanent Resident Visa after 2 years of living in the country. This will enable you to live in Bolivia for an indefinite period of time.
To apply for residency in Bolivia, you will need to provide several documents, so it is recommended that you consult with a professional to help you navigate the application process and ensure that all necessary documents are in order. Contact your Damalion experts now and let us help.
The tax authority in Bolivia is the National Tax Service (Servicio de Impuestos Nacionales or SIN). It is a decentralized entity under the Ministry of Economy and Public Finance and is responsible for collecting and managing tax revenue in the country.
SIN is responsible for administering the tax system in Bolivia, which includes the collection of taxes, auditing of taxpayers, and enforcing compliance with tax laws and regulations. It also provides tax information and education to taxpayers and the public.
As a tax resident in Bolivia, an individual is generally subject to taxation on their worldwide income. This includes income earned from employment, business activities, investments, and other sources.
Non-residents, on the other hand, are only taxed on their income derived from sources within Bolivia, such as rental income from property located in Bolivia or income earned from work performed within the country.
In Bolivia, tax residency is determined based on an individual’s physical presence in the country. An individual is regarded a tax resident in Bolivia if he/she is physically present in Bolivia for 183 days or more in a year.
Types of Taxes
In Bolivia, there are several types of taxes that individuals and businesses may be required to pay. Here is an overview of the main types of taxes and their corresponding rates:
- Income Tax: this tax is imposed on individuals and companies based on their income. The current tax rate for individuals is progressive, ranging from 0% to 13% depending on the income level. For companies, the tax rate is a flat 25% on their net income.
- Value Added Tax (VAT): VAT is a tax on the value added at each stage of production and distribution of goods and services. The current standard VAT rate in Bolivia is 13%.
- Excise Tax: this tax is levied on specific goods, such as tobacco, alcohol, gasoline, and vehicles. The rates of excise tax vary depending on the type of product. For example, the tax on gasoline is currently around 40%, while the tax on cigarettes is around 150%.
- Municipal Taxes: local governments in Bolivia are authorized to levy taxes on property and other local activities. These taxes vary depending on the location and may include property taxes, vehicle taxes, and commercial activity taxes.
- Financial Transactions Tax: this tax is levied on financial transactions, including bank transfers and ATM withdrawals. The current tax rate is 0.3% of the transaction amount.
- Stamp Duty: this tax is imposed on legal documents, such as contracts and agreements. The current stamp duty rate is 3% of the transaction value.
Note that these tax rates and types may change over time, and some taxes may be subject to exemptions or deductions depending on the circumstances.
Tax Filing and Penalties
Taxpayers in Bolivia are required to file tax returns annually. The deadline for filing tax returns is typically in April or May of each year. Failure to pay taxes or file tax returns on time can result in penalties and interest charges.
Double Tax Treaties
Bolivia has signed several tax treaties with other countries to avoid double taxation and prevent tax evasion.
The different types of tax treaties Bolivia has signed with other countries includes:
- Double Taxation Avoidance Agreements (DTAs): these treaties are designed to avoid double taxation on the same income by providing rules on how income is taxed when it is earned in one country by a resident of another country.
- Tax Information Exchange Agreements (TIEAs): these agreements are designed to promote the exchange of information between tax authorities in different countries to prevent tax evasion and promote compliance with tax laws.
- Mutual Administrative Assistance in Tax Matters (MAATM): these agreements are designed to provide mutual administrative assistance between tax authorities in different countries to promote compliance with tax laws and prevent tax evasion.
The specific terms and conditions of these tax treaties may vary, depending on the country involved and the type of treaty.
The countries Bolivia has signed tax treaties with include Argentina, Brazil, Canada, China, Chile, Cuba, Denmark, Ecuador, France, Finland, Germany, Italy, India, Japan, Mexico, Norway, Netherlands, Paraguay, Portugal, Peru, Russia, South Korea, Spain, Switzerland, Sweden, United Kingdom, United States, Uruguay, Venezuela
The tax regime in Bolivia is complex, and it is recommended that individuals and businesses seek the advice of a qualified tax professional to ensure compliance with tax laws and regulations.
Intellectual property (IP) protection in Bolivia is governed by the Bolivian Intellectual Property Law, which was enacted in 1992 and has been amended several times since then.
The Bolivian Intellectual Property Law provides for the protection of various types of IP, including:
- Patents protect inventions, such as new products or processes, for a limited period.
- To be patentable, an invention must be new, non-obvious, and capable of industrial application.
- A patent owner can execute his rights through an action for re-vindication.
- In Bolivia, patents are granted by the Bolivian Intellectual Property Office (SENAPI) for 20 years from the date of filing.
- Trademarks protect distinctive signs, such as logos or brand names, that are used to distinguish goods or services in the marketplace.
- To be registrable, a trademark must be distinctive and not confuse consumers with existing trademarks.
- A trademark owner can implement his rights through an action before the applicable authority.
- In Bolivia, trademarks are registered with SENAPI and are valid for 10 years, renewable for additional 10-year periods.
- Copyrights protect original works of authorship, such as literary, artistic, and musical works.
- In Bolivia, copyrights are automatically granted upon the creation of the work and do not require registration. However, it is recommended to register copyrighted works with SENAPI to facilitate enforcement in case of infringement.
- Copyright in Bolivia is protected by a resolution granted by the Bolivian Copyright Registry.
- Copyright protection lasts for the lifetime of the author plus 50 years after their death.
- Industrial designs protect the visual appearance of products, such as the shape, configuration, or ornamentation of a product.
- To be registrable, an industrial design must be new and have an individual character.
- In Bolivia, industrial designs are registered with SENAPI and are valid for 10 years, renewable for additional 5-year periods.
Enforcement of IP rights in Bolivia can be challenging, and it is recommended to seek legal advice from a qualified IP lawyer if you need to protect your IP rights in the country.
LABOR AND EMPLOYMENT
The labor and employment law in Bolivia is governed by the Labor Code (Codigo del Trabajo), which was enacted in 1939 and has been amended several times since then. The Labor Code establishes the rights and obligations of employers and employees, as well as the procedures for labor disputes and collective bargaining.
Enforcement of the labor and employment law in Bolivia is the responsibility of the Ministry of Labor and Social Welfare, which has the authority to investigate complaints of labor law violations and impose penalties on employers who violate the law.
The key features of the labor and employment law in Bolivia include:
Employment contracts must be in writing and specify the terms and conditions of employment, including the duration of the contract, the salary, and the benefits. Contracts may be for a fixed or indefinite term, and employers are required to provide employees with a copy of the contract.
In Bolivia, there are two main types of employment contracts: fixed-term contracts and indefinite-term contracts.
- Fixed-term contracts: these are employment contracts that have a specified duration, such as six months or one year. Fixed-term contracts are typically used for temporary or seasonal work, or specific projects or tasks. The contract automatically terminates at the end of the specified duration, unless it is renewed or extended by mutual agreement of the parties.
- Indefinite-term contracts: these are employment contracts that do not have a specified duration and continue until they are terminated by either the employer or the employee. Indefinite-term contracts are typically used for permanent employment. Employers are required to provide a written employment contract to employees who are hired for an indefinite term.
There are also other types of work arrangements in Bolivia that may not be considered employment contracts, such as independent contractor agreements or temporary agency work.
Employment Compensation, entitlements, and Benefits in Bolivia
- Minimum wage: the government sets a minimum wage that employers must pay their employees. The minimum wage is reviewed annually and adjusted if necessary to reflect changes in the cost of living.
- Working hours: the standard workweek in Bolivia is 48 hours, with a maximum of eight hours per day. Employers are required to provide employees with a minimum of one day off per week. Employees who work more than eight hours per day or 48 hours per week are entitled to overtime pay.
- Social security: employers are required to contribute to the national social security system, which provides benefits such as healthcare, pensions, and disability insurance.
- Labor unions: employees have the right to form and join labor unions, and employers are required to negotiate with unions on matters such as wages and working conditions.
- Vacation and holidays: employees are entitled to paid vacation and holidays, which vary depending on the length of service. For example, employees who have worked for less than one year are entitled to 15 days of paid vacation, while employees who have worked for more than five years are entitled to 30 days of paid vacation. Employees are also entitled to paid public holidays.
- Sick leave: employees who are unable to work due to illness or injury are entitled to sick leave. The amount of sick leave depends on the length of service but typically ranges from 10 to 60 days per year.
- Maternity leave: female employees are entitled to 12 weeks of paid maternity leave, which can be extended by up to six weeks in certain circumstances.
Termination of employment and Severance pay
Employers can terminate an employee’s contract for cause, such as misconduct or poor performance. Employees who are terminated without cause are entitled to severance pay, which is calculated based on the length of service and the employee’s salary.
Employers may also offer additional benefits to their employees, such as health insurance, life insurance, or retirement plans. However, these benefits are not mandatory under Bolivian law.
Do you want to enter this Latin American market?
Contact your Damalion experts now. We assist foreign legal entities in setting up a business in Bolivia, and in addition to this, we provide various integral business solutions, including compliance, entity management, accounting, taxation, payroll support, and many more across the country.
If you wish to learn more about our services and how we can assist you in making your Bolivia company a success, contact your Damalion experts today.
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