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Hiring in Bolivia

Bolivia, officially known as the Plurinational State of Bolivia, is a country in South America. Sucre is the constitutional and judicial capital; whereas La Paz is the executive and the legislative capital. Agriculture, forestry, mining, banking and tourism are some of the main sectors of Bolivia’s economy. Its main trading partners are Brazil, United States and Argentina. Global PEO or Employer of Record (EOR) play a pivotal role in providing companies with services related to hiring employees, and ensuring compliance with Bolivia’s legal and tax regulations. Employment regulations including probation, holidays and termination are covered by the Labor Code. The Labor Code stipulates that employees are entitled to 15 days of paid annual leave after one year of service. Bolivia taxes individuals only on their Bolivian-source income, regardless of their nationality/residence. Global PEO’s or Employer of Record (EOR) facilitate companies by ensuring compliance with Bolivia’s Labor Code and tax laws.

statutory labor requirements

Probation Period

  • The maximum probationary (trial) period in Bolivia is 3 months

Annual Leave

  • If an employee has completed one year of employment, they are entitled to 15 days of paid annual leave.   
  • For an employee who has been employed for at least 5 years, they are entitled to 20 days of paid annual leave.  
  • For an employee who has been employed for at least 10 years, they are entitled to 30 days of paid annual leave. 

Public Holidays

  1. New Year's Day (1st January)
  2. Plurinational State Foundation Day (22nd January)
  3. Candlemas (2nd February)
  4. Carnival (24th to 25th February)
  5. Shrove Tuesday (25th February)
  6. Good Friday (10th April)
  7. Labor Day (1st May)
  8. Corpus Christi (11th June)
  9. Willkakuti (21st June)
  10. Agrarian Reform Day (2nd August)
  11. Independence Day (of Bolivia) (6th August)
  12. All Souls Day (2nd November)
  13. Christmas Day (25th December)

Maternity Leave

  • Mothers are entitled to a total of 90 days, broken down into 45 days before the expected due date and 45 after the birth of the child. 
  • Pay given to a mother on maternity leave is 100% of the national minimum wage.  
  • However, the employer is entitled to receive a 90% reimbursement from social security.  

Paternity Leave

  • For the birth of a child, fathers are entitled to 3 days’ pay. 
  • From the date that the child is born, fathers receive job protection for 1 year.

Sick Leave

  • Workers receive five fully paid sick days per year

Work Hours

  • The effective working day is eight hours per day up to a maximum of 48 hours per week, except for women who may work only 40 hours per week
  • In Bolivia businesses normally work from about 8-12:30 am and from about 2:30 to 6:30 or 7 p.m. because it's a tradition to take the 2-hour siesta and lunch hour at midday.

Overtime

  • Overtime is work that is carried out at times of emergencies or to meet the employer's needs.
  • Overtime is treated as extraordinary working hours.
  • They must be compensated with a 100% extra pay, and must not exceed a total of two hours per day. 
  • Extra pay of 100% also applies to work done during public holidays.
  • Work on Sundays must be compensated by triple the daily salary, or, in some circumstances, by granting a leave of one working day (to be determined by management).

Notice Period

  • According to Bolivian labor law, there is no mandatory notice period.

Severance

  • Severance for unjustified dismissal is equal to one month pay for each year of service. 

13th / 14th Month Pay

  • Yes (Mandatory)
  • There is a statutory requirement to pay the 13th month.
  • This is the Christmas bonus.
  • Recently the government has approved another Christmas bonus if the GDP is over 4.5%.
  • Employers customarily also pay a profit bonus and a seniority bonus.

income tax

  • Bolivia taxes individuals only on their Bolivian-source income, regardless of their nationality/residence. In this regard, income arising from goods/assets located or utilized economically within Bolivian territory and performance of any activity carried out within the country is considered Bolivian-source income. No Bolivian taxes are imposed on foreign-source income earned by individuals.
  • In general, taxable income includes all wages, salaries, prizes, bonuses, gratuities, compensations and allowances in cash or in kind. 
  • It also includes fees for directors and trustees and salaries for owners and partners.
  • The personal income tax (Regimen Complementario del Impuesto al Valor Agregado or RC-IVA) rate is 13%.
  • Employers have the obligation to withhold and pay to the tax authorities the RC-IVA on gross income after deduction of social contributions and other concepts established by tax law.
  • There are no local taxes on personal income in Bolivia.

Personal Income Tax Rate (%)

Flat Rate

13%

deductible expenses

  • For personal income tax on employees, the following tax deductions may be claimed with respect to taxable income 
    • Employee contributions to social security institutions. 
    • The nontaxable minimum amount, which equals two minimum national salaries per month. The current minimum salary is BOB2,122 (USD305). 
  • In addition, the following credits may be claimed with respect to the tax on the taxable income of employees: 
    • 13% of two minimum national salaries 
    • The value-added tax (VAT) credit remaining after offset against VAT 

Deductible Expenses

Personal Deductions

Employee contributions to social security institutions

 

The nontaxable minimum amount, which equals two minimum national salaries per month. The current minimum salary is BOB2,122 (USD305).

Tax Credits 

The following credits may be claimed with respect to the tax on the taxable income of employees: 

• 13% of two minimum national salaries 

• The value-added tax (VAT) credit remaining after offset against VAT

immigration

  • Expatriates who want to engage in remunerated activities in Bolivia must apply for a visa or residence permit that entitles him or her to work. 
  • The most common of these documents are the provisional work permits for tourists, subject-to-contract visas and temporary visas.
  • Except for provisional work permits, these permits may be obtained after the expatriate has entered the country. 
  • Individuals may also obtain the documents before their arrival through a Bolivian consulate abroad.
  • Foreign nationals may establish businesses in Bolivia if they comply with all legal requirements. 
  • Companies may be headed by foreign nationals who are resident or domiciled in Bolivia for tax purposes. 
  • The visas mentioned above allow individuals to reside and work in Bolivia.
  • Bolivia issues the following types of residence visas:
    • Officials: Members of the consular and diplomatic corps.
    • Temporary: Expatriates who want to work or perform other legal remunerated activities in Bolivia. This visa may be granted to individuals who have relatives in Bolivia or who intend to make investments that are considered advantageous for Bolivia.
    • Subject-to-contract: Valid for one to two years, and may be renewed for an additional one- to two-year period.
    • Student: Valid for up to one year and may be renewed for additional one-year periods, as many times as necessary.
    • Political refugee: Issued to foreign nationals who intend to establish permanent residence in Bolivia.
    • Permanent residence: An indefinite visa that grants to the expatriate the same rights as an ordinary Bolivian national, except for the right to vote and work at public offices.
  • A residence visa is canceled if the expatriate, without the express authorization of the migratory authority, is absent from the country for more than two consecutive years.

Type of Visa/ Permit

Documentation

Validity

Eligibility

Temporary Residence Visa

  • Application form
  • Passport
  • Foreign national Identification card
  • Documents that prove professional status
  • Documents that prove marital status
  • Documents that evidence the activities that an applicant will perform in Bolivia, such as a labor contract
  • A certificate proving no criminal record
  • Proof of financial solvency
  • A current photo of the applicant
  • Payment for the procedure of UFV 2,500 (USD 800)

1 to 2 years                                                                                              

  • Expatriates who want to work or perform other legal remunerated activities in Bolivia.
  • Individuals who have relatives in Bolivia
  • Individual who intent to make investments in Bolivia

Subject-to-Contract

  • Application form
  • Passport
  • Foreign national Identification card
  • Documents that prove professional status
  • Documents that prove marital status
  • Documents that evidence the activities that an applicant will perform in Bolivia, such as a labor contract
  • A certificate proving no criminal record
  • Proof of financial solvency
  • A current photo of the applicant
  • Payment for the procedure of UFV 2,500 (USD 800)

1 to 2 years

  • Individuals who have an employment contract in Bolivia

Permanent Residence

  • Application form
  • Passport
  • Foreign national Identification card
  • Documents that prove professional status
  • Documents that prove marital status
  • Documents that evidence the activities that an applicant will perform in Bolivia, such as a labor contract
  • A certificate proving no criminal record
  • Proof of financial solvency
  • A current photo of the applicant
  • Payment for the procedure of UFV 2,500 (USD 800)

Indefinite Period

  • Individuals who wish to permanently work and reside in Bolivia

value added tax

  • VAT Standard rate: 13 percent (effective rate 14.94 percent).
  •  Exemptions: 0 percent on exports. 
  • VAT paid in export-related purchases or expenses may be recovered through tax refund requests.

VAT

Standard Rate

13% (14.94% effective rate)

Zero Rate

0%

 

withholding tax

Dividends

  • Dividends paid to a nonresident are subject to a 25% withholding tax levied on 50% of the gross dividend, resulting in an effective rate of 12.5%

Interest

  • Interest paid to a nonresident is subject to a 25% withholding tax levied on 50% of the gross amount, resulting in an effective rate of 12.5%

Royalties

  • Royalties paid to a nonresident are subject to a 25% withholding tax levied on 50% of the gross amount, resulting in an effective rate of 12.5%

Technical Service Fees

  • Technical service fees paid to a nonresident are subject to a 25% withholding tax levied on 50% of the gross amount, resulting in an effective rate of 12.5%

Branch Remittance Tax

  • Bolivia levies a withholding tax of 25% on 50% of the Bolivian-source profits of a Bolivian branch upon a distribution to the foreign head office, resulting in an effective tax rate of 12.5%. 
  • The tax may be deferred if the branch reinvests the profits

WHT

Dividends

  • 25% of WHT
  • 12.5% effective rate

Interest

  • 25% of WHT
  • 12.5% effective rate

Royalties

  • 25% of WHT
  • 12.5% effective rate

Technical Service Fees

  • 25% of WHT
  • 12.5% effective rate

Branch Remittance Tax

  • 25% of WHT; 12.5% effective rate

termination

  • The employer can dismiss an employee without having to make any payments on the basis of any of the reasons listed in Article 16 of the General Labor Law and Article 9 of the Regulatory Decree on the General Labor Law.
  • The following reasons are listed in Article 16 of the General Labor Law:
    • Intentional material prejudice caused to working tools.
    • Disclosure of industrial secrets.
    • Omissions or imprudence relating to industrial security and hygiene.
    • Partial or total breach of the employment agreement.
    • Robbery or theft.
  • Unjustified dismissal is whereby an employer can unilaterally terminate an employment relationship at any time without relying on any of the reasons listed above.
  • An employee who accepts an unjustified dismissal is entitled to severance pay for years of service.
  • Indirect dismissal can result from a reduction of the employee's remuneration or a change of functions. The employer must give the employee three months' prior notice of such change.
  • An employee who rejects the reduction or change is entitled to severance pay.

statutory benefits

  • These are benefits as postulated by law
  • These include probationary period, public holidays, annual leave, sick leave, maternity leave, paternity leave, overtime pay, severance for unjustified dismissal, 13th month pay and 14th month pay
  • Statutory benefits also include social security benefits

Statutory Benefits

Probationary Period

Public Holidays

Annual Leave

Sick Leave

Maternity Leave

Paternity Leave

Overtime Pay

Severance for unjustified dismissal

13th month pay

14th month pay

Social Security Benefits 

payments and invoicing

  • Tax must be paid monthly when it is paid by a withholding agent and quarterly when it is paid directly by a taxpayer. 
  • The tax must be paid at the same time the tax return form is filed. The tax return form must be filed between the 13th and 22nd day of the month following the end of the reporting period.
  • The due date is determined by the last digit of the Tax Identification Number (Número de Identificación Tributaria, or NIT)

ease of doing business

  • The ease of doing business index is an index created by Simeon Djankov, an economist at the Central and Eastern Europe sector of the World Bank Group.
  • Higher rankings (a low numerical value) indicate better, usually simpler, regulations for businesses and stronger protections of property rights.
  • According to the World Bank Bolivia ranked 150th in the World in 2019 in terms of ease of doing business.

employee accruals

   
Christmas Bonus% Based on one month bonus 8.33%
Christmas Bonus Over Vacations % 0%
Severance per Year % Employees are entitled to severance pay equal to one month's pay after completion of one year of employment (8.33% of annual salary)
Vacations % • If an employee has completed one year of employment, they are entitled to 15 days of paid annual leave (4.109% of annual salary)
• For an employee who has been employed for at least 5 years, they are entitled to 20 days of paid annual leave (5.47% of annual salary)
• For an employee who has been employed for at least 10 years, they are entitled to 30 days of paid annual leave (8.22% of annual salary)
Notice % No mandatory notice period.
0%
Christmas Bonus Over Notifications% 0%
Vacations Plus% Based on one month bonus (if GDP exceeds 4.5%)
8.33%
Total percentage of Salary (yearly) The total employment accruals as a percentage of salary per anum are equal to 29.11%
( Note, there are more bonuses. Another one month pay if the company makes a profit and a seniority bonus after the employee has worked for over 2 years)

 

employer accruals

Additional information (Country Accruals)

   
Health Insurance

10.00%

 
Contribution pro

2.00%

Professional risk

1.71%

Employer contributions

3.00%

Christmas Bonus

8.33%

Vacations

11.23%

Description

Additionally, Bolivia applies a further tax known as the RC- IVA or RC- VAT. This is calculated by the salary amount received by the employee after the 12.71% contribution mentioned above, if the salary is higher than 4 times the National Minimum Wage.

 

Employer Accruals Additional information

    Employment Accruals
Annual Leave If an employee has completed one year of employment, they are entitled to 15 days of paid annual leave. This equals 4.1% (15/365 days) of annual income
Maternity Leave Mothers are entitled to a total of 90 days, broken down into 45 days before the expected due date and 45 after the birth of the child. This equals 4.78% (90/365 days) of annual income
Paternity Leave For the birth of a child, fathers are entitled to 3 days’ pay. This equals 0.82% (3/365 days) of annual income
Sick Leave Workers receive five fully paid sick days per year This equals 1.36% (5/365 days) of annual income
Overtime Overtime is treated as extraordinary working hours.
They must be compensated with a 100% extra pay, and must not exceed a total of two hours per day.
Extra pay of 100% also applies to work done during public holidays. Maximum overtime is 40 hours a month.
Normal hourly rate is around 53 BOB. Overtime is paid at an additional 53 BOB.
Severance Severance for unjustified dismissal is equal to one month pay for each year of service. This equals 8.33% (1/12 months) of annual income
13th Month 13th month pay is mandatory and tax-free up to one month’s wages.
14th-month is also mandatory as a holiday bonus if GDP is over 4.5%
This equals 16.66% (2/12 months) of annual income
Social Security Employers and employees are required to make social security contributions based on the total monthly remuneration.
The following are the contribution rates: - Social Security Office 10%; Housing Fund 2%; Soliadity Fund 3%.
This equals 15% of annual income

 

 

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