The Bolivian government on 5 April 2017 published law 921 that increases to 25%, the tax rate that certain financial intermediary entities must pay if their return on equity index exceeds 6%. Law 921 is effective beginning fiscal year 2017.
Specifically, financial intermediary entities regulated by the Bolivian banking regulatory agency (ASFI)—e.g., banks and credit unions—now must pay an additional 25% of tax when their return of equity index exceeds 6%. As a result of this increase, profitable financial intermediary entities that reach the 6% threshold ultimately may be taxed at a rate of 50% (i.e., 25% corporate income tax plus 25% additional tax if profitability exceeds 6%).
Law 921 does not include language that prevents the additional 25% of tax on profits from being considered as a payment on the “transactions tax.” The transactions tax is a 3% tax on gross income arising from any economic or commercial activities, calculated on a monthly basis, and that may substitute for the standard 25% corporate income tax (the government imposes the tax that results in the greatest collection). Accordingly, the additional 25% tax imposed by law 921 and the transactions tax may result in an offset.
For more information, contact a tax professional with KPMG’s Latin America Markets practice or with the KPMG member firm in Bolivia:
Devon M. Bodoh | +1 (202) 533 5681 | firstname.lastname@example.org
Alfonso A-Pallete | +1 (305) 913 2789 | email@example.com
Carola Jáuregui | +591(3) 3343 4555 | firstname.lastname@example.org
Sergio Ruiz-Mier | +591(2) 2244 2626 | email@example.com
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