How to open a company in Bolivia as a foreigner

Bolivia is one of the South American countries that is extremely rich in natural resources. Opening a company in Bolivia is an interesting opportunity for many investors and entrepreneurs, as the country is experiencing increased trade and improved business opportunities.

Benefits of Starting a Business in Bolivia

Natural Resources

Bolivia is rich in resources, including natural gas, minerals, and agricultural products. This opens up business opportunities in industries such as mining, energy, and agriculture.

Strategic Location

Bolivia’s location in South America provides a strategic advantage for companies looking to expand their operations in the region. The country has access to several major transportation routes, including highways and railroads that connect it to neighboring countries.

Growing Economy

Bolivia’s economy has been growing in recent years, with an average annual growth rate of about 4%. This growth has been driven by a combination of government policies and foreign investment.

Favorable Business Environment

The Bolivian government has taken a number of measures to attract foreign investment and support local businesses. For example, foreign investors can take advantage of tax incentives, simplified business setup procedures, and other benefits.

Skilled Workforce

Bolivia has a young and educated workforce, with many professionals in fields such as engineering, technology, and finance. This offers opportunities for businesses that require skilled labor.

Cultural Diversity

Bolivia is a multicultural country with a rich history and a diverse population. This creates opportunities for businesses that can serve the unique needs and preferences of different customer groups.

Types of Companies

The most common types of legal entities in Bolivia are:

• Limited Liability Company (Sociedad de responsabilidad limitada, SRL): This is the simplest legal structure and is most common for most types of activities. It requires the appointment of a legal representative in the company's bylaws, a financial address, a minimum of two shareholders, and a minimum capital of $500.
• Corporation (Sociedad Anónima): is suitable for medium to large companies. Corporations require three directors (one must be a Bolivian resident) and three shareholders, who can be foreigners or locals. Incorporating a corporation also requires a Síndico (controller), auditor, and a fiscal address. Companies that earn more than $160,000 must file annual financial statements with the tax authorities and SEPREC (Multinational Service of the Commercial Registry).
• Branch (Sucursal): Establishing a branch in Bolivia provides your foreign parent company with full ownership, with 100% participation. To begin this process, you must formally register a branch in Bolivia and appoint a legal representative, who must be a resident of Bolivia and have a local fiscal address.

If your shareholders are not present in Bolivia, a Power of Attorney (POA) will be required, which allows your legal representative to carry out the process locally. This power of attorney must be signed by the appropriate party.

Also note that additional documentation will be required for foreign shareholders.

All documentation that comes from abroad must be properly legalized and apostilled (if applicable), and these printed documents must be sent to Bolivia. Finally, note that documentation that is not written in Spanish will require translation to be accepted by local agencies.

Steps to Register a Company

• Name Reservation: The first step is to make sure that the name of the company you want to create is not already in use. To do this, you must request a name reservation from the Mercantile Registry.
• Preparing the Public Act: Once you have a company name, a public act must be prepared by a notary public. This act must include the company's details such as the name, the type of activity to be carried out, the share capital, etc.
• Registration in the Mercantile Registry: Once the public act has been prepared, the company must be registered in the Bolivian Mercantile Registry. To do this, it is necessary to provide a public deed along with other documents such as the registration application form and payment of the relevant fees.
• Obtaining a NIT: The company must also obtain a NIT (tax identification number), which is a number assigned to companies so that they can meet their tax obligations.
• Registering with the Social Security Authority: The company must register with the Social Security Authority to be able to meet its labor obligations.
• Obtaining Licenses and Permits: Depending on the activities carried out by the company, it may be necessary to obtain additional licenses and permits from other regulatory authorities.
• Opening a Bank Account: The company must open a bank account with a financial institution to be able to carry out its business operations.

Taxes

In Bolivia, companies are subject to various types of taxes that must be paid be paid to the government. The most common taxes are:

• Income Tax (IUE): This is a tax that taxes the profits made by companies. The percentage varies depending on the level of income of the company. The percentage for companies with an annual income of up to 15 million bolivianos is 25%. For companies with an income of more than 15 million bolivianos, the percentage is 32.5%.
• Value Added Tax (VAT): This is a tax levied on the sale of goods and services. The percentage is 13%, with some exceptions, such as the sale of food and medicine, which are exempt from the tax or have a reduced rate of 6.5%.
• Financial Transaction Tax (ITF): This is a tax that taxes financial transactions carried out by companies, such as bank transfers and checks. The percentage is 0.15%.
• Property Tax (IPBI): This is a tax that taxes the ownership of real estate such as land, buildings and houses. The percentage varies depending on the taxable value of the property and can be up to 3% of the taxable value.
• Immovable Property Transfer Tax (ITBI): This is a tax that taxes the transfer of real estate. The percentage is 3% of the transaction value.