Tuesday, 7 July 2015

Bolivia: ruling issued on transfer pricing documentation requirements

Bolivia’s tax authorities issued a ruling on 30 April 2015 that sets out the requirements for corporate taxpayers to prepare and file a transfer pricing study and/or complete an information reporting form for transactions with related parties. The rules are effective as from the first day following the end of the corporate fiscal year, which depends on the nature of the taxpayer’s economic activities. This has the effect that the first due dates for submission will be: for mining companies, 1 January 2016; for commercial companies, banks and insurance companies, 1 April 2016; and for industrial and oil companies, 1 July 2016.
A transfer pricing study must be prepared in Spanish, in a hard copy and in a digital format, stated in Bolivian currency and signed by the taxpayer’s legal representative or the holder of the tax identification number, as applicable. The hard copy must be filed with the Bolivian tax authorities’ district offices or large taxpayer offices in the relevant jurisdiction, along with the financial statements for the fiscal year. The electronic version of the transfer pricing study must be submitted through the tax authorities’ website.
The transfer pricing study must include at least the following information:

  • An index;
  • An executive summary that lists the taxpayer’s related parties, the nature of the relationships, the transactions carried out and the transfer pricing method selected;
  • A functional analysis, with background information on the related parties; a description of the organizational and corporate structure of the group; the business activities conducted by the taxpayer and the markets in which it operates; commercial strategies; and a description of transactions, contracts, etc.;
  • An economic analysis that includes a description of the related party transactions; a description of the valuation methods used and how and why they were selected; a selection of comparables and the sources of the comparables; and a definition of a range; and
  • Conclusions.

The following transfer pricing methods may be used:

  • Comparable uncontrolled price method;
  • Resale price method;
  • Cost-plus method;
  • Profit split method;
  • Transactional net margin method; and
  • Transparent market price method.

A related party information return (E-Form 601) may need to be filed along with the transfer pricing study or on its own, as follows:

  • E-Form 601 and the transfer pricing study must be filed for transactions equal to or exceeding BOB 15 million; 
  • E-Form 601 must be filed for transactions equal to or exceeding BOB 7.5 million, but less than BOB 15 million; and
  • For related party transactions under BOB 7.5 million, no filing is required but the taxpayer must maintain documentation to demonstrate that the transactions are on arms’ length terms or that any necessary adjustments have been made.

Penalties apply for failure to comply with any of the filing obligations.

Source: Deloitte