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Bolivia: Selected Issues

Author(s):
International Monetary Fund
Published Date:
July 2007
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II. Tax System: Structure and Reform Options1

A. Introduction

1. In recent years Bolivia experienced a marked increase in revenue collection mostly due to a large increase in hydrocarbon royalties. The favorable external environment, reflected in a more than doubling in natural gas export prices, and a change in the tax take, which more than doubled the level of royalties, are the main factors underlying an increase in hydrocarbon royalties by about 8 percentage points of GDP in the period 2003–06.2 Revenues from regular taxation3 also increased in the same period, by about 4 percentage points of GDP, reflecting higher growth, improved corporate income tax collections from the hydrocarbons sector, the impact of tax administration reforms, and improvements in taxpayer compliance. These revenue developments, coupled with slow growth of spending, resulted in a large shift in the overall fiscal balance—from a deficit of about 8 percent of GDP in 2003 to a surplus of about 5 percent of GDP in 2006.

2. The drastic change in the fiscal situation provides a good opportunity to review the tax system with a focus on strengthening its capacity to collect revenues efficiently and equitably. In the period 2001–04, the high fiscal deficits were driven by large increases in spending related to social tensions, which were not accompanied by increases in revenue. The concerns created by the high deficit and the difficulties in adjusting spending, led to the adoption of stop-gap tax policy measures (such as the introduction of a financial transactions tax), with a clear loss in terms of efficiency and equity. The strengthening in the fiscal position provides a chance to analyze the tax system with a focus on these two key dimensions, and to consider reform options.

3. This chapter reviews the main elements of Bolivia’s tax system and discusses options to improve its efficiency and equity. It focuses on the main national taxes4 and special regimes and is divided in four sections. Section B describes the main groups of taxes forming the Bolivian tax system, recent developments in the level and composition of revenues and recent modifications to the system. Section C discusses main issues related to each group of taxes and special regimes. Section D discusses reform options.

B. Tax System: Structure and Recent Developments5

4. Bolivia has a relatively simple tax system, based mainly on consumption taxes (Table 1). These include the value added tax (VAT), a transactions tax (IT), a financial transactions tax (ITF), and two types of excise taxes—excise taxes on beverages, tobacco, and vehicles (ICE); and excise taxes on hydrocarbons and its derivative products (IEHD). Revenue from these taxes averaged about 11 percent of GDP, and represented on average about 57 percent of tax revenue6 in the period 2001–06.

Table 1:Bolivia: Tax Revenues of the General Government
200120022003200420052006
(As a percent of GDP)
Tax Revenues16.416.116.218.723.827.0
Taxes on Goods and Services10.110.49.910.812.612.0
Value added tax (net) (IVA))5.05.45.55.66.26.4
Domestic Market2.93.03.33.13.13.4
Imports2.73.02.83.23.73.6
VAT Refunds (CEDEIM)-0.6-0.6-0.6-0.6-0.6-0.6
Transactions tax (IT)1.81.91.92.32.22.0
Financial Transactions Tax (ITF)0.00.00.00.50.80.5
Excises on non-hydrocarbon products (ICE)0.80.70.70.80.90.9
Excises on hydrocarbon products (IEHD)2.42.31.71.62.52.2
Taxes on income and profits2.32.22.02.33.13.5
Corporate Income tax (IUE)1.91.91.82.02.83.2
Hydrocarbons sector0.40.20.30.50.91.1
Other Sectors1.61.71.51.52.02.1
Complementary tax to VAT (RC-IVA)0.40.40.30.30.30.2
Property taxes1.01.01.01.21.00.9
Royalties2.72.42.93.56.710.1
Mining0.10.10.10.10.20.5
Hidrocarbons (including IDH)2.62.32.83.46.69.7
Taxes on International Trade1.11.00.91.01.01.0
Custom duties1.11.00.91.01.01.0
Other tax revenues0.20.10.41.20.30.3
Of which tax amnesties0.20.00.21.10.00.0
Of which special regimes0.00.00.00.00.00.0
(As a share of total tax revenues)
Tax Revenues100.0100.0100.0100.0100.0100.0
Taxes on Goods and Services61.464.361.457.753.144.7
Value added tax (net) (IVA))30.433.634.130.126.223.8
Domestic Market17.618.520.316.713.112.5
Imports16.718.817.416.815.513.4
VAT Refunds (CEDEIM)-3.9-3.7-3.6-3.5-2.4-2.1
Transactions tax (IT)11.212.112.012.19.47.5
Financial Transactions Tax (ITF)0.00.00.02.43.51.9
Excises on non-hydrocarbon products (ICE)5.24.34.64.23.73.2
Excises on hydrocarbon products (IEHD)14.714.310.78.810.48.3
Taxes on income and profits14.313.812.612.213.112.9
Corporate Income tax (IUE)11.711.610.810.711.912.0
Hydrocarbons sector2.21.21.72.53.74.2
Other Sectors9.510.49.18.38.27.8
Complementary tax to VAT (RC-IVA)2.62.21.71.51.20.9
Property taxes5.96.36.16.24.23.5
Royalties16.514.818.118.528.337.5
Mining0.50.50.50.60.71.7
Hidrocarbons (including IDH)16.014.217.617.927.735.9
Taxes on International Trade6.46.45.65.14.33.8
Custom duties6.46.45.65.14.33.8
Other tax revenues1.40.72.46.51.21.1
Of which tax amnesties1.20.31.56.10.20.1
Of which special regimes0.10.10.10.10.10.1
Memorandum items:
Tax Revenues excluding royalties and amnesties (%GDP)13.513.713.014.117.016.8
Nominal GDP (in million of bolivianos)53,790.356,682.361,904.469,626.176,153.889,434.1
Sources: Financial Programing Unit (UPF), Bolivian Tax Service (SIN) and Staff Estimates.
Sources: Financial Programing Unit (UPF), Bolivian Tax Service (SIN) and Staff Estimates.

5. In recent years the composition of tax revenue has been changing and the importance of royalties has increased sharply. In addition to the large increases in prices of gas and tax take from hydrocarbons, mining royalties have also boomed due to high international prices. Since 2003, the share of royalties in tax revenue has more than doubled, reaching 37½ percent in 2006. Similarly, the overall contribution of the hydrocarbon sector to tax revenue (which includes corporate income tax payments by the sector) has risen by about 20 percentage points, to over 50 percent in 2006.

6. The other main components of the tax system include taxes on income and profit, custom duties, subnational property taxes, and special regimes for small taxpayers and for certain regions. While Bolivia does not have a personal income tax, it has RC-IVA, a tax mostly on wages and interest income whose revenue, has been gradually declining, and a corporate income tax (IUE), which, in contrast, has been showing some improvement in collections. Regarding special regimes, these apply to small taxpayers in trade (RTS), transport (RTI), and agriculture (RAU), whose revenues have been negligible. The special regimes for regions include free trade zones and a set of special tax exemptions.

7. Following the adoption of the current tax code in 2003, and the introduction of a financial transactions tax in 2004, the changes in the tax system were mainly in hydrocarbons, with only modest changes in other areas. In 2005, a new direct tax on hydrocarbons (IDH) was introduced, implying a de facto increase in the royalty level, from 18 percent to 50 percent. Also, IEHD excises on diesel and gasoline were increased. In 2006, there was a reduction in the rate of the financial transactions tax, from 0.25 percent to 0.15 percent, along with a narrowing of the definition of its base to cover only transactions in foreign currency. In addition, passenger transportation services between regional departments were moved from the RTI special regime into the regular regime.

C. Key Tax Policy Issues

8. This section discusses issues that should be addressed concerning the three main groups of taxes covered in this chapter. The first part discusses issues with taxes on income and profits, the second part discusses issues regarding taxes on goods and services, and the third part discusses issues related to the special regimes for small taxpayers and the special regimes for certain regions.

Taxes on profit and income

9. The complementary tax to VAT (RC-IVA). The RC-IVA was designed to strengthen control over sales of retailers to the final consumers. However, the presentation of fraudulent invoices or sale of invoices from taxpayers with excess credits in a secondary market, have become difficult and administratively costly to control. This has resulted in a continued decline in revenue. Moreover, the associated liability is an increasing function of savings, which provides an incentive to increase consumption. More fundamentally, the RC-IVA is effectively a narrow base version of a personal income tax. The tax base is made up of only a few types of income and given the problem with invoices, most of the collections come from interest withholding (which is final) and concentrates the burden on taxpayers with this type of income. In addition, it does not provide the kind of progressivity to the tax system that a more general personal income tax with a progressive rate schedule would.

10. The corporate income tax (IUE). While the tax base of the IUE has grown with respect to previous estimations, there is evidence that it remains significantly below its potential. Table 2 compares the share of revenues obtained from a sector in total IUE collections with its share in GDP and computes implicit IUE tax bases for each sector and for IUE as a whole. The share of certain sectors (e.g. agriculture and hotels/restaurants) in total IUE collections is well below their share in GDP. Moreover, the implied IUE tax base is only about 11 percent of the GDP generated in the different sectors while the statutory corporate income tax rate is 25 percent. The relatively small size of the tax base relative to its potential is likely to be related to several mechanisms of tax avoidance that are not adequately addressed in the legislation. These include, among others: (a) transfer pricing: subsidiaries selling their output at artificially low prices to shift their profits to a country with lower tax burden (b) thin capitalization (companies have artificial incentives to borrow either from banks or related companies to inflate the interest bill that is tax deductible); (c) exemptions, such as for companies operating in certain free trade zones, and for capital gains from assets registered in the stock market; and (d) generous loss carry over provisions. In addition, the fact that only profits generated in Bolivia are part of the tax base reduces incentives for domestic investment.

Table 2-Bolivia: Selected information on the Corporate Income Tax and the VAT
2.1 Corporate income tax collections, Sectoral GDP 2/ and Implicit Tax bases
In millions of Bolivianos% of total collections% of total GDP 1/In millions of bolivianosIn percent
SectorIUE collections 2006 4/Sectoral GDPIUE collections 2006Sectoral GDPImplicit Tax Base 3/Implicit base/Sectoral GDP
Agriculture, hubsbandry and fishing9.69759.70.513.438.50.4
Mining and Quarrying547.39890.427.613.62189.222.1
Manufacturing411.910301.820.814.21647.516.0
Electricity, Gas and Water150.12118.97.62.9600.428.3
Construction39.31578.82.02.2157.410.0
Commerce298.15647.415.07.81192.621.1
Hotels and Restaurants12.22268.00.63.148.72.1
Transport, Storage and Communications151.79094.47.612.5606.86.7
Financial Services253.77823.912.810.81014.713.0
Communal and social services73.53995.93.75.5294.07.4
Public Administration37.510184.81.914.0150.01.5
Total1984.972664.07939.710.9
Statutory Corporate Income Tax Rate25.0
2.2 Productivity of VAT
200120022003200420052006
(in millions of Bolivianos)
GDP53790.356682.361904.469626.176153.889434.1
Final Consumption48957.350893.254187.658601.463067.069810.2
Total Gross VAT collection3035.03413.03780.24372.35187.86251.9
VAT refunds to exporters348.4340.5363.2450.5444.3512.2
Net VAT collection2686.63072.53417.03921.84743.55739.7
Stock of owed VAT refunds to the domestic market0.00.00.00.0514.0392.6
Net VAT collection as a percent of GDP5.05.45.55.65.66.6
C-Efficiency (using Net VAT collection) (in percent) 5/36.840.542.344.945.056.3
C-Efficiency (using Gross VAT collection) (in percent) 5/41.645.046.850.155.260.1
2.3 VAT Statutory Rates and C-Efficiency in Countries of the Region 6/
CountryRateC-Efficiency
Argentina21.045.0
Bolivia14.960.1
Chile19.062.3
Colombia16.047.4
Ecuador12.055.8
Paraguay10.066.6
Peru18.051.0
Uruguay23.049.5
Sources: Financial Programing Unit (UPF), Bolivian Tax Service (SIN), National Statistical Office (INE), VAT Productivity Database-IMF, and staff estimates.

The definition of total GDP is GDP at factor cost plus imputed banking services

The definition of sectors used by the tax administration matches the one from the statistical office.

The implicit tax base is the total IUE collection (for the sector or for the sum of sectors) divided by the IUE tax rate of 25 percent.

The total IUE revenues will not necessarily coincide with the total revenues as not all revenues are matched to a specific sector.

C-Efficiency (using gross VAT collection) is the ratio of gross VAT collection divided by final consumption and the standard statutory rate of 14.9 percent. The net version of the calculation uses net revenue

C-Efficiency is computed using Gross VAT collections for cross country comparison as data on refunds and stock of owed refunds is not available for several countries.

Sources: Financial Programing Unit (UPF), Bolivian Tax Service (SIN), National Statistical Office (INE), VAT Productivity Database-IMF, and staff estimates.

The definition of total GDP is GDP at factor cost plus imputed banking services

The definition of sectors used by the tax administration matches the one from the statistical office.

The implicit tax base is the total IUE collection (for the sector or for the sum of sectors) divided by the IUE tax rate of 25 percent.

The total IUE revenues will not necessarily coincide with the total revenues as not all revenues are matched to a specific sector.

C-Efficiency (using gross VAT collection) is the ratio of gross VAT collection divided by final consumption and the standard statutory rate of 14.9 percent. The net version of the calculation uses net revenue

C-Efficiency is computed using Gross VAT collections for cross country comparison as data on refunds and stock of owed refunds is not available for several countries.

Taxes on goods and services

11. The transactions tax (IT). In its current form, the IT is acting as a de facto minimum profit tax and is an important source of revenue. The base of the tax is essentially gross income or sales and the payment of the IUE can be deducted for the computation of the tax liability of the IT, characteristics that are similar to the ones a minimum profit tax on turnover. However, the tax generates several distortions. First, it is a “cascading” tax, i.e., it penalizes businesses that have many stages of production, thereby providing distortionary incentives to vertical integration. Second, it penalizes domestic production as importers are not subject to the tax. Finally, exporters typically cannot get a refund for the IT on their inputs, which artificially makes them less competitive.

12. The financial transactions tax (ITF). The financial transactions tax was created in 2004, in a context of emergency revenue need, for an initial period of two years. The tax rate was initially set at 0.30 percent for both credits and debits, and then reduced to 0.25 percent in 2005. In 2006, the ITF was made permanent, its rate was reduced further to 0.15 percent, and transactions in bolivianos were exempted as part of the government’s strategy to reduce dollarization. While the ITF provided needed revenues in a crisis situation, its costs may outweigh its benefits given the improved fiscal position. In particular, it increases the costs of financial intermediation, a large share of which remains denominated in U.S. dollars.

13. The value added tax (VAT). The VAT is in general a well designed tax and its efficiency has improved in recent years. Its productivity, as measured by the C-efficiency coefficient has been growing, and there has been an important increase in collection levels as a share of GDP7 (Table 2). This is likely to reflect a combination of a stronger level of economic activity and an improvement in tax administration. Some aspects, however, could be strengthened. First, excise taxes are not included in the base of the VAT, which runs against the externality correction function of excises. Second, fraudulent invoicing has contributed to the setting of discretionary limits to the amount of refunds that can be paid to certain sectors, leading to an accumulation of unpaid refunds to some exporters. Finally, the regulation of the tax does not clearly define what constitutes an export of a service.

14. Excise taxes (ICE and IEHD). Although the introduction of tax amnesties has been avoided in the last two years, the repeated use of such amnesties in the past eroded the base of the ICE. In particular, tax amnesties on imported vehicles as a source of revenue in the crisis years has contributes to a continued expectation of future amnesties. In addition to evasion problems with vehicles, some studies provided evidence of significant evasion in the collection of excises on tobacco and beverages. Regarding the IEHD, the administrative nature of the adjustment of rates, coupled with incentives to use IEHD rates to keep domestic retail prices of hydrocarbon products low, has typically hurt IEHD revenues and hindered the externality correction role of the tax.

Special regimes for small taxpayers and regions

15. The system of special regimes for small taxpayers has several features that reduce the efficiency and equity of the tax system. First, the treatment of taxpayers on the basis of the type of activity allows taxpayers that should normally be taxed in the regular regime to obtain a preferential tax treatment by dividing up their activities (thereby favoring large taxpayers who can easily divide up their activities). Second, within the same type of activity, it favors unfair competition by informal businesses, as the latter are typically treated under the special regimes under advantageous conditions. Third, given that informality is favored, it makes tax evasion and smuggling more difficult to control, particularly for some taxes such as the VAT, given that special regime taxpayers are not allowed to issue invoices. Finally, the several categories of special regimes generate costs and difficulties for the tax administration, diverting valuable resources that could be used more efficiently to monitor larger taxpayers.

16. The special tax regimes or free trade zone is overly complex and provides numerous opportunities for tax avoidance or evasion. There are currently 14 free trade zones and several elements of legislation exempting certain regions from a specific group of taxes. While the authorities have limited the impact of these laws with the related regulation, the special concessions granted to certain regions have provided arguments to other regions to ask for similar treatment, leading to further complexity. Regarding the avoidance problem, by locating activities in a specific region, or by exploiting ambiguities in a complex legislation, certain group of taxpayers have been able to artificially reduce their tax burden. For example, some enterprises use free trade zones exemption to IUE to distribute dividends to local shareholders, and they similarly can avoid paying VAT. In addition, the fact that the tax administration is overburdened leads to a perception of low risk and provides taxpayers with significant opportunities for tax evasion. This is evidenced, for example, by the low level of taxpayer compliance in the regime covering the transportation sector, where the evasion rate reached a high of about 70 percent before some taxpayers were shifted in 2006 to the regular regime.

Box:Summary of Key Tax Policy Issues and Recommendations

Key tax policy issues

  • The complementary tax to VAT (RC-IVA) is hampered by evasion and a narrow base, and adds little progressivity to the tax system.
  • The corporate income tax (IUE) tax base remains significantly below its potential due to loopholes in the legislation that allow several forms of tax avoidance and exclusion of profits generated outside Bolivia.
  • The transactions tax (IT) provides distortionary incentives to vertical integration and has features that penalize domestic production and exports.
  • The financial transactions tax (ITF) entails distortions to financial intermediation that may outweigh its benefits in terms of revenue generation.
  • Excise taxes (ICE and IEHD) have been hampered by the repeated use of tax amnesties and tax evasion problems. Moreover, the administrative adjustments of IEHD rates to keep domestic hydrocarbons prices low have hurt IEHD revenues.
  • Special regimes for small taxpayers and regions are complex to administer and facilitate tax avoidance and evasion.

Main recommendations

  • Eliminate the RC-IVA and replace it with a well designed personal income tax.
  • Strengthen the corporate income tax by eliminating loopholes that facilitate the erosion of its base.
  • Eliminate the transactions tax and replace its revenues through an increase in the VAT rate.
  • Raise the level of excises for hydrocarbons and non-hydrocarbons as a share of the final price to levels comparable to neighboring countries in the context of a gradual adjustment of hydrocarbon prices to market levels.
  • Simplify special regimes for small taxpayers and rationalize the number of tax exemptions granted to regions and the number of free trade zones.
  • Continue strengthening of the tax administration by recruiting staff on the basis of merit and provide adequate resources to ensure competitive pay and the availability of necessary technology.

D. Reform Options

17. The above discussion suggests that some taxes have weak bases, high administrative costs, and a distortionary impact. The tax system has been complicated by the introduction of several special regimes for small taxpayers and particular regions that generate incentives for informality and tax evasion, and also treat differently taxpayers with potentially similar capacity to pay, depending on their characteristics such as the type of economic activity. Finally, given the important reliance on taxes on goods and services and the lack of a well functioning personal income tax, there is little progressivity in the system, an essential characteristic for vertical equity. In order to address these issues and avoid a further increase in the dependence on hydrocarbon revenues, reforms could be considered based on an appropriate combination over time of the following measures:

  • Eliminating the RC-IVA and replacing it with a well designed personal income tax. A simple tax design with moderate marginal rates (e.g. between 5 and 25 percent), a high exemption threshold, standardized deductions, and a broad tax base covering all sources of income would help improve efficiency and strengthen the vertical and horizontal equity in the tax system. While the yield of the measure will ultimately depend on the exact design of the tax, a personal income tax with these characteristics could yield a gross revenue level of 1 percent of GDP. After deducting the revenue loss from the elimination of the RC-IVA and other related changes, the net revenue gain could be around 0.5 percent of GDP.
  • Eliminating the transactions tax and replacing its revenues through an increase in the VAT rate. This would limit the problems related to cascading, artificial disincentives to domestic production, and reduction in competitiveness of exporters. Depending on how much the elimination of the IT would affect the base of the VAT, an increase in the gross VAT rate of between 4 and 5 points would be needed to compensate for lost revenues from the IT. Given the current rate of 13 percent, this would leave Bolivia with a VAT rate closer to those of neighboring countries (Table 2).
  • Strengthening the corporate income tax by eliminating loopholes that facilitate the erosion of its base. This includes: (a) implementing guidelines on transfer pricing in line with the OECD guidelines; (b) limiting the possibilities for interest deductions, to avoid thin capitalization; (c) eliminating the exemption for capital gains from assets registered in the stock market; (d) limiting loss carry over provisions; and (e) making the tax apply to worldwide profits and not only to profits generated in Bolivia. In addition, given that the IT would not longer act as a minimum profit tax, a 1 percent minimum profit tax based on assets could be introduced temporarily, as several countries in the region have done to ensure a certain level of revenue during the transition to the reformed IUE. While it is very difficult to quantify ex-ante the yield of such measures, about 0.3 percent of GDP would be a conservative estimate.
  • Simplifying special regimes for small taxpayers and rationalizing the number of tax exemptions granted to regions and the number of free trade zones. The simplification of the special regime for small taxpayers could be achieved by replacing them with a unique regime for small taxpayers. Two thresholds based on turnover would be introduced—a lower threshold below which the taxpayer would be exempt from the VAT and IUE, and a higher one above which taxpayers would have to contribute to the regular regime. Taxpayers in between these thresholds would only pay the corporate income tax, on a presumptive basis. Exemptions for regions and free trade zones should be reviewed and their coverage reduced to a minimum, taking into account a quantification of their associated tax expenditures.
  • Raising the level of excises for hydrocarbons and non-hydrocarbons as a share of the final price to levels comparable to neighboring countries. The former should be undertaken in the context of a gradual adjustment of hydrocarbon prices to market levels. Avoiding erosion of the level of excises as a share of the final price is important to ensure that there is adequate correction for the externalities typically generated by the consumption of the covered goods. However, and particularly in the case of the ICE, these changes will need to be accompanied by increased tax administration efforts to fight evasion and smuggling. Depending on the magnitudes of adjustment in prices and rates, this reform could generate significant additional revenue.

18. The effectiveness of the above tax policy reforms would hinge on continued improvement in tax administration. In this connection, efforts should continue to recruit staff on the basis of merit and to provide the necessary resources to the tax and customs administrations, so that these institutions can pay competitively to their staff and acquire the necessary technology to support appropriate revenue administration procedures.

Appendix 1: Bolivia: Summary of the Tax System
TAX CategoryTax Name AbbreviationTax NameLevel to which the tax appliesSummary of Tax Rates and BasesValid Since
Goods and ServicesIVAValue Added TaxNational13% on net sale priceApril 1987 (Law 843)
ITTransactions TaxNational3% on accrued gross incomeApril 1987 (Law 843)
ITFFinancial Transactions TaxNational1,5 x 1000 (per taxed financial transaction)July 2006 (Law 3446)
ICEExcise Tax on Non Hydrocarbon ProductsNationalSpecific excise in Bolivianos per liter that varies depending on the beverage product.April 1987 (Law 843) and July 1995 (Law 1606)
Ad valorem rates: 50% for tobacco and 18% or 10% depending on the type taxable vehicles.
IEHDExcise Tax on Hydrocarbon ProductsNationalSpecific excise in Bolivianos per liter that varies depending on the hydrocarbon productJuly 1995 (Law 1606)
Income and ProfitIUECorporate Income TaxNational25% on net profit and 25% on extraordinary profitsJanuary 1995 (Law 1606).
SURTAX (Additional tax in addition to the regular corporate income tax)25% on extraordinary profits, if applicable for specific activities.January 1997 (Law 1731).
RC - IVAComplementary Tax to the VATNational13% over net incomeApril 1987 (Law 843)
RoyaltiesIDHDirect tax on hydrocarbonsNational32% applied to the value of hydrocarbons production out of the well or in its first comercialization stage.May 2005 (Law 3058)
ICMComplementary Tax on MiningSubnationalVaries depending on whether the mineral is metallic or not.March 1997 (Law 1777)
Special RegimesRTSSimplified regime for small commerce and artisansNationalFixed amount by category, according to the level of investment carried out between approved maximum and minimum.1987. Supreme Decree 21521
STISimplified regime for urban transport ot passengers and cargoNationalFixed amount by category, according to an approved scale depending on income.1987. Supreme Decree 21642
RAUSimplified regime for small agricultural propertiesNationalFixed amount by por hectare depending on the zone, type of activity y and land size of agricultural property1987. Supreme decree 24463
International TradeGACustom DutiesNationalVaries according to the good and commercial agreements betwen 0%, 5% y 10%1985. Supreme Decree 21060
Other TaxesITGBTax on Estates and Free Transfer of GoodsNational1%, 10% y 20% applied to the value of goods and rightsApril 1987 (Law 843)
ISAETax to air travel to other countriesNational176 Bolivianos per any trip outside Bolivia (Value valid since December 2006)March 1990 (Law 1141)
Subnantional TaxesIMTMunicipal Transfer TaxSubnational3% of the value of the transfer transaction1987. Supreme Decree 21521
IPBITax on Urban and Rural Real Estate PropertySubnationalVaries according to the zone, type of construction and services availableJanuary 1995 (Law 1606)
IPVATax on Vehicle PropertySubnationalVaries according to horsepower, model and origin (Escalas).January 1995 (Law 1606)
T y PMMunicipal Patents and FeesSubnationalVaries according to the square footage and type of economic activity1999 (Law on Municipalities)
References

    CoelhoIsaias;EbrillLiam P. andVictoriaP. Summers2001“Bank Debit Taxes in Latin America - An Analysis of Recent Trends,”IMF Working Paper No. 01/67 (Washington: International Monetary Fund).

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1Prepared by Alejandro Simone.
2Royalties were increased in 2005, from 18 percent to 50 percent of the production value. An additional temporary royalty of 32 percent on the production of the two largest gas fields for the national oil company YPFB was established in the May 2006 nationalization decree, and lasted until April 2007.
3Revenues from regular taxation exclude royalties and revenue from tax amnesties.
4The paper does not cover issues related to trade taxes, sub national taxation and the sector-specific hydrocarbon and mining taxation regimes.
5Appendix I provides a more detailed description of the Bolivian tax system.
6Unless indicated otherwise, “tax revenue” refers to the total tax revenue of the general government.
7The level of C-efficiency compares favorably with other countries in the region (Table 2), which is in part due to the fact that the Bolivian VAT has one of the fewest numbers of exempted goods and services.

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