Bolivia introduces tax incentives for foreign reinvestment, updates excise duties

Bolivia's Supreme Decree 5563 introduces tiered withholding tax reductions for foreign investors who reinvest profits locally, with rates dropping as low as 3.125% for reinvestment above 75%. The reforms also include accelerated depreciation for 2026 asset purchases, expanded deductions for bad debts and professional expenses, and updated excise duties on beverages and commercial vehicles.

Bolivia has introduced tax reforms through Supreme Decree 5563 to encourage foreign investors to reinvest profits domestically and support economic growth. The decree was published in the Official Gazette on 2 March 2026 and took effect immediately.

Reinvestment incentives for foreign investors

The new framework offers significant tax benefits to non-resident shareholders and foreign entities operating in Bolivia who choose to reinvest their profits. To qualify, reinvested amounts must be capitalised through equity reserve accounts and directed toward fixed assets, inventory, or expansion projects.

The withholding tax on distributed profits varies based on reinvestment levels:

• 3.125% when reinvestment reaches 75% or more
• 6.25% for reinvestment between 50% and 74.99%
• 11.25% for reinvestment between 25% and 49.99%

Corporate tax relief measures

Several provisions aim to boost business activity during 2026. Companies purchasing fixed assets between 1 January and 31 December 2026 can apply accelerated depreciation using half the standard useful life periods, effectively doubling depreciation rates. This benefit excludes the oil and mining sectors.

For bad debt deductions in 2026, businesses may claim the higher amount between actual 2025 bad debts or 60% of actual 2026 bad debts. Additionally, self-employed professionals can now deduct personal expenses, including food, clothing, education, transportation, health insurance, and basic services when invoiced in their name.

Updated excise tax rates

Supreme Decree 5563 also revises excise tax (ICE) rates on beverages and vehicles. Energy drinks now carry 5.74 Bolivianos per litre, while bottled soft drinks are taxed at 0.51 Bolivianos per litre. Whisky faces the highest rate at 16.49 Bolivianos per litre plus 10%, whereas singani carries 3.94 Bolivianos per litre plus 5%.

Diesel-powered road tractors for commercial use receive a temporary flat 15% ICE rate through 31 December 2026, regardless of vehicle age.

The full excise duty list is as follows:

Finally, the Decree has eliminated the condition that corporate income tax (IUE) must be paid “by its due date” to qualify for a credit against the transactions tax. Under the updated provision, taxpayers can now offset the IUE as long as it has been paid, even if the payment occurs after the original deadline.