BUSINESS ORGANIZATIONS
According to the Bolivian Commercial Code, legal business can be conducted
in the form of corporations, private companies, general partnerships, limited
partnerships, limited partnership companies, branch companies of a foreign-owned
business, and sole proprietorships. Corporations, private companies and
branches are the most common forms of business in Bolivia.
Corporations: For a corporation to legally exist, it must fulfill all
requirements of the Commercial Code. Corporations organized by private subscription
must have: at least three shareholders; 50 percent of authorized capital
subscribed; and statutes approved by shareholders. Publicly subscribed corporations
must submit a report to corporation management identifying the promoters;
the number and type of shares; subscription terms; by-laws; and other requirements
set forth in article 224 of the Commercial Code. Shareholders must subscribe
in order to receive the necessary public deed for corporate formation. Deeds
must state the name and residence of the shareholders, the name of the company,
names of administrators, the company's capital structure, provisions for
division of profits, the firm's duration, any provisions for termination,
rules for dispute arbitration, and any additional provisions specific to
the company. Deeds must be registered with the Ministry of Exports and Economic
Competitiveness (MECE) and the Internal Revenue. The deed must be published
in a national newspaper.
Private Companies: The only necessary procedures for establishing a private
company are the preparation and execution of an incorporation deed, as outlined
above, and registration of the company with MECE. The deed must also be
published in a national newspaper.
Branches: Two requirements must be met for a foreign company or corporation
to establish a branch in Bolivia. First, a local representative must be
named and second, a legal entity must be formed. The appropriate paths for
forming, conducting, liquidating (and any other aspects involved with establishing
a branch) are the same as for private companies. The head office is responsible
for all branch liabilities and the parent company must provide all of the
necessary guarantees. All foreign legal documents must be substantiated
by the Bolivian Consulate. Branches must register with the Register of Commerce
and the following documentation must be made public: the articles of incorporation;
statutes and bylaws of the head office; legal authorization to constitute
a branch abroad as well as the designation of legal representatives of the
company sufficiently empowered to carry out the company's projects; and
proof that the required capital has been subscribed.
EXPORTING
Agents and Distributors: In most cases, there is no legal obligation
for foreign companies to retain local agents. However, local representation
is required when foreign companies are bidding on a public tender or are
engaging in certain branch operations.
Import Restrictions: All goods can be legally exported to Bolivia except
for sugar or goods that pose health risks or threaten national security.
Sugar, wheat, and national security items require import licenses.
Import Duties: In 1990, Bolivia lowered tariff rates on capital goods
from 10 to five percent. The tariff rate on non-capital goods was lowered
from 17 to 10 percent based upon their cost, insurance, and freight (c.i.f)
value. All imports are levied a 13 percent value-added tax (VAT) on the
c.i.f. value.
As a member of the Andean Pact, Bolivia has agreed to implement a Common
External Tariff (CXT) and an Andean Pact Free Trade Zone (FTZ). Since Bolivia
already has low external tariffs within the Pact, it will be allowed to
maintain these rates as its CXT.
Other import duties include a two percent ad valorem tax on books, brochures,
and other printed materials. Selective consumption taxes are charged on:
tobacco products, 50 percent; beer, 60 percent; other alcoholic beverages,
perfumes, cosmetics, 30 percent; soft drinks, 20 percent; and automotive
vehicles, electrical appliances, pottery, jewelry, 10 percent.
Vehicles are subject to an additional 10 percent specific consumption
tax (ICE).
Documentation: The five standard documents which must be presented to
customs for all shipments into Bolivia are:
* Seller's Commercial Invoice: The invoice, which may be completed in
English, must include a detailed description of the products by item, unit
price and total free-on-board (f.o.b.) price. Freight costs, either air
or ocean, and the insurance to port of destination must also be included
on the invoice.
* Bill of Lading or (air waybill): A bill of lading must be presented
with two original bills signed and sealed by the steamship company and
two non-negotiable copies. One of the bills of lading should accompany
the original bill and the commercial invoice. Bill's of lading must be
drawn to the order of the consignee, who is permitted to endorse it to
a third party (usually the shipper).
* Insurance Policy: A copy of the insurance policy is used to calculate
the VAT and is therefore required by customs.
* Packing List: This document should be included because it facilitates
the customs inspection process and is beneficial to the importer in case
of loss or theft.
* Inspection Certificate: All imported products with an f.o.b. value
of US$ 1000 or more are required to be inspected. The fee is 1.9 percent
of f.o.b. value.
There are additional documents required for specific goods, including:
* Phytosanitary certification is required for live animals and used
clothing.
* Pharmaceuticals must pass strict quality control regulations which
must be expressed in Spanish on a certificate of analysis. Also, pharmaceuticals
must be registered with the Ministry of Health and Welfare prior to importation.
COMMERCIAL POLICIES
Exchange Controls: The Central Bank operates an exchange auction market
and sets exchange rates.
FOREIGN INVESTMENT
Restrictions: There are very few restrictions on investment within Bolivia.
With guaranteed national treatment, foreign investors generally receive
the same rights as domestic investors. Private companies can invest in the
petroleum industry only when contracted by YPFB (the state-owned petroleum
company) through joint ventures or operation (explorational/exploitational/refining)
contracts. Private companies can invest in joint venture mining projects
through COMIBOL, the state-owned mining company.
Incentives: The Bolivian government as well as the International Monetary
Fund (IMF), the Inter-American Development Bank (IDB), and the World Bank
are committed to attracting foreign investment in Bolivia. In an attempt
to accomplish this, legislation was passed in 1990 and 1991 which was designed
to establish rules for private investment. The legislation attempted to
facilitate investment through:
* An Investment Code that guarantees national treatment, free currency
convertibility, no registration requirements, and international arbitration.
* A Hydrocarbons Code which allows for joint ventures to exist between
the state oil company and private investors, and alters the tax structure
to allow for tax credits in the United States.
* A Mining Code that permits foreign companies to enter into joint ventures
within 50 kilometers of the Bolivian border (as long as the partner is
a domestic investor), permits joint ventures with COMIBOL, and establishes
a tax structure for credits within the United States.
INTELLECTUAL PROPERTY RIGHTS
Patents last for five years (with an option to renew for five years if
exploited) and must be registered at the Patent Registry. There are three
different kinds of patents: caveat or provisional specification, invention,
and improvement. New laws to protect films and videos and copyrighted material
(including specific protection for computer software) were recently passed.
Trademarks have to be registered with the Ministry of Exports and Economic
Competitiveness (MECE). The five-year protection is effective but renewal
periods last for only five years.
TAXATION
Corporate taxes: Both foreign and domestic corporations and partnerships
pay taxes based on their net worth which is determined by the Tax Code.
As a result, tax payments do not depend on whether the corporation has made
a profit or loss during the year. The rate of tax for corporate net worth
is three percent. Assets held abroad by a domestic company are included
in taxable net worth and taxes paid within a foreign country may not be
taken as a tax credit. The mining, electricity, and hydrocarbon industries
are exempt from corporate taxation because they have a special tax structure.
Branches of foreign corporations located in Bolivia must pay taxes on
any income earned within Bolivia. Branch profits are considered to be remitted
to their head office (on an annual basis at the end of the fiscal year)
regardless of whether or not this has occurred. The Bolivian government
taxes all subsidiaries of foreign owned companies (corporate as well as
partner) at a rate of 10 percent on dividends, interest, royalties, and
service fees abroad.
There is no distinction made between domestic and foreign shareholders
regarding the payment of dividends. Cash dividends are subject to tax at
a rate of 10 percent while dividends paid in shares are considered a reinvestment
and are not taxed. Capital gains are not taxed for either domestic or foreign
companies.
Personal Income Taxes: Taxes on personal income are assessed on total
income earned. Individuals that are considered Bolivian residents (and therefore
subject to personal income tax) include:
* Persons (both national and foreign) who reside in Bolivia for a period
greater than 180 days in any given year.
* Individuals working abroad for the state or state enterprises who
receive remuneration from these entities.
* Estates, if at the date of death the deceased was a Bolivian resident.
Income paid to a nonresident is subject to a 10 percent withholding tax.
Tax Treaties: Bolivia is a signatory of the Andean Pact with Colombia,
Ecuador, Peru and Venezuela. It is also a signatory of the River Plate Basin
Treaty with Argentina, Brazil, Paraguay, and Uruguay. Bolivia has signed
two tax treaties which provide relief from double taxation for natural or
juridical persons located within any state which is a member of the Andean
Pact or the River Plate Basin Treaty.
REGULATORY AGENCIES
* The Registry of Commerce is responsible for the control and supervision
of commercial and industrial matters except for banking, insurance and
finance companies. The Registry has the power to approve the formation,
liquidation, transformation and merger of companies as well as the right
to impose fines and penalties. It also has the power to obtain and review
financial statements and may appoint officers to approve certain transactions
within a company.
* The Superintendency of Insurance Companies is responsible for regulating
the insurance industry and monitoring insurance companies' compliance with
the Law of Insurance Companies.
* The Ministry of Exports and Economic Competitiveness (MECE) is responsible
for formulating, defining, and executing policies on exports; attracting
private capital; and upgrading Bolivia's economic competitiveness, industry,
and tourism.
* The Superintendency of Banks is responsible for regulating the working
of banks and finance companies.
* The Comptroller General's Office conducts the audits of all state
enterprises.
USEFUL CONTACTS
U.S. Embassy in Bolivia
To mail from the United States:
Embassy of Bolivia in the United States
