In Bolivia, tax controversies typically arise from tax audits, assessments, self-assessments, and reassessments conducted by national, regional, and municipal tax authorities ("TAs"). Under the Tax Code (Law 2492), TAs hold broad control, verification, and audit powers, and generally initiate a formal determination procedure by notifying the taxpayer with an audit or verification order.

Tax Audits, Reassessments and Withholding Tax

Controversies frequently arise when TAs identify discrepancies between the formal and material tax obligations declared by taxpayers, typically through data cross-referencing or targeted audits of fiscal documents. These findings may lead to administrative resolutions adjusting the taxpayer‘s liabilities. Withholding tax disputes, though less common, generally stem from cross-border transactions involving payments to non-residents and centre on the nature of the payment, the source of the taxation applicable in Bolivia, and the applicability of existing tax treaties to avoid double taxation.

Other Sources of Controversy

Disputes may also arise from the unfounded denial of refund claims, the rejection of rectificatory returns, or sanctions for formal non-compliance. They may further result from another taxpayer‘s failure to meet its formal or material obligations, which can create discrepancies for taxpayers that have claimed related tax credits or deductible expenses. Although Bolivia‘s self-assessment system requires taxpayers to calculate and declare their own tax obligations, TAs retain broad powers to challenge self-assessed returns and issue administrative resolutions where they consider that taxes were underpaid or improperly calculated.

Taxes and Matters That Give Rise to More Controversies

The taxes that generate the most controversies in Bolivia are the Value Added Tax ("VAT"), the Corporate Income Tax, and the Transaction Tax. The most common and broadest disputes typically involve said taxes, declared by taxpayers with substantial operations (Grandes Contribuyentes), where adjustments may reach millions of bolivianos.

VAT disputes frequently involve the disallowance of tax credits, particularly where the TAs question the legitimacy of the invoices used to offset VAT debits, or the nexus between the credited purchases and the taxpayer‘s taxable activities and corporate purpose. Corporate Income Tax controversies commonly concern the deductibility of expenses, transfer pricing, and the recharacterisation of income by the TAs.

Transaction Tax disputes are usually related to the taxable base and the crediting of annual Corporate Income Tax tax payments against monthly Transaction Tax obligations in the following fiscal year.

Assessments aimed at verifying proper payment of the Wealth Tax have given rise to a growing number of controversies, owing to its severe penalties, which can reach up to 200% of the allegedly omitted tax. At the municipal level, property and vehicle taxes also generate disputes, though generally of lower value.

Mitigating Tax Controversies

Tax controversies in Bolivia can be mitigated by adopting proactive compliance strategies and preventive measures. Strict adherence to both substantive and formal obligations is critical, as the TAs routinely impose penalties for late filings, improper bookkeeping, and invoicing deficiencies.

Transfer Pricing and Rectificatory Returns

Taxpayers should proactively manage their transfer pricing supporting documentation through defence files or similar records. The Tax Code also permits rectificatory returns to correct errors before a formal audit begins, and the “Arrepentimiento Eficaz“ mechanism under article 157 of the Tax Code allows for the reduction of sanctions when taxpayers rectify their returns before the TAs notify any administrative action aimed at assessing a specific period or year. In such cases, taxpayers are not subject to any penalty.

Preventive Measures

Ongoing consultation with the TAs, the implementation of internal tax compliance mechanisms, and continuous coordination with the external auditors responsible for preparing the annual tax records required for Corporate Income Tax filings allow taxpayers to identify, correct, and resolve issues before they escalate, thereby reducing the risk of formal disputes.

BEPS and EU Measures

Bolivia is not a member of either the Organisation for Economic Cooperation and Development ("OECD") or the European Union ("EU") and has therefore not formally or statutorily adopted the Base Erosion and Profit Shifting ("BEPS") recommendations. The BEPS guidelines have nonetheless indirectly influenced domestic law. In 2015, Law No. 549 introduced transfer pricing rules requiring transactions between related parties to be carried out at an "arm‘s length" basis, with implementing regulations largely modelled on OECD methodology. The TAs have likewise adopted low-tax jurisdiction criteria aligned with OECD standards. These measures have increased tax controversies, particularly for multinational enterprises engaged in cross-border transactions.

Regional Framework

Bolivia is a member of the Andean Community and is therefore bound by the decisions issued by that body, in particular Decision 578, which seeks to avoid double taxation and prevent fiscal evasion for taxpayers in Bolivia, Colombia, Peru, and Ecuador. Andean Community decisions are binding and take precedence over domestic regulations by virtue of their supremacy over local law, meaning that, where a local tax provision conflicts with Decision 578, the latter prevails.

Pursuant to their verification powers, the TAs have broad authority to issue administrative resolutions assessing tax debts, which may comprise allegedly omitted taxes, penalties (60% of the omitted tax), interest, and value maintenance expressed in Unidad De Fomento De Viviendas ("UFVs"), a daily inflation-indexed unit of account used in Bolivia to preserve the purchasing power of the local currency against price variations. Taxpayers are not required to pay the assessed amounts immediately and may challenge them through administrative or judicial proceedings.

Administrative Challenge and Guarantees

Taxpayers may challenge tax resolutions by filing administrative recourses before the regional and national tax administrative bodies ("AIT"). Filing such a recourse automatically suspends enforcement of the challenged resolution, and no guarantee or prior payment is required to access this stage. Rulings of the regional AIT may be appealed by the taxpayer, the TAs, or both before the national AIT, and enforcement remains suspended throughout that appeal.

Once the national AIT issues its ruling, either the taxpayer or the TAs may challenge it by filing a judicial action (demanda contencioso administrativa). To preserve the suspension of enforcement, the taxpayer must, within five days of being notified of the national AIT‘s ruling, request such suspension from the TAs and offer sufficient guarantees (eg, letters of credit, bank bonds, or real estate), to be provided within ninety days. Otherwise, the TAs may initiate enforcement proceedings.

Judicial Challenge

As an alternative to the administrative recourses described above, taxpayers may instead pursue a judicial route by filing a demanda contencioso tributaria before a tax court. Throughout this judicial proceeding, taxpayers are not required to provide any guarantee to suspend enforcement of the challenged resolution.

In tax proceedings, the TAs may ask the court to order the taxpayer to post guarantees securing payment of the tax debt in the event a final, res judicata ruling confirms the administrative resolution. To obtain such an order, however, the TAs must demonstrate a clear and imminent risk that the taxpayer will be unable to pay. In our experience, this is uncommon, and courts rarely grant these requests.

Administrative and Criminal Sanctions

Failure to declare or pay taxes on time may result in administrative sanctions, including fines for formal non-compliance and a penalty of 60% of the allegedly omitted tax for tax omission or evasion. Other minor monetary sanctions may also apply.

The TAs may also initiate criminal proceedings under the Criminal Tax Regime set forth in the Tax Code where:

• the allegedly omitted amount exceeds 10,000 UFVs (approximately USD5 thousand); and
• fraudulent conduct by the taxpayer is suspected.

Such proceedings may result in imprisonment of three to six years and additional fines.

In our experience, the TAs rarely initiate criminal proceedings against taxpayers, having done so only in isolated cases and primarily for political reasons. In addition, under the Code of Criminal Procedures, a taxpayer may halt any such criminal proceeding by paying the tax debt assessed by the TAs, as the TAs – being treated as victims of the crime – will then deem the harm repaired.

Criteria for Tax Audit Selection

Unfortunately, TAs do not publicly disclose their specific audit selection policy or criteria. However, in practice, we have noticed that audits are driven by several factors.

First, taxpayers under the GRACO (Grandes Contribuyentes) regime – which includes all corporations (sociedades anónimas) and other legal entities with substantial monthly and annual invoicing – face more frequent audits due to their economic significance. TAs also rely on data analytics and third-party cross-referencing (with banks, suppliers, and customs) to detect inconsistencies in tax returns, significant reductions in rectificatory filings, and substantial tax credit or refund claims.

Second, entities operating in high-risk sectors – such as hydrocarbons, mining, and financial services – and those engaged in significant cross-border or related-party transactions are subject to greater scrutiny. Taxpayers that have not been audited for extended periods are also prioritised to prevent the statute of limitations (currently eight years) from expiring.

Finally, high net worth individuals have been the target of numerous assessments in connection with the Wealth Tax, as they can be readily audited based on publicly available information about them.

Initiation of a Tax Audit

A tax audit begins when the TAs notify the taxpayer of a verification order (Orden de Fiscalización) requesting supporting documents, tax filings, records, and any other legal documentation related to the taxpayer‘s activities and associated tax matters. Following review, the TAs may issue a preliminary assessment (Vista de Cargo) within twelve months, which can be extended by:

• up to six additional months in general cases; and
• up to twelve additional months in transfer pricing cases (Law No 549).

Once the Vista de Cargo is notified, the taxpayer has thirty days to submit further arguments and evidence seeking to overturn the preliminary assessment. Upon expiration of that period, the TAs have sixty days to issue a Resolución Determinativa, the formal administrative resolution requiring payment from the taxpayer.

Although audit procedures legally should not exceed eighteen months, in practice they often last twenty to thirty months. Failure to meet these deadlines does not automatically forfeit the TAs‘ right to continue assessing the taxpayer; it may only give rise to administrative liability for the official responsible for the delay.

Once the audit concludes with the issuance of the Resolución Determinativa, the taxpayer may challenge it through administrative or judicial recourses.

Statute of Limitations

The general statute of limitations for tax matters is eight years, counted from 1 January of the year following the year in which the obligation became due. This period is extended by two additional years for unregistered taxpayers, tax crimes, or transactions involving parties in jurisdictions with no or low-tax regimes. Once the statute of limitations has expired, the TAs may no longer audit or assess the taxpayer for those periods.

Effect of a Tax Audit on the Statute of Limitations

Suspension

Notification of the verification order suspends the statute of limitations for six additional months. Administrative or judicial proceedings also suspend the statute of limitations until the case is returned to the TAs.

Interruption

The statute of limitations restarts in full upon notification of the final assessment (Resolución Determinativa) or upon the taxpayer's express acknowledgment or recognition of a tax debt.

Location of Tax Audits

As a general rule, taxpayers must submit all documentation requested by the TAs for review and verification. This includes delivering both originals and copies of the required records and supporting materials to the authority‘s headquarters. By exception, taxpayers may request that the audit be conducted at their own premises; the TAs will evaluate such requests and grant them only in exceptional cases.

Format of Documentation

Documentation may be submitted in physical format, digital format, or both, provided it can be readily reviewed by the TAs. Taxpayers may also retain the originals and submit only copies, once the TAs have confirmed that such copies accurately reproduce the original documents.

Tax audits in Bolivia typically focus on the following key areas.

IVA Tax Credits

Auditors scrutinise invoices supporting VAT credits by cross-referencing them with suppliers‘ declarations and verifying the existence, business connection, and economic substance of each transaction. In particular, they confirm:

• The existence of the original invoice;
• the connection between the expense and the taxpayer‘s taxable activity; and
• reliable evidence that the transaction actually took place, taking into account the means of payment used.

Corporate Income Tax Deductions

Auditors examine whether expenses are properly documented, related to the entity‘s business purpose, and deemed necessary to maintain and develop the business.

Transfer Pricing

Tax authorities review intercompany transactions to confirm they are conducted on an "arm‘s length" basis, including the adequacy of transfer pricing studies and the proper filing of transfer pricing forms.

Formal Compliance

Auditors verify compliance with formal obligations, including:

• Timely filing of tax returns;
• proper taxpayer registration (under the applicable tax identification number/registry);
• correct maintenance of accounting records;
• compliance with invoicing rules (facturación).

Withholding Obligations

Auditors review whether taxes have been correctly withheld and remitted on payments to non-residents and on certain domestic transactions.

Cross-Checking of Income

Auditors compare declared income against third-party sources, such as bank deposits, customs records, and counterparties‘ purchase reports. Significant discrepancies typically trigger further investigation.

Bolivia’s Current Framework for Information Exchange

Compared to OECD member states, Bolivia maintains a limited network of tax information exchange agreements. Information is currently exchanged through bilateral tax treaties with Germany, Spain, France, Sweden, the United Kingdom, and Argentina, as well as within the Andean Community framework. In addition, the TAs routinely request and provide information to foreign tax administrations on an ongoing basis.

On June 4, 2025, Bolivia officially joined the OECD-led Global Forum on Transparency and Exchange of Information for Tax Purposes as its 172nd member. However, Bolivia has not yet signed the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, nor has it committed to the Common Reporting Standard (CRS). This absence of CRS commitment limits the scope and frequency of cross-border data flows between the TAs and foreign tax authorities.

Indirect Effects Through Transfer Pricing Rules

Bolivia‘s transfer pricing regulations have indirectly broadened the TAs‘ access to cross-border transaction data by requiring taxpayers to disclose their related-party transactions and the pricing methodologies applied.

Joint Audits With Foreign Authorities

Joint audits with foreign tax authorities are uncommon in Bolivia. We have not encountered tax audits involving authorities from multiple jurisdictions, nor instances of foreign auditors on secondment.

Timely Responses and Submissions

Submitting timely responses and supporting documentation is critical to prevent the TAs from relying on a presumptive basis, which would undermine the taxpayer‘s ability to present its actual position and arguments.

Verifying the Scope of the Audit Order

The verification order defines the scope of the TAs‘ audit. Any findings or document requests that fall outside that scope may be challenged on procedural grounds.

Active Participation Throughout the Process

Providing written explanations and organised documentation (in the form of defence files or similar) for each observation helps prevent misinterpretations and adverse findings.

Leveraging Voluntary Correction (Arrepentimiento Eficaz)

Under Article 157 of the Tax Code, voluntarily correcting deficiencies before the Vista de Cargo is issued may eliminate or reduce applicable fines and penalties.

Preparing a Formal Response (Descargos)

In addition to providing all required documentation upon receipt of the verification notice from the TAs, taxpayers have thirty days from notification of the Vista de Cargo to submit their formal response with supporting evidence under Article 98 of the Tax Code.

Early Assessment of the TAs‘ Case

Assessing the strength of the TAs‘ case at an early stage enables taxpayers to determine the most advantageous course of action: whether to negotiate, pay in advance to take advantage of incentives that eliminate or reduce penalties, voluntarily correct, or prepare an administrative or judicial challenge.

Tax authorities must personally notify taxpayers, or their legal representatives, of an assessment request to initiate a verification process. To conclude that procedure and ultimately issue an administrative resolution determining an alleged tax debt, the TAs must review and consider all documents and arguments submitted by the taxpayer during the initial administrative phase, culminating in the issuance of a Resolución Determinativa that formally demands payment of the tax debt. This resolution closes the administrative audit conducted under the TAs‘ verification powers and triggers the taxpayer‘s right to challenge it before an administrative court ("AIT") within twenty calendar days.

Statutory Deadlines

When the TAs issue an administrative resolution in the form of a Resolución Determinativa, taxpayers may challenge it through the administrative recourses regulated by the Tax Code. The administrative review system consists of two levels: a regional administrative court and an AIT.

The first-level recourse, the Recurso de Alzada, is filed before the regional AIT and follows these stages:

• Admission within five days;
• a fifteen day period for the TAs to respond;
• a twenty day evidentiary stage;
• a twenty day period to file closing arguments; and
• issuance of the ruling within fourty days thereafter.

Once the regional AIT issues its ruling, either the taxpayer or the TAs may file a Recurso Jerárquico before the national AIT, which must be resolved within the deadline established under Article 210.III of the Tax Code. Overall, the administrative recourses (covering both the regional and national AIT stages) typically take between nine and twelve months.

The Tax Code does not expressly recognise a tacit negative decision (silencio administrativo negativo) within the AIT framework. However, if the national AIT fails to resolve the Recurso Jerárquico within the statutory period, the taxpayer may invoke the general administrative law principles set forth in Law No. 2341 to assert a due process violation. In practice, the national AIT generally meets its statutory deadlines.

Once the Recurso Jerárquico is resolved by the national AIT, either the taxpayer or the TAs may challenge the decision by filing a contencioso administrativo proceeding before the Supreme Tribunal Court. This judicial action does not automatically suspend enforcement of the hierarchical resolution issued by the national AIT.

Initiation of Judicial Tax Litigation

In Bolivia, taxpayers have two alternative paths to challenge tax assessments issued by the TAs through administrative resolutions following an administrative verification proceeding. Each path eventually leads to judicial review by the Supreme Justice Tribunal.

Contentious-Administrative Proceedings

In case the administrative path is chosen before the regional and national AIT (Recurso de Alzada and Recurso Jerárquico), either the TAs or taxpayers may later file a proceso contencioso administrativo before the Supreme Justice Tribunal challenging the ruling issued by the national AIT. This judicial proceeding has the purpose of reviewing the legality of the final administrative decision based on the existing factual and legal record.

Filing this claim does not automatically suspend enforcement. To obtain suspension, the taxpayer must request it from the tax authority within five days of notification and provide sufficient guarantees within ninety days.

Contentious Tax Claim

Alternatively, instead of pursuing the administrative recourses before the regional and national AIT, the taxpayer may file a Demanda Contenciosa Tributaria directly before a judicial tax court (Juzgado Tributario Coactivo Fiscal), to challenge a tax assessment issued as an administrative resolution (resolución determinativa). Decisions rendered in this proceeding may be challenged by appeal (recurso de apelación), and, ultimately, by cassation (recurso de casación) before the Supreme Justice Tribunal.

In either case, the Supreme Justice Tribunal resolves the matter at the final instance.

Contentious-Administrative Proceeding

This proceeding begins when a taxpayer challenges an administrative resolution issued by the TAs that determines a tax debt and any applicable penalties and interest following the conclusion of a verification process. To initiate the challenge, the taxpayer files a Recurso de Alzada within twenty calendar days of notification of the resolution before the regional AIT with jurisdiction over the taxpayer‘s registered legal and tax domicile.

The regional AIT reviews the recourse for admissibility, and, if it identifies formal deficiencies, may require correction (subsanación) or the filing of missing documentation. Once admitted, the recourse is served on the TAs, which must respond and forward the administrative file (in practice, typically within fifteen days). The case then proceeds through an evidentiary stage (twenty days) and a closing argument phase (twenty days), after which the regional AIT issues a ruling within fourty days. The ruling may affirm, revoke in whole or in part, or annul the challenged resolution, and may order a remand to cure procedural defects.

Either the TAs or the taxpayer may challenge the regional AIT‘s ruling by filing a Recurso Jerárquico with the national AIT within twenty days of notification. Once admitted, the recourse is served on all parties, and the case proceeds through an evidentiary stage (ten days) and a closing argument phase (twenty days), after which the national AIT issues a ruling within fourty days. As with the regional AIT, the ruling may affirm, revoke in whole or in part, or annul the challenged resolution, and may order a remand to cure procedural defects.

Once the regional and national AIT have issued their respective rulings, the taxpayer may file a contentious-administrative claim before the Supreme Justice Tribunal. This judicial procedure typically involves the following stages:

• Filing of the suit;
• admission and service on the defendant entity (which generally has fifteen days to respond);
• preliminary objections or exceptions;
• the answer; and
• the reply and rejoinder (generally ten days each), after which the case is ready for judgement. The judgement may uphold the administrative outcome, set it aside in whole or in part, or order corrective measures.

Contentious Tax Claims

As an alternative to administrative recourses, the taxpayer may file a claim directly before the judicial tax courts within fifteen business days of being notified of the formal administrative resolution (a Resolución Determinativa) that determines a tax debt and any applicable penalties and interest. Admission of the claim suspends enforcement of the challenged resolution. The TAs then have fifteen days to respond.

The TAs may raise preliminary objections in the form of dilatory exceptions, which must be filed before submitting their response, or peremptory exceptions, which may be raised at any stage of the procedure and are resolved in the final judgement.

A non-extendable thirty day evidentiary period is then opened, during which the parties may present all legally admissible means of evidence (except official oaths and confessions) and submit their closing arguments. Before the judge issues a ruling, the file is referred to a technical professional assigned to the court to review any matters requiring accounting or audit analysis.

Once the file is returned from the technical professional, the judge must issue a first-instance judgement within ten business days. Either party may appeal that judgment within ten business days, and the appellate court must issue its decision within ten days. The appellate decision may, in turn, be challenged by a cassation appeal before the Supreme Court, filed within ten business days, with a final ruling due within thirty days.

Although the deadlines set forth in the Tax Code suggest a relatively brief judicial procedure, in practice tax cases may take up to ten years to reach a final ruling by the Supreme Justice Tribunal.

Administrative Recourse

During the administrative phase, parties may rely on all means of evidence admitted by law, except for confessional testimony from public officials of the respondent entity. The evidentiary stages proceed as follows:

Recurso de alzada

A twenty common-day evidentiary period, during which the parties may submit documentary evidence, witness testimony, and expert reports.

Recurso jerárquico

A ten-day window in which only newly obtained evidence may be introduced.

In practice, documentary evidence carries the greatest weight, while witness testimony plays a secondary role.

Judicial Procedure

At the judicial stage, the court reviews the administrative record, and the introduction of new evidence is generally restricted. As a result, all relevant documents and testimony should be produced during the administrative phase to ensure they are considered.

Evidence must be submitted together with the claim, after which a non-extendable thirty day evidentiary period is opened. All legal means of evidence are admissible, except official oaths and confessions.

Under the Tax Code, the burden of proof in both administrative and judicial proceedings rests on the taxpayer. Accordingly, taxpayers must produce sufficient evidence to extinguish, modify, or exclude the tax liability determined by the TAs through an administrative resolution (a Resolución Determinativa).

In practice, the TAs are required to set out sufficient factual and legal grounds to support their administrative resolutions (both the Vista de Cargo and the Resolución Determinativa), while taxpayers must support their defences with documentary evidence during the discharge period and in any administrative appeals.

In criminal tax proceedings, general criminal law principles govern. The prosecution (the Public Prosecutor, with the TAs acting as the aggrieved party/victim) bears the burden of proving guilt beyond a reasonable doubt, and the accused enjoys the presumption of innocence.

Key strategic options in Bolivian judicial tax litigation include the following:

Evidence and Timing

Because the judicial phase primarily reviews the administrative record, all critical evidence should be submitted during the administrative stage before the TAs, either within the thirty day period and the twenty day evidentiary period of the Recurso de Alzada, or the thirty day evidentiary period in the judicial tax procedure.

Settlement and Payment

Bolivian tax law does not allow settlement or conciliation in tax proceedings, but taxpayers may request installment payment plans with interest. Because administrative and judicial challenges have suspensive effect, payment can be deferred until remedies are exhausted, though interest – including value maintenance – continues to accrue.

Expert Reports

Expert opinions on technical issues such as valuation, accounting, or transfer pricing can materially strengthen the taxpayer‘s case.

Procedural Challenges

Defects in notification, scope, or timing may nullify the assessment and should be carefully reviewed.

Precedent Analysis

Reviewing prior AIT resolutions and judicial decisions on analogous issues helps assess the likelihood of success.

Bolivia‘s legal system is statutory, so jurisprudence is not a formally binding source of tax law. In practice, however, taxpayers and practitioners cite prior rulings to seek consistent application of the law and to gauge likely outcomes in similar disputes. Only Constitutional Tribunal rulings are binding, and few have addressed tax matters.

Doctrine and academic commentary are routinely cited by taxpayers and the TAs. OECD materials, including the Transfer Pricing Guidelines and BEPS reports, are not formally binding but are increasingly relied upon in transfer pricing disputes and TA audits, as Bolivia‘s transfer pricing rules largely follow OECD principles.

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Contentious-Administrative Proceeding

Once both administrative recourses (Recurso de Alzada and Recurso Jerárquico) are exhausted, taxpayers may file a proceso contencioso administrativo before the Supreme Justice Tribunal, which reviews the legality of the final administrative decision on the existing record.

Filing does not automatically suspend enforcement; taxpayers must request suspension from the tax authority within five days of notification of the national AIT ruling, provide sufficient guarantee, and commit to formalise it within ninety days.

Contentious Tax Claim

If taxpayers pursue the judicial route by filing a Demanda Contenciosa Tributaria before a tax court to challenge a tax assessment (a Resolución Determinativa) issued by the TAs, the court‘s decision may be challenged by appeal, and thereafter by cassation before the Supreme Justice Tribunal.

At the first administrative level (Recurso de Alzada), the Regional Executive Director of the regional AIT decides alone. On appeal (Recurso Jerárquico), the National Executive Director of the national AIT decides alone. Both are appointed through competitive processes for fixed terms. Once both administrative recourses are exhausted, taxpayers may file a proceso contencioso administrativo before a courtroom of approximately five magistrates of the Supreme Justice Tribunal, whose magistrates are pre-selected by the Plurinational Legislative Assembly (Asamblea Legislativa Plurinacional) and elected by popular vote.

In judicial tax proceedings, a single judge rules at first instance; a collegiate panel of the Departmental Tribunal hears the appeal; and a collegiate panel of the Supreme Justice Tribunal issues the final decision on cassation. Supreme Court magistrates are pre-selected by the Plurinational Legislative Assembly (Asamblea Legislativa Plurinacional) and elected by popular vote.

Bolivian arbitration law expressly excludes taxes and royalties from mediation and arbitration. Accordingly, alternative dispute resolution is not an available option in tax matters and conflicts, thus taxpayers must resolve their disputes exclusively through administrative or judicial recourses.

Please refer to 6.1 Mechanisms for Tax-Related ADR in This Jurisdiction

Please refer to 6.1 Mechanisms for Tax-Related ADR in This Jurisdiction

Tax Consultation Mechanism

The Tax Code provides a mechanism called a “Consulta Tributaria“, allowing taxpayers to submit written consultations to the TAs on how specific statutory rules apply to particular factual situations that are controversial or where the law appears silent. The TAs must respond within thirty days, and the response is binding with respect to the specific case consulted.

Effectiveness and Limitations

While a consultation response can provide advance certainty, its practical effectiveness is limited by several factors:

• The consultation must address a concrete factual situation, not a hypothetical scenario;
• the response is binding only for the specific case consulted and does not create general precedent;
• there is no formal mechanism to appeal an unfavourable answer;
• the TAs retain broad discretion in interpreting tax law and may change their position in future consultations.

Despite these limitations, the Consulta Tributaria remains a useful tool for taxpayers facing complex or novel tax questions.

Please refer to 6.1 Mechanisms for Tax-Related ADR in This Jurisdiction

Please refer to 6.1 Mechanisms for Tax-Related ADR in This Jurisdiction

Administrative Infractions and Tax Assessments

In Bolivia, additional tax assessments and tax infringements are interconnected but follow distinct procedures. Tax offences are classified as either administrative infractions or criminal offences. An additional tax assessment by the TAs – whether for disallowed deductions, ineligible tax credits, or transfer pricing adjustments – does not automatically trigger criminal prosecution.

Administrative contravention proceedings for payment omissions may, however, run in parallel with the verification process. The penalty is a fine equal to 60% of the deemed omitted tax.

Criminal Offences and the Threshold for Prosecution

Criminal proceedings arise only when specific conditions are met:

• the omitted tax amount equals or exceeds 10,000 UFVs (or about USD5 thousand) per tax period; and
• there is evidence of fraudulent intent (dolo) on the part of the taxpayer.

TAs initiate criminal proceedings by filing a complaint with the Prosecutor‘s Office (Ministerio Público), typically once the determination phase has advanced enough to quantify the omitted tax. Prosecution is never automatic: it requires a separate assessment of the taxpayer‘s intent, independent of the administrative process.

Article 8 of the Tax Code establishes a general anti-avoidance rule: tax rules are interpreted using all methods permitted by law, which may yield extensive or restrictive readings, while tax exemptions are interpreted literally. Where a taxable event refers to concepts defined in other branches of law without expressly adopting or departing from them, the interpretation must reflect the meaning that best fits the economic reality.

To determine the true nature of a taxable event where the taxpayer adopts legal forms that are manifestly inappropriate or atypical to the underlying economic reality, the tax rule applies disregarding those forms, without prejudice to their effect in civil or other spheres. In simulated transactions, the taxable event is the one actually carried out by the parties, regardless of the forms or designations used, and the simulated transaction is disregarded for tax purposes. This legislation thus confirms that economic interpretation may be applied, but transactions must still be analysed in light of their legal nature.

Administrative and criminal tax proceedings follow separate tracks. Under res judicata (cosa juzgada), once a tax debt is finally determined administratively or judicially, the criminal court is bound by that amount and cannot modify it.

Parallel Proceedings and Suspension

The proceedings may run in parallel, but once the administrative quantification is final, the criminal court must accept it. The criminal proceeding instead focuses on:

• whether the taxpayer acted with fraudulent intent (dolo); and
• the imposition of criminal penalties.

The statute of limitations for criminal prosecution is tolled during the prejudiciality phase.

When Administrative Processes Are Initiated

TAs initiate sumario contravencional proceedings upon detecting formal violations or payment omissions. These can occur independently, after the fact (eg, when the taxpayer pays before the Vista de Cargo), or alongside the determination process.

When Criminal Proceedings Are Initiated

TAs may refer cases to the Ministerio Público when the omitted tax is at least 10,000 UFVs (about USD5 thousand) and there is evidence of fraudulent intent (dolo), to be prosecuted as tax crimes under the Tax Code.

Can an Administrative Process Evolve Into a Criminal Case?

Yes, if the investigation shows the taxpayer's conduct meets both the monetary threshold and the fraudulent intent requirement. In practice, however, criminal prosecution for tax offences other than contraband (smuggling) is uncommon in Bolivia, since TAs prioritise administrative recovery of the tax debt over criminal punishment.

Administrative Contravention Process

Upon identifying a tax infringement or contravention (contravención), TAs initiate a formal administrative proceeding designed to safeguard the taxpayer‘s right to due process. The main stages are as set out below.

Auto inicial de sumario contravencional

Formal resolution initiating the proceeding and granting the taxpayer twenty days to present a defence.

Evidentiary phase

Both TAs and taxpayers may submit evidence supporting their positions.

Resolución sancionatoria

TAs issue a final decision imposing the applicable penalty.

Appeals

Taxpayers may challenge the sanction via a Recurso de Alzada and a Recurso Jerárquico before the AIT.

Criminal Tax Case Procedure

Criminal tax cases follow the stages set forth in the Code of Criminal Procedures, beginning when TAs file a formal complaint with the Ministerio Público.

Penalty Reductions for Voluntary Payment

Taxpayers may reduce the pecuniary penalty for the tax contravention by paying the tax debt (omitted tax in UFVs plus interest, calculated to the payment date). Payment within twenty days of notification of the Vista de Cargo (or Auto Inicial) extinguishes the penalty in full (100% reduction). Later payments yield reductions of 80%, 60%, or 40%, depending on the procedural stage at which payment is made.

Scope of the Reductions

These reductions apply only to administrative contraventions (contravenciones) and do not affect criminal liability. If the conduct also constitutes a criminal tax offence (eg, tax fraud), paying the assessed tax and obtaining a penalty reduction will not extinguish or reduce the criminal consequences. The framework is intended to encourage early resolution of administrative disputes and reduce the caseload of the TAs and the administrative and judicial courts. Full reparation (payment of the alleged tax debt) is a mechanism to extinguish criminal proceedings when accepted by the TAs.

Full Reparation as a Mechanism to Extinguish Criminal Proceedings

Under the Tax Code and the Code of Criminal Procedures, taxpayers may halt criminal tax proceedings by fully paying the outstanding debt. Except for smuggling (contrabando), criminal actions for tax crimes may be extinguished if the TAs, as victims, accept full reparation. This encompasses payment of the entire debt plus the penalty (60% of the omitted tax), accrued interest, and value maintenance calculated in UFVs.

Scope and Limitations

The TAs, as the aggrieved party, have discretion to accept the reparation offer. Key aspects include:

• Significant financial burden: full debt plus 100% of the fine;
• TAs‘ discretion to accept; and
• the exclusion of smuggling cases.

Available Appeal Routes

Criminal tax decisions may be appealed through the ordinary criminal appeal system, principally via:

• The Recurso de Apelación Restringida before the Departmental Justice Tribunal, which reviews errors in the application or interpretation of the law, including procedural defects;
• the Recurso de Casación before the Supreme Justice Court, available when the Auto de Vista ruling conflicts with that court‘s own precedents. It serves a nomophylactic function, ensuring uniform interpretation of the law nationwide.

Once the Recurso de Casación is resolved – or the filing deadlines lapse – the decision becomes res judicata. Even so, under Bolivia‘s constitutional framework, final judgements may still be challenged through extraordinary constitutional remedies before the Plurinational Constitutional Tribunal.

These remedies, though outside the ordinary appeal system, allow review of final judgements where fundamental rights have been violated. The principal actions are:

• Acción de Libertad, protecting life, physical integrity, and personal liberty; and
• Amparo Constitucional, a subsidiary remedy subject to a six-month statute of limitations.

Practical Considerations

Each stage serves a distinct purpose: the Apelación Restringida addresses errors of law without re-evaluating evidence, while the Recurso de Casación ensures interpretive consistency across jurisdictions and renders the decision res judicata. Constitutional remedies, though technically post-finality, remain available to protect due process and fundamental rights after ordinary appeals are exhausted. Criminal tax cases – typically involving smuggling or tax fraud – may therefore traverse all stages, including constitutional review, before final resolution.

Administrative Enforcement Approach

TAs enforce tax obligations via audits using actual records or presumptive methods, relying on the general anti-avoidance rule in article 8 of the Tax Code.

The transfer pricing regime under Law No 549 is the principal Specific Anti-Avoidance Rules ("SAAR") for related-party transactions. Common audit challenges include:

• Legitimacy of invoices supporting tax credits or deductions;
• deductibility of claimed expenses; or
• proper characterisation of transactions for tax purposes.

Criminal Prosecution

Criminal tax cases are rare outside contraband matters. TAs may pursue tax fraud where fraudulent intent and threshold amounts are met, coordinating with the Public Prosecutor‘s Office, but most tax disputes are resolved through administrative appeals.

Primary Remedy: Domestic Litigation

Cross-border tax assessments by TAs that result in double taxation are typically challenged through domestic litigation, with taxpayers contesting the resulting administrative resolutions before administrative or judicial courts.

Treaty-Based and International Mechanisms

Bolivia‘s limited Double Tax Treaty ("DTT") network and CA Decision 578 contain Mutual Agreement Procedure ("MAP") provisions, but these are rarely used, and other mechanisms are unavailable:

• The Multilateral Instrument ("MLI") has not been adopted, so its enhanced MAP and arbitration provisions do not apply;
• the EU Tax Disputes Directive does not apply, as Bolivia is not an EU member; and
• limited institutional experience makes MAP uncommon in practice.

Taxpayers facing double taxation therefore rely almost exclusively on domestic channels for relief.

Domestic Anti-Avoidance Framework

Per prevailing jurisprudence and administrative precedent, Bolivia‘s GAAR applies to cross-border situations covered by bilateral tax treaties. The TAs‘ broad and discretionary use of the GAAR to recharacterise transactions and assess tax debts has prompted taxpayer challenges in administrative and judicial courts.

The main SAAR is the transfer pricing regime under Law No 549, which targets related-party transactions.

Impact of the MLI and the Principal Purpose Test

Bolivia has not adopted the MLI, so the Principal Purpose Test ("PPT") does not apply. TAs rely instead on the domestic GAAR and applicable DTT or CA Decision 578 provisions. Key points include:

• No court challenges on the interaction between anti-avoidance rules and treaty provisions;
• the Tribunal de Justicia de la Comunidad Andina may address CA-related disputes; and
• the broad reach of the domestic GAAR, combined with the absence of a PPT, leaves few tools to address treaty abuse beyond existing domestic rules.

Available Mechanisms in Bolivia

International transfer pricing adjustments are challenged exclusively through domestic channels (administrative and judicial recourses). Bolivia has not signed any multilateral transfer pricing convention or bilateral agreement providing for mutual agreement or arbitration. The EU Directive on dispute resolution does not apply.

An Emerging Area of Litigation

Transfer pricing disputes are relatively new, as the governing rules were introduced in 2015. TAs are gradually building audit capacity, and case volume is expected to grow. Key factors include:

• No Advance Pricing Agreements ("APAs") or MAP mechanisms to resolve disputes before litigation;
• limited administrative or judicial precedents on complex transfer pricing matters; and
• increasing focus interest by TAs on intercompany transactions involving multinationals in Bolivia.

Availability Under Bolivian Law

APAs are not available under Bolivian tax law. Neither the Tax Code nor transfer pricing regulations permit taxpayers to agree with the TAs in advance on transfer pricing methodology for intercompany transactions.

Without APAs, taxpayers must manage transfer pricing risk through alternative means:

• maintaining thorough, contemporaneous transfer pricing documentation;
• ensuring compliance with the "arm‘s length" principle; or
• preparing proactively for TAs audits.

Because no advance certainty mechanism exists, transfer pricing disputes can only be resolved after audit or verification results are notified and subsequently challenged by taxpayers.

Most Common Cross-Border Disputes

Bolivian cross-border tax disputes typically involve three areas:

• withholding tax on payments to non-residents (notably DTT rates and CA Decision 578);
• permanent establishment, and transfer pricing under the 2015 TP rules; or
• a leading example is TACA-Peru (AGIT-RJ 0074/2016), addressing CA Decision 40 and the Corporate Income Tax obligations of foreign airlines.

Potential Mitigation Measures

Several measures could reduce cross-border disputes:

• expanding Bolivia‘s treaty network to enhance certainty;
• introducing MAP and APA mechanisms;
• issuing clearer guidance on DTT provisions;
• building SIN capacity to enable cooperative compliance with multinationals; or
• ensuring TAs apply DTTs over local source-based rules.

Without these reforms, disputes will likely increase as Bolivia‘s international economic activity grows.

Boliva is not in an EU member state so state aid issues do not arise.

See 9.1 State Aid Disputes Involving Taxes.

See 9.1 State Aid Disputes Involving Taxes.

See 9.1 State Aid Disputes Involving Taxes.

Bolivia's Position on Part VI of the MLI

Bolivia has neither signed nor ratified the MLI and did not opt into Part VI‘s mandatory binding arbitration. No Bolivian DTT contains an arbitration clause, reflecting a policy of resolving tax disputes solely through domestic channels.

Probable Reasons for Non-Adoption

Key factors include:

• A protectionist stance on tax sovereignty;
• a limited DTT network, which reduces the practical need for the MLI;
• concerns that binding arbitration would constrain domestic tax policy autonomy; or
• limited institutional capacity to handle international tax disputes.

Existing Treaty Practice

Bolivia‘s DTTs contain standard MAP provisions but no arbitration backstop. Tax disputes are resolved exclusively through domestic administrative and judicial proceedings.

Bolivia‘s Policy on Tax Arbitration

Bolivia has not adopted the MLI, and its DTTs lack arbitration clauses. Consequently, no domestic policy defines matters eligible for tax arbitration, and the exclusion of factual or legal disputes from arbitration does not arise.

Applicability in Bolivia

Bolivia has not adopted the MLI, and its DTTs contain no arbitration provisions. Neither "baseball arbitration" nor the independent opinion procedure have been used in Bolivian tax disputes.

Reasons and Consistency with Treaty Options

With no Bolivian experience applying these mechanisms, no choice between them arises. Key points:

• Neither tax authorities nor taxpayers have invoked "baseball arbitration" or the independent opinion procedure;
• Bolivia‘s DTTs neither enable nor exclude these options; and
• because Bolivia has not adopted the MLI, its arbitration choices are irrelevant here.

Bolivia relies solely on domestic administrative and judicial proceedings, with no framework for international arbitration.

EU Directive on Arbitration

As Bolivia is not an EU member state, the EU Directive on Arbitration and its procedures for resolving double taxation disputes do not apply.

The MLI and International Tax Arbitration

Bolivia has neither signed nor ratified the MLI, and has enacted no domestic legislation on international tax arbitration. Key aspects of its position include:

• no participation in the MLI framework or its arbitration provisions;
• no binding arbitration clauses in its existing DTTs; and
• limited engagement with international dispute resolution frameworks.

Bolivia‘s tax dispute resolution remains anchored in domestic administrative and judicial mechanisms, with no foreseeable move toward international arbitration.

Application in Bolivia

Recent international and EU tax dispute resolution instruments have not been used in Bolivia. The MLI arbitration provisions and the EU Dispute Resolution Directive do not apply, as Bolivia has not adopted the MLI and is not an EU member state.

Case Activity

There are no known international tax arbitration cases involving Bolivia. Tax disputes continue to be resolved exclusively through domestic administrative and judicial mechanisms, as Bolivian arbitration law expressly excludes taxes and royalties from mediation and arbitration.

Bolivia‘s Position on Pillars One and Two

Bolivia has not adopted Pillar One or Pillar Two measures. As a non-OECD member with limited participation in the Inclusive Framework on BEPS, near-term adoption is unlikely. Key factors include:

• domestic economic priorities over international tax reform;
• limited engagement in global tax discussions; and
• few Bolivian multinationals meeting the EUR750 million revenue threshold for Pillar Two.

Relevance to Tax Dispute Resolution

Since Bolivia has not engaged with these reforms, the tax certainty instruments under Pillars One and Two are not yet relevant to the Bolivian tax controversy framework. No change in this position is expected in the near future.

Confidentiality Framework

Bolivia‘s DTTs adopt the standard confidentiality provisions of Article 26 of the OECD Model Convention: information exchanged between competent authorities must remain confidential and may be accessed only by persons involved in tax assessment, collection, enforcement, or appeals. Because Bolivia has not adopted the MLI, its confidentiality options do not apply.

Public Access to AIT Resolutions

AIT resolutions are published on its website, providing transparency on tax law interpretation. Taxpayer information is anonymised under Article 67 of the Tax Code, allowing access to the legal reasoning without compromising taxpayer confidentiality.

Domestic Litigation as the Primary Mechanism

Cross-border tax disputes in Bolivia are most often resolved through domestic litigation, beginning with administrative recourses (Recurso de Alzada and Recurso Jerárquico) and followed by a contencioso administrativo claim before the Supreme Justice Court or directly before the judicial tax courts.

International Instruments

Bolivia has a limited DTT network – including Germany, Spain, France, Sweden, the United Kingdom, and Argentina – and these treaties contain MAP provisions that are rarely invoked in practice. Andean Community Decision 578 provides an additional framework for avoiding double taxation among member states.

Several instruments common in other jurisdictions do not apply in Bolivia:

• The EU Dispute Resolution Directive and EU Arbitration Convention, because Bolivia is not an EU member; and
• the Multilateral Instrument (MLI), which Bolivia has not adopted.

Domestic litigation therefore remains the dominant path for resolving cross-border tax controversies.

Representation of Taxpayers

Tax lawyers and advisers are regularly retained to represent taxpayers at all stages of tax controversy proceedings, including the audit, administrative appeal, and judicial phases.

Taxpayers may engage professionals at any stage, depending on the complexity of the case.

Representation of the State

TAs are represented by their own attorneys and rarely retain external counsel. AITs likewise handle administrative recourses with in-house staff, and outside assistance is uncommon.

Government-Imposed Fees

Proceedings before the AIT – both the Recurso de Alzada and the Recurso Jerárquico – are free of charge, with no filing fees, stamp duties, or other government charges.

Practical Costs for Taxpayers

Although no government fees apply, taxpayers should budget for practical expenses, including:

• professional fees for tax advisers and lawyers engaged to prepare and litigate the recourse; and
• administrative expenses related to gathering and submitting supporting documentation.

These costs vary with the complexity of the dispute, the volume of evidence, and the professionals‘ rates.

If the national AIT‘s ruling is challenged in court, the taxpayer must post a bond to access the judicial phase and may need to provide a guarantee to suspend enforcement of the assessed tax. The cost of issuing such a guarantee should be considered and will vary with the size of the tax debt.

Filing Fees and Litigation Costs

Contencioso administrativo proceedings before the Tribunal Supremo de Justicia involve minimal court fees. The primary litigation costs are:

• attorney fees for legal representation; and
• administrative expenses related to filings.

No bond is required to access the judicial process, although a guarantee may be needed to suspend enforcement of the assessed tax during the judicial phase.

Allocation of Costs Between Parties

Each party generally bears its own litigation costs, and courts do not typically order the losing party to pay the prevailing party‘s attorney fees. As a result, taxpayers are not reimbursed for their costs, even when they prevail.

Consequences of a Nullity Declaration

When an administrative or judicial court declares a tax assessment absolutely null and void, taxpayers are not entitled to any indemnity. The only consequence is that the TAs must issue a new resolution correcting the errors or defects that caused the nullity, provided their power to determine the tax obligation is not time-barred.

Pleaser refer to 6.1 Mechanisms for Tax-Related ADR in This Jurisdiction

Available Data from the AIT

The AIT does not publish comprehensive statistics on pending tax cases, but its annual reports provide:

• The number of Recursos de Alzada and Recursos Jerárquicos received and resolved each year;
• the aggregate values of those cases.

In recent years, the AIT has handled several thousand cases annually across its four regional offices.

Limitations on Judicial Statistics

Per-judge caseload statistics and pending case values at the contencioso tributario and administrativo stages of the Tribunal Supremo de Justicia are not publicly available, making it difficult to assess the judicial backlog.

Availability of Public Statistics

Bolivia lacks a consolidated publication of annual statistics broken down by tax type and value. TAs release some aggregate data in their annual reports, and the AIT‘s institutional memoirs report on resolved cases.

Most Common Tax Disputes by Type

IVA, IT, and IUE account for the largest share of tax controversies by both case count and monetary value. Customs disputes – covering contraband and duties handled by the Customs Office and reviewed by the AIT – also generate significant litigation.

No publicly accessible database consolidates annual case statistics across all tax types. Practitioners must rely on institutional reports from the TA, AIT, and Customs Office, which typically provide only partial or aggregate figures rather than detailed breakdowns by tax category and value.

General Overview

Comprehensive public statistics on taxpayer win rates against the TAs in administrative and judicial courts are not regularly published. However, the AIT's annual reports and practitioner experience reveal certain trends.

Outcomes at the Administrative Appeal Stage

Administrative courts at the regional and national level frequently revoke or partially revoke TAs‘ determinations, and taxpayers often obtain at least partial relief, particularly when:

• The TAs committed procedural errors during the audit or assessment; or
• the evidentiary basis for the assessment is insufficient or poorly documented.

Factors Influencing Litigation Outcomes

Outcomes vary significantly depending on several key factors:

• Complex matters such as transfer pricing or anti-avoidance cases may yield different success rates than straightforward assessment disputes;
• thorough, well-organised records improve the chances of successfully challenging TAs' determinations; and
• novel or unsettled legal questions can produce less predictable outcomes for both parties.

Key Strategic Guidelines in Tax Controversies

Proactive approach

Taxpayers should engage proactively from the earliest audit stages, providing complete documentation and clear explanations to the TAs. Monitoring procedural compliance – notification rules, scope limitations, and statutory deadlines – is critical, since procedural defects often support successful challenges.

Practical recommendations

Key strategies include:

• submitting all relevant documentation within applicable deadlines, as late submissions may be rejected and barred from later administrative or judicial recourse;
• using the graduated reduction system to minimise financial exposure when the assessment basis is strong;
• evaluating case strength before the Vista de Cargo is notified, to choose between payment with reductions or full administrative contest;
• maintaining robust transfer pricing documentation given the TAs‘ increasing audit focus; and
• when committed amounts approach the tax fraud threshold, aligning administrative and criminal defense strategies from the outset.