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Update - Bolivia's Transfer Pricing Regulations Published

On 24 July 2014, Bolivia's new transfer pricing regulations were published in Law No. 549 in the country's Official Gazette. The law sets out the transfer pricing regulations in connection with Bolivia's Investment Promotion Act 516.

Application

The transfer pricing rules cover transactions with both resident and non-resident related parties, and apply only to corporate income tax.

Definition of Related Parties

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.

Transfer Pricing Methods

The tax authorities may apply the following methods for determining an arm's length price:

  • Comparable uncontrolled price
  • Resale price
  • Cost plus
  • Transactional net margin
  • Transactional profit split

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.

Transfer Pricing Studies

The Bill amends the Customs Act by empowering the customs authorities to require transfer pricing studies from importers for customs purposes in regard to their transactions with related parties.

Transfer Pricing Audits

Transfer pricing audits should be done within 12 months, but may be extended an additional 12 months.

Effective Date

The regulations will apply from first day following the close of a company's fiscal-year in 2015. Generally 1 January 2015 for commercial companies, and 1 April 2015 for industrial companies.

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