Transfer Pricing in Bolivia

Concept and Regulation in Bolivia

Transfer pricing legislation in Bolivia is not longstanding, being 2014 the year in which the regulation in this matter is introduced, through Law 549 or “Investment Promotion Law”, which modifies Articles 45, 45 bis and 45 ter of Law No. 843 (the Law).

In the same year, Supreme Decree No. 2227 was published, which regulates the provisions of the Law in question, regulating the cases of connection, methodology, and documentation to be presented, among other guidelines.

Later, in 2015, the Regulatory Resolution of the Board of Directors No.10-0008-15 was published, which establishes the subjects obliged to present the Transfer Pricing Study and the Informative Affidavit; as well as the deadlines for presentation and form.

Although Bolivia’s transfer pricing regulations had not mentioned the Organization for Economic Cooperation and Development (OECD) until that time, it was not until 2017 that the National Tax Service (SIN) made reference to this organization by means of RND 1017000001 when it included the list of countries with low or no taxation.

Principle of full competition: Concept

This principle governing transfer pricing, also known as the “Arm’s length” principle, is based on the fact that prices agreed between related parties are in accordance with market value, as if they had been agreed upon by independent parties.

This principle is also regulated in the Bolivian transfer pricing legislation, in Article 45 of Law No. 843, which states that the prices agreed in commercial and/or financial transactions between related parties must be those agreed between independent parties.

Criteria for Identifying Related or Linked Companies

In accordance with the third paragraph of Article 45 of the Law, two or more companies will be considered as related parties when a person, whether natural or legal, participates in the management, control, administration or capital of another company.

Such linkage will also be formed when a third party, directly or indirectly, participates following the provisions of the preceding paragraph in two or more companies.

In relation to this, Article 2 of the D.S. No. 2227, indicates certain cases of linkage, such as the following:

I. For the purposes of Article 45 of Law No. 843, parties are considered related when:

II. In addition to those described, upon proposal of the Tax Administration and after evaluation by the Transfer Pricing Technical Committee, other forms of linkage will be incorporated by Supreme Decree when the operations or transactions have not been carried out under conditions similar to those carried out between independent parties in comparable market operations.

Likewise, with respect to countries or regions with low or no taxation, the Annex to the 2019 Board of Directors’ Resolution No. 1019000002, which lists these, must be taken into account.

Transfer pricing methods in Bolivia

According to Article 45 ter of Law No. 843 and its Regulation (Article 7 of D.S No. 2227), transfer pricing legislation in Bolivia provides for six methods to analyze whether prices agreed between related parties comply with the principle of full competition:

• Comparable Uncontrolled Price Method.
• Resale price method.
• Added cost method.
• Profit distribution method.
• Method of the net margin of the transaction.
• Notorious price method in transparent market transactions.

The standard also states that the most appropriate method for the type of operation will be applied and if it is not possible to determine the value of the transaction with any of the aforementioned methods, another method may be applied according to the nature and economic situation of the operation.

Comparability criteria in Bolivia

To compare whether two or more transactions are comparable, the following will be taken into consideration, according to Article 5 of the Decree in question:

• The characteristics of the goods or services.
• The functions assumed by the parties, for which risks and assets used will be identified.
• The contractual terms of the transaction.
• The characteristics of the market or other influencing factors.
• The commercial strategies.

Documentation Formally Requested by the Authority

The obligations of the taxpayer in transactions with related parties according to Article 3 of D.S No. 2227 are as follows:

• Every company, branch, subsidiary, or affiliate established in the country must keep its own accounting and/or special records independently.
• The related companies established in the country as provided in Article 2 of D.S. No. 2227 are obliged to carry out their commercial and/or financial operations at market prices. These operations must be reflected and documented in the financial statements, sworn statements, and/or special records of the taxpayers of the Tax on Profits of Companies.
• The taxpayer must present to the Tax Administration, along with the financial statements and the tax declaration, a Transfer Pricing Study on the related transactions prepared according to the technical aspects established in this Regulation.

Transfer Pricing Study (TPS) and Informative Sworn Statement of Transactions with Related Parties (Electronic Form 601)

According to Chapter II, Articles 3 and 4 of RND No. 10-0008-15,they specify the characteristics and requirements that the Transfer Pricing Study must contain; on the other hand, Article 6 of the same resolution indicates the procedure for submitting Electronic Form 601:

Transfer Pricing Study – TPS

According to Article 3 of Resolution Normativa Directoral No. 10-0008-15:

1. The Transfer Pricing Study – TPS must be prepared in both physical and digital format, written in Spanish (Castilian), expressed in Bolivianos, and include the signature of the Legal Representative or NIT holder as appropriate.
2. The price or value of the transaction with related parties, as well as that of comparable transactions, must be expressed in Bolivianos (Bs). For this purpose, when the transaction has been carried out in a currency other than Bolivianos, the taxpayer must convert these amounts to Bolivianos using the official exchange rate in force at the date of the transaction between the national currency and the respective foreign currency, according to the publication made by the Central Bank of Bolivia when applicable.

Content of the Transfer Pricing Study – TPS is detailed in Article 4 of RND No. 10-0008-15

Electronic Form 601 – Informative Sworn Statement of Transactions with Related Parties

Filling out Electronic Form 601, Informative Sworn Statement of Transactions with Related Parties, must be done through the Da Vinci application, whose updates and filling instructions will be available on the website of the National Tax Service www.impuestos.gob.bo as indicated in Article 6 of RND No. 10-0008-15.

Subjects Obligated to Present Information

According to Chapter III – Article 7. (Subjects Obligated to Present Information) of RND No. 10-0008-15: Those required to present information about their transactions with Related Parties as appropriate:

• Those taxpayers whose annual accumulated transactions with related parties are: greater than or equal to Bs7,500,000 and less than Bs15,000,000.
• Additionally, companies that have transactions with related parties exceeding Bs15,000,000 will present a report.

Regarding the Presentation and submission of the physical and digital copy of the TPS as well as related to the submission of Electronic Form 601, Chapter III – Article 8 of RND No. 10-0008-15 indicates:

• The physical copy of the TPS must be presented at the District Managements or GRACO of the corresponding jurisdiction along with the financial statements corresponding to the end of the fiscal year. The submission of the digital information of the TPS will be carried out through the website of the SIN.
• The submission of Electronic Form 601, Informative Sworn Statement of Transactions with Related Parties, must be carried out through the Da Vinci module of the Virtual Office or from the same Da Vinci application in case of having an Internet connection.

Adjustments, Verification, and Sanctions

Article 10 of Chapter IV of RND No. 10-0008-15 describes how to calculate the adjustment in case the price or value agreed upon for the transaction between related parties is outside the range of market values and, as a consequence, fiscal harm is determined. Meanwhile, Article 11 of the same RND indicates the power of the Bolivian Tax Administration to carry out the Verification and Adjustments it deems necessary.

Deadline for Submission

Deadline for the Submission of the Transfer Pricing Study and/or the submission of Electronic Form 601

According to Chapter III, Article 9 of RND No. 10-0008-15, the submission of the Transfer Pricing Study – TPS in physical and digital format and/or the submission of Electronic Form 601, Informative Sworn Statement of Transactions with Related Parties, must be made within the deadline established for the submission of the Sworn Statement and payment of the Tax on Profits of Companies (IUE) as provided in Article 39 of Supreme Decree No. 24051 from the first fiscal year covered by the effectiveness of Law No. 549 of July 21, 2014.

“ARTICLE 39° D.S. No. 24051 – The deadlines for the submission of sworn statements and the payment of the tax, where applicable, will expire one hundred and twenty (120) days after the close of the fiscal year, whether they must be submitted with or without the opinion of external auditors. From the 1995 fiscal year inclusive, the following closing dates are established according to the type of activity:

Sanctions for non-compliance with transfer pricing in Bolivia

Sanctions for non-compliance with transfer pricing obligations are regulated by Article 162 of Law 2492 or “Bolivian Tax Code”, which depend on the type of infringement committed.

Likewise, it should be noted that Annex I of RND No. 10-0033-16 has established the sanctions for each of the infringing conducts, according to the aforementioned article of the Tax Code.

For those related to transfer pricing obligations, they are regulated from paragraph 3.23 to 3.31 of the aforementioned Annex, which range from 2500 UFV to 5000 UFV.

The sanctions for not submitting or submitting it after the deadline, with errors or incomplete information, will be sanctioned with fines from 50% to 100% of the maximum sanction established in art. 162 of Law 2492.

Transfer Pricing Ranking 2022

We are pleased to inform you that we belong to the  2022 Ranking of Transfer Prices  by  World TP in Bolivia.