Bolivia joins the countries that charge a tax on large fortunes
On December 28, 2020, Law 1375 was published in Bolivia, which regulates the payment of the tax on large fortunes. In the case of the country, it is expected that only 150 families contribute this tax. It is still pending that the National Tax Service (SIN) issues a resolution with the characteristics of the forms and processes to make the payment. However, despite this missing piece, the rule is applicable from 2021.
In an interview for LexLatin, Miguel I. Mardoñez Barrero, partner at Ratio Legis, commented on the scope of the new tax provision.
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How is fortune calculated considering deductions?
The tax is calculated taking into account the assets owned or in the possession of the taxpayer. In the case of marital property, the amount equivalent to 50% of the value of the fortune accumulated during the marriage will be added to the taxpayer's fortune.
Principal balances pending payment for loans from financial entities regulated by the Financial System Supervision Authority (ASFI) and similar entities abroad will be deducted, in the case of loans in other jurisdictions. The aliquots to be paid are detailed below:
Tax base in bolivianos | Aliquot | With Bolivian discount |
From 30,000,001.- to 40,000,000.- | 1.4% | 150,000.- |
From 40,000,001.- to 50,000,000.- | 1.9% | 350,000.- |
From 50,000,001.-onwards | 2.4% | 600,000.- |
The Government of Bolivia refers to an average of 150 taxpayers, however we consider that taxpayers will be an average of 10% of the active population of Bolivia and real estate will be taken into account for the calculation; land motor vehicles and air or water navigation vehicles; goods assigned to activities of liberal professions or trades; capital investments and shares in companies; deposits in financial entities and credits of any nature; cash in national or foreign currency; insurance income; jewelry, works of art, antiques and collectibles, as well as intellectual and industrial property rights and other assets.
Who is exempt from paying this tax?
To sole proprietorships, public companies, commercial companies, cooperative companies, mixed corporations and any other legal person. It so happens that these companies currently pay the annual corporate tax (25%).
Notwithstanding the participation of a natural person in a company, it will be taken into account for the calculation of the fortune, which implies that this exclusion is merely referential.
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What is the difference between this law and those that have been approved in the region?
This law is permanent, that is, it begins to apply from 2020 until it is repealed. For example, the Law in Argentina is special and due to management, as a consequence of the health crisis. Likewise, Bolivian law has the characteristic of including foreigners who have investments or assets in the national territory, which implies that the nationality of the taxpayer is not an exclusion for the payment of the tax.
Are other important taxes expected to be added in Bolivia this year?
Possibly the income tax of natural persons. What has become more evident is the readjustment of existing taxes, especially in special regimes such as mining or agriculture, specific consumption, among others. The closest thing for now to be taken into account in Bolivia is the salary increase for the 2021 administration, which is an issue of considerable social implication and that must be addressed between the private sector and the Government in a very serious and responsible manner.
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