Bolivia introduces tax incentives for reinvestment and economic reactivation
Supreme Decree No. 5563 – Key tax measures for businesses
On 2 March 2026, the Bolivian Government enacted Supreme Decree No. 5563, introducing a set of tax measures aimed at encouraging reinvestment of profits, stimulating productive activity and supporting economic recovery.
The decree regulates Article 10 of the 2025 General State Budget Law, as incorporated into the 2026 General State Budget, which establishes a tax exemption for shareholders or partners who reinvest profits generated in Bolivia.
The regulation defines the conditions under which foreign shareholders or branches of foreign companies may benefit from reduced withholding rates under the Corporate Income Tax applicable to Beneficiaries Abroad (IUE-BE).
Incentives for reinvestment of profits
Under the new framework, profits or dividends generated in Bolivia may benefit from reduced withholding tax rates if they are reinvested through capitalisation in the same company or branch.
The applicable withholding rates depend on the level of reinvestment:
| Reinvestment level | Withholding on non-reinvested profits |
| 75% or more | 3.13% |
| 50% – 74.99% | 6.25% |
| 25% – 49.99% | 11.25% |
To qualify for the incentive, the reinvested profits must be allocated to activities such as:
- acquisition of fixed assets
- working capital and inventories
- expansion, diversification or modernisation of operations.
These investments must be linked to the economic activity of the company operating in Bolivia.
Accelerated depreciation for investments in 2026
As part of a broader economic stimulus package, the decree introduces a temporary accelerated depreciation regime.
Assets acquired between 1 January and 31 December 2026 may be depreciated over half of the standard useful life established under the Corporate Income Tax regulations.
This measure allows companies to recognise depreciation expenses more rapidly, potentially reducing taxable income in the short term and improving cash flow.
The regime does not apply to mining and hydrocarbons extractive companies, which remain subject to sector-specific regulations.
Adjustments to excise tax and deductibility rules
The decree also introduces several tax adjustments affecting specific sectors.
Among them:
- modifications to the Excise Tax (ICE) rates applicable to alcoholic and non-alcoholic beverages;
- temporary adjustments to ICE applicable to certain diesel-powered vehicles;
- expanded deductibility rules for certain expenses incurred by independent professionals.
These measures form part of a broader fiscal policy effort to stimulate consumption, investment and economic activity.
Practical implications for businesses
Although framed primarily as an investment incentive, the decree may have several implications for companies operating in Bolivia:
Investment planning
Companies may reassess dividend distribution strategies in light of the reinvestment incentives.
Tax optimisation
Accelerated depreciation may improve short-term tax efficiency for capital-intensive projects.
Corporate structuring
Foreign investors may consider capitalisation strategies to benefit from reduced withholding rates.
Sector-specific impact
Companies in the beverage, automotive and professional services sectors may need to review the new tax parameters introduced by the decree.
Strategic perspective
Supreme Decree No. 5563 reflects the Government’s intention to promote reinvestment of profits and strengthen domestic productive capacity.
By linking tax benefits to the capitalisation of profits and the acquisition of productive assets, the regulation seeks to channel corporate earnings toward investment rather than distribution abroad.
For companies operating in Bolivia, the new framework presents both tax planning opportunities and compliance considerations, particularly regarding the structuring of reinvestment strategies and the application of accelerated depreciation rules.
