Israel – Bolivia Tax Treaty

Israel Bolivia Tax Treaty

Israel – Bolivia Tax Treaty

Bolivia

UTC:
Capital City:
Language:
Population:
Currency:
Country Code:
Domain:

-4
La Paz
Spanish
12.4 million
Bolivian Boliviano (BOB)
+591
.bo

Israel-Bolivia relations

Israel and Bolivia have not signed a Double Tax Treaty (DTA). The countries established diplomatic relations in 1950, and they are currently involved in trade exchanges with each other, which shows an increasing trend. The prime goods that Israel had exported to Bolivia in the prior year were the main exports of steam turbines, the main export ($4.02M), pesticides ($2.08M), and industrial printers ($1.8M). Israeli exports to Bolivia have increased by 18.1% per year from 2017’s $5.07M to $11.7M in 2022. In 2007, Israel exported $390k in services to Bolivia. The largest amount was spent on computer and information services. Regarding the Bolivia-Israel trade, Bolivia exported $3.26M to Israel in 2022. The main Bolivian exports were coconuts, Brazil nuts, cashews ($1.93M), other oily seeds ($435k), and buckwheat ($319k).

Additionally, both Israel and Bolivia are active members of the United Nations, where they collaborate in international forums to address global challenges. They share a common interest in engaging in dialogue and working toward solutions that advance global well-being and benefit humanity.

Details about the Embassy of Israel in Bolivia

Currently, Israel does not have a consular or diplomatic mission established in Bolivia. Instead, the consular services are covered by the Israeli Embassy in Lima, Peru.

Address: Ca. Coronel Andrés Reyes 437, San Isidro 15046, Peru
Phone: +51 4180500
Email: info@lima.mfa.gov.il
Website: Click Here

Details about the Embassy of Bolivia in Israel
Currently, Bolivia does not have a consular or diplomatic mission established in Israel. Instead, the consular services are covered by the Bolivian Embassy in Cairo, Egypt. Address: 21B Amman Street, from Mohy el Din abou el Ezz, Dokki, Cairo Phone: +20 (2) 3762 4361 E-mail: info@emboliviaeg.com

Business Activity in Bolivia

The 2009 Constitution of Bolivia allowed the government to take control over companies that were deemed as “strategic” in the country’s economy, such as fossil fuels, mining, telecommunications, and electricity. In addition, an “import substitution model” was adopted to lower the dependency on imports by producing and selling domestically, promoting native industries, and strengthening self-reliance on the economic front.

The key sectors of investments in Bolivia that are attracting investments include environmental technologies, automotive, healthcare technologies, and agriculture. Agriculture, in particular, is a growing sector, with a significant increase in exports up 27% in 2022.

Applicability of the MLI

Israel has signed the “Multilateral Convention to Implement Tax Treaty-Related Measures to Prevent Base Erosion and Profit Shifting” (MLI). Israel signed the agreement on June 7, 2017, and ratified it on September 13, 2018. In contrast, Bolivia has not proceeded with the signature of the MLI.

Residency for Tax Purposes in Bolivia

 
Residence of an individual

Bolivia taxes individuals only on income earned within the country, regardless of their nationality or where they live. Income from goods or assets located in Bolivia, or from activities performed within the country, is considered Bolivian-source income. Foreign income earned by individuals is not taxed in Bolivia.

To read about how an individual is considered a resident of Israel, click here.

Residency of a Company

A corporation is considered a resident of Bolivia if it is incorporated in the country.

To learn about how a company is considered a resident of Israel, click here.

The Tax System in Bolivia

The Bolivian tax authority is called The National Tax Service

Income taxation: 13%

Taxation of companies: 25%

VAT: 13%

Capital gains tax: NA

 Withholding Tax

 

Bolivia’s Internal tax rate

Israel’s internal tax rate

Personal Income Tax

(tax brackets)

13%

Up to 50%

Corporate Income Tax

25%

23%

Capital Gains Tax Rate

NA

25% – 30% (plus exceptional income tax for high earners at 3%)

Branch Tax

25%

23%

Withholding Tax (Non-resident) Dividends

 12.5%

25% or 30%

Interest

 12.5%

15%/25%/23%

Royalties

 12.5%

23% – 40%

VAT

13%

17%

Inheritance Tax

1/10/20 %

NA

Inheritance Tax and Estate Tax in Bolivia

Bolivia applies a progressive gift and inheritance tax at rates of 1%, 10%, or 20%, based on the degree of affinity between the beneficiary and the decedent or donor. There is also a wealth tax on assets over BOB 30 million (around $4.3 million), with rates ranging from 1.4% to 2.4%, which includes foreign assets.

Relocation to Bolivia

There are several reasons to relocate and invest in Bolivia. One of them is that Bolivia has an overabundance of natural resources, which comprises natural gas, minerals, and agricultural products. These, in turn, provide opportunities for companies in such areas as mining, energy, and agriculture. Besides, Bolivia is positioned strategically as a gateway for companies that want to expand in the region. The country is connected to neighboring nations through key transportation routes, including highways and railroads.

In the meantime, the Bolivian administration has been taking many steps to intrigue foreign investors and assist the local companies. Among these measures are tax incentives, a simplified procedure for opening a business, and other perks. Not only that, but the country also has a young, educated workforce with the majority of professionals specialized in related fields such as engineering, technology, and finance.

Prior to the Spanish occupation and later colonization, Jews first arrived in Bolivia in the 16th century. In 1999, the Jewish population in La Paz was estimated at 500, mostly based in La Paz.

Real Estate Taxation in Bolivia

Real estate and vehicles are subject to annual property taxes by the municipal government, with progressive rates ranging from 0.35% to 1.5% for real estate and 1.5% to 5% for vehicles. Each municipality sets property values and tax brackets for real estate, so tax rates vary based on location.

Transfer of Funds from Israel to Bolivia

According to section 170(a) of the Israeli Income Tax Ordinance, any transfer of payment to a non-Israeli resident is subject to a 25% withholding tax. The tax authority may allow, under certain circumstances, a reduction or dismissal of the withholding tax. Our firm handles withholding tax matters with the Israeli Tax Authority.

Since both countries have a tax treaty, one can submit a declaration form (statement regarding a payment to a foreign resident that is exempt from withholding tax), and under certain circumstances, it is possible to transfer the payment without the withholding tax and the approval of the Tax Authority.

In providing advice regarding the transfer of money abroad, in addition to the issue of withholding tax, our firm handles the requirements of foreign banks, such as an accountant’s approval regarding the payment of taxes, and examines additional actions required in light of the uniform standard of CRS between the countries –automatic exchange of information between countries which is carried out first through the banks and then between the tax authorities of each two countries.

Banks raise many difficulties and charge high fees for converting shekels into other currencies, so it is important to consult before transferring the funds – Contact us.

For more information on money transfers abroad click here.

Types of Business Entities in Bolivia

The most common types of companies in Bolivia are:

Public Corporation (Sociedad Anónima)

A Corporation can issue shares as either nominated or bearer shares. This type of legal entity requires a minimum of 3 shareholders, who have limited liability over their contribution to the share capital. These shares are often negotiable, and transferring them requires filling out simple forms and recording the transfer in the company’s records.

Limited Liability Companies (Sociedad de Responsabilidad Limitada)

In Limited liability companies, the capital is represented by quotas, which are subject to strict transfer requirements and approvals, unlike shares in corporations. For the establishment of this type of company, at least 3 shareholders are required.

Unipersonal Company (Empresa Unipersonal)

This business structure can be set up by a single individual, either a local or a foreign resident. The owner bears unlimited liability, meaning personal assets can be used to cover the company’s debts. This type of entity is ideal for small business owners or entrepreneurs, but it’s essential to have legal and accounting advisors to protect personal assets and ensure compliance.

Branch Office (Sucursal)

A branch office operates as an extension of its offshore parent company and is not considered a separate legal entity. Therefore, the parent company is fully liable for the branch’s obligations. Despite this, branches must maintain separate accounting records, obtain a local tax ID, and adhere to local tax and financial regulations.

Representative Office (Oficina de Representacion)

This business structure can be 100% foreign-owned, but it is prohibited from conducting any income-generating activities within the country. All its expenses must be funded through foreign currency remittances. The office is limited to tasks such as market research and promoting the parent company’s business, without engaging in any direct commercial transactions.

Incentive Laws in Bolivia

Aiming to attract foreign investments, the Bolivian law provides with VAT and other tax exemptions as per the following:

  • Businesses involved in exporting can reclaim VAT and customs duties paid during the production of export goods. However, this does not apply to oil and gas companies.
  • Hotels providing services to foreign tourists who do not reside in Bolivia are exempt from VAT.
  • Importing books, magazines, and newspapers is free from import taxes (VAT). Additionally, the sale of these items, whether produced locally or imported, is taxed at a zero VAT rate.
  • International highway transportation is either exempt from VAT or taxed at a 0% rate.

Particularly, for the new investments in manufacturing in the states of Oruro and Potosi several tax exemptions are provided:

  • Companies are exempt from import tariffs and VAT on machinery imported exclusively for the new industry until the start-up of operations.
  • Exemptions apply to import tariffs on inputs that are not substitutes for domestic inputs of the same kind and are intended for a transformation process. This exemption is available for the first ten years of operation.
  • The transaction tax is waived for ten years starting from the commencement of operations.
  • An exemption from corporate income tax is granted for ten years from the start-up of operations, provided that the exempted amount is reinvested in fixed assets in the following fiscal year.

Bolivia: Double Tax Treaties

Argentina

Colombia

Ecuador

France

Germany

Peru

Spain

Sweden

United Kingdom

 

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