Bolivia's new Supreme Decree 5563 introduces a comprehensive tax reform package designed to stimulate economic growth through reinvestment incentives for foreign companies, accelerated depreciation benefits for businesses, expanded deductions for self-employed professionals, and bad debt relief provisions—all aimed at attracting international capital and supporting domestic enterprises.
The Bolivian government enacted Supreme Decree 5563 on 6 March 2026, offering significant tax reductions to foreign companies that reinvest their earnings within the country rather than sending them abroad.
The decree modifies the Tax on the Profits of Companies – Beneficiaries from Abroad (IUE-BE) through a sliding scale system. Companies reinvesting over 75% of their profits qualify for the lowest rate of just 3.125%. Those reinvesting between 50% and 74.99% pay 6.25%, while reinvestment of 25% to 49.99% results in an 11.25% rate.
Qualifying reinvestments include purchasing fixed assets and inventory, upgrading technology, and expanding business operations. The policy applies to both foreign shareholders of Bolivian companies and local branches of international corporations.
To prevent abuse, companies must maintain reinvested funds in dedicated equity reserve accounts. Businesses that falsely claim reinvestment or later withdraw these funds face tax penalties under Bolivia’s Tax Code.
Operating under Law 1613 of the General State Budget, the measure aims to attract international capital, stabilise foreign exchange reserves, and drive sustainable economic development in Bolivia.
Accelerated depreciation for business equipment
The measure allows businesses and independent professionals to depreciate machinery and equipment in half the standard time. Agricultural machinery with a four-year lifespan, for instance, can now be written off in two years, accelerating investment recovery and encouraging technology modernisation.
This benefit is voluntary and applies to assets purchased during fiscal year 2026 and directly lowers the Corporate Income Tax (IUE) base.
To take advantage of this option, taxpayers must notify the Tax Administration of their decision. The measure covers most economic sectors, with the exception of mining and hydrocarbon companies, which are governed by specific sector regulations.
Broader tax credits for self-employed individuals
Self-employed workers gain access to expanded tax deductions. They can now claim credits for family expenses, including food, clothing, healthcare, and life insurance. Professional costs like transportation, fuel, training, and utilities also qualify when invoiced under the taxpayer’s name, providing meaningful financial relief for consultants and independent contractors.
Bad debt relief
Companies can deduct uncollected customer debts as expenses, using previous fiscal year losses or substantial current-year amounts as benchmarks. This provision acknowledges actual cash flow challenges, preventing businesses from paying taxes on unrealised income and strengthening Bolivia’s commercial sector.
