Supreme Decree 5563 – Incentive for the reinvestment of profits in Bolivia and other tax benefits

By Supreme Decree 5563, issued on March 2, 2026, the tax benefit granted by Law 1613 (General State Budget for Fiscal Year 2025, dated January 1, 2025) is regulated in the case of profit reinvestment for allocation to economic activities. The Decree establishes that partners and shareholders of companies domiciled in the country, as well as branches of foreign companies, that reinvest all or part of their profits or dividends obtained in the Plurinational State of Bolivia, shall be exempt from the payment of the Corporate Income Tax – Beneficiaries Abroad (IUE‑BE), which has a 12.5% rate, under the following conditions.

1. Who can access to this benefit?

• Partners or shareholders domiciled abroad of companies established in Bolivia that reinvest their dividends through capitalization in the same company.
• Foreign companies with branches established in the country, which reinvest through capitalization their Bolivian‑source profits in the same branch.

In both cases, the reinvestment must be made in assets, inventory, or investments directly linked to the economic activity of the Bolivian company or branch.

2. How must the reinvestment has to be carried out?

• The reinvested profits or dividends must be recorded in an equity reserve account, intended exclusively to finance fixed assets, inventory, or productive or service‑related investments connected to the company’s business activity.
• The funds must be used by the end of the fiscal year following the year in which such profits or dividends were generated.

3. What happens to the portion that is not reinvested?

The Decree establishes progressive IUE‑BE withholding rates on the portion of profits or dividends not reinvested, according to the following table:

If the equity reserve is subsequently distributed without being effectively reinvested, the omitted tax must be paid as Tax Debt, in accordance with the Tax Code.

4. Other complementary benefits

• Accelerated depreciation for fixed assets acquired during fiscal year 2026, applying half of the useful life years (not applicable to mining or hydrocarbons extractive companies).
• Deductibility of provisions for uncollectible loans for the period established in the Decree.
• Individuals practicing professions or occupations independently may treat the purchase of goods and services for personal expenses (food, clothing, transportation, training, health, among others) and for their immediate family members (first‑degree kinship and spouse) as tax credits.
• Updates and tariff adjustments to the Specific Consumption Tax (ICE) for certain beverages and vehicles.
• Elimination of the restriction established in 2025 that allowed the compensation of the IUE with the IT only when the IUE was paid “by its due date.”
• Sole proprietorships are included among the taxpayers eligible for the tax benefits and the conditions established for business reorganization processes, regarding Value Added Tax (IVA), Transaction Tax (IT), and Corporate Profits Tax (IUE).

Supreme Decree 5563 is effective in accordance with the transitional periods established in its text.

 Contacts and Further Information

For more details on the content of Supreme Decree 5563, and to identify the regulatory implications, our team is available to:

• Address specific inquiries regarding the application of this decree;
• Provide support in assessing the regulatory impact on operations, contracts, and existing structures; and
• Assist with legal compliance and adaptation to the provisions and regimes established therein.

To schedule a meeting or submit inquiries, please contact our legal team at: abogados@baqsn.bo