Bolivia: New Tax Regulation Enhances Employee Mobility, Requires Company Compliance by May 31^st Deadline

Starting in May 2019, workers in Bolivia can benefit fiscally from a recently approved legislative change to the Complementary System of the value added tax (RC-IVA). The benefit is retroactive from January 1st, 2019.

On May 10th, the Bolivian government published the normative resolution of directory (RND) n° 101900000009, which complemented the May 1st Supreme Decree n° 3890 and amended the regulation of the complementary system to the VAT (RC-IVA). This regulation becomes effective for the fiscal period beginning May 2019.

The Bolivian RC-IVA is a tax applicable to the income of individuals. It supplements the value added tax on goods and services and applies to the income of individuals and undivided estates, obtained from capital investment and labor.

The main change is the ability for workers to transfer the balance of their VAT income tax from previous employment at a Bolivian company as a credit to a new company where they are employed. In this way, the mobility of workers from one company to another is better facilitated. Prior to this change, workers lost their accumulated tax credits when they changed jobs.

The Bolivian tax system allows workers who wish to deduct their personal expenses relating to the acquisition of basic goods or services with the withholdings made by the companies; for this purpose, it is necessary to submit Form 110 on a monthly basis. Under the current tax reform, an employee may maintain the adjusted tax credit accumulated with invoices for the discharge of the complementary regime to the VAT (RC-IVA).

An additional modification contained in Supreme Decree No. 3890 is the obligation of the companies to submit a monthly affidavit with the retained taxes and/or the balances that would have remained in favor of the worker. To do this they must use the new tax return that is detailed in RND N ° 101900000009.

These updates conclude a turbulent month of May in Bolivian legislative issues, which began with the May 1^st signing of Supreme Decree No. 3888 by President Evo Morales. The decree authorizes a three percent (3%) increase in the Basic Wage and four percent (4%) increase in the National Minimum Salary (SNB).

Notably, these increases will be retroactively applied from January 1^st, 2019.  Companies have until May 31^st, 2019 to pay the difference.

It is important that companies adapt responsively to the new regulations, ensuring compliance from the first day of the law´s implementation to avoid incurring errors and subsequent fines.

For more information on regulatory changes and impacts in Bolivia, or for assistance with operations in the country, Auxadi is available to meet your diverse international business needs.