On 25 June 2014, the Bolivian Deputies Chamber approved Bill 322/2014 - 2015, which introduces transfer pricing regulations in connection with Bolivia's Investment Promotion Act 516.
The transfer pricing rules cover transactions with both resident and non-resident related parties, and apply only to corporate income tax.
The definition of related parties is in line with the OECD model. This includes when a natural person or legal entity is involved in the direction, control, management or capital ownership of another party, or a third party is involved in the direction, control, management or capital ownership of both parties.
The tax authorities may apply the following methods for determining an arm's length price:
The transactional notorious price in transparent markets methods may also be used. This is a method commonly included as a 6th method in the transfer pricing rules of South American countries for transactions involving commodities with well-known market prices.
There are no specified preferred methods and the best method for the transaction should be applied. If none of the above methods are appropriate, other methods may be used.
The Bill amends the Customs Act by empowering the customs authorities to require transfer pricing studies for customs purposes.
Transfer pricing audits should be done within 12 months, but may be extended an additional 12 months.
The bill must now be approved by the Reviewer Chamber and signed by the President .The regulations will apply from 1 January 2015 for commercial companies, and 1 April 2015 for industrial companies.
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