Transfer Pricing in Bolivia, regulations and formal obligations required by the Tax Challenge Authority (AIT)

Transfer Pricing in Bolivia, regulations and formal obligations required by the Tax Challenge Authority (AIT)

Since September 2015, Transfer Pricing rules are regulated by Law 516 on Investment Promotion, Law 549 or Law of July 21, 2014, by Supreme Decree 2227 of December 31, 2014 and Regulatory Resolution of the Board of Directors No. 10-0008-15 of April 30, 2015 (Transfer Pricing in Transactions between Related Parties).

That Article 2 of Law No. 549 of July 21, 2014, amends Article 45 of Law No. 843 and incorporates Articles 45 bis and 45 ter to the aforementioned Law, establishing the transfer pricing regime applicable to commercial and/or financial transactions carried out between related companies, for the purpose of determining corporate income tax, incorporating, among others, the principle of full competition, the definition of related parties and the valuation methods for transactions carried out by such parties and the complementary documentation and information to be submitted.

The norm mentions the power that the Tax Administration has to make adjustments to a Bolivian company when it identifies transactions with its related parties that were not made at market values (“arm’s length” principle). To this end, it establishes the valuation methods for such transactions, which are based on the OECD Guidelines on Transfer Pricing for Multinational Enterprises and Tax Administrations.

Obligated parties

Parties obliged to comply with the Transfer Pricing standard and, therefore, to keep supporting documentation and the Transfer Pricing Technical Study (TPS) are those that meet the following conditions:

Formal obligations

The presentation of the Electronic Form 601 and EPT, must be submitted within the period established for the presentation of the Affidavit and payment of the Corporate Income Tax (IUE), according to the type of business activity.

The price or value of the transaction with related parties, as well as that of comparable transactions must be expressed in Bolivianos (Bs). To this effect, when the transaction has been carried out in a different currency, the taxpayer must convert such amounts to Bolivianos.

The filling out of the Electronic Form 601 – Affidavit for Information on Transactions with Related Parties shall be done through the Da Vinci application, which will be updated and the filling out instructions will be available at the National Tax Service website

Penalties for non-compliance

Without prejudice to the determination made by the taxpayer, declared and submitted through the Electronic Form 601 Informative Affidavit of Transactions with Related Parties and the Technical Study of Transfer Pricing – ETPT, the National Tax Service for tax purposes may make the adjustments it deems necessary. On the other hand, penalties for failure to file the ETPT or Form 601, or filing it late, with errors or incomplete information will be sanctioned with fines ranging from 50% to 100% of the maximum penalty established in Article 162 of Law No. 2492 of the Tax Code. It is worth mentioning that the payment of the fine does not exempt from the obligation to send and submit the information indicated.