ANALYSIS AND CLARIFICATIONS TO SUPREME DECREE N°4850 WHICH REGULATES THE NEW FORM OF TAXATION OF INDEPENDENT PROFESSIONALS AND INTRODUCES OTHER MODIFICATIONS

by | Feb 17, 2023 | Articles

I. INTRODUCTION

Paragraph I of Article 3 of Law No. 1448 promulgated on July 25, 2022 incorporated subsections g) and h) into Article 19 of Law No. 843 (current Ordered Text), reaching with the RC-IVA a income from the exercise of the profession or trades freely or independently, as well as fees, remuneration or income from payments, whatever their denomination, of persons not domiciled in the Plurinational State of Bolivia, from work carried out in national territory .

In this sense, it became necessary to adapt the RC-IVA, in order to comply with the provisions of the aforementioned Law No. 1448, regarding compliance with the tax obligations of natural persons who receive income as a result of the exercise of the profession. or trades freely or independently, as well as persons not domiciled in Bolivia, for their income from a Bolivian source.

In order to clarify which income is from a Bolivian source, it is necessary to mention that article 42 of Law No. 843, states that Bolivian source profits are those that come from assets located, placed or used economically in the Plurinational State of Bolivia ; of the performance in the national territory of any act or activity capable of producing profits; or events that occurred within its limits, without taking into account the nationality, domicile or residence of the owner or of the parties involved in the operations, or the place of execution of the contracts.

Additionally, article 44 of the aforementioned Law No. 843 establishes that the remunerations or salaries received by the members of boards, councils or governing bodies for activities carried out abroad for companies domiciled in Bolivia are also considered to be of Bolivian source; and the fees, remunerations or remunerations for the provision of services of any nature from or abroad, when they are related to obtaining profits from a Bolivian source.

Based on the foregoing, it is appropriate to carry out the analysis and clarifications regarding the provisions inserted in Supreme Decree No. 4850 of December 28, 2022 that regulates Law No. 1448 of July 25, 2022.

II. MAIN MODIFICATIONS INCORPORATED BY SUPREME DECREE Nº 4850

The purpose of Supreme Decree No. 4850 is to adapt the tax treatment for natural persons who exercise their profession or trade freely or independently and persons who are not domiciled in Bolivia, for income obtained from a Bolivian source.

Let us clarify that as established by Law No. 843, income obtained from a Bolivian source is understood to be the fees, remunerations or remunerations for services of any nature from or abroad, when the purpose of this provision of services is to obtain profits in Bolivia.

Likewise, the aforementioned Supreme Decree No. 4850 establishes important modifications to Supreme Decrees No. 21531 of February 27, 1987 (RC-IVA), to Supreme Decree No. 21532 of February 27, 1987 (IT) and to No. °24051 of June 29, 1995 (IUE); likewise, it makes an addition to Supreme Decree No. 21531, a regulation that regulates Law No. 843. Consequently, below, we comment on the main provisions of Supreme Decree No. 4850:

  1. Form of declaration of the RC-IVA: Modifies subparagraphs a) and b) of article 9 of the regulation to the RC-IVA, approved by Supreme Decree No. 21531 of February 27, 1987, indicating that natural persons and undivided successions, personal hired locally either by accredited diplomatic missions in the country, international organizations, foreign governments or foreign official institutions, as well as notaries, civil registry officials, auctioneers or auctioneers, as well as commission agents, brokers, factors or administrators and managers, by the Free or independent exercise of the profession and trade that receive taxable income, they must proceed to:
    a) Prepare a quarterly sworn statement, which will contain the information corresponding to the total income of each monthly period that makes up the quarter. It is clarified that the social security contributions actually paid must be deducted from the declared income.
    b) The applicable rate will be 13% on the applicable income.
  2. Form of payment of the RC-IVA for taxpayers without domicile in Bolivia: Modifying article 20 of Supreme Decree No. 1531, it was determined that the presentation of the affidavit and payment of the RC-IVA will be made in the means and forms provided by the WITHOUT; while with respect to taxpayers who do not have domicile in Bolivia, they may pay this tax in US dollars, in the account designated by the SIN, also clarifying that payments made from abroad will not be subject to commissions and/or surcharges.
  3. Withholding in payments without invoice support: Article 11 of Supreme Decree No. 21531 is amended, stating that legal persons, public or private, including sole proprietorships, as well as State institutions and agencies that accredit or make payments to people individuals and undivided successions, when the operations are not supported by the corresponding invoice, they must withhold the 13% rate, on the total amount of the operation without any deduction and deposit said amount considering the last digit of the NIT, in the month following the one in which the withholding was made. Likewise, this modification establishes that natural persons who prove or make payments, under any title, to persons not domiciled in the country for services performed in national territory, will withhold this tax on the total amount paid without any deduction, and must deposit it within of five (5) days after the payment or the conclusion of the service, whichever occurs first.

It is necessary to clarify that the concepts for which withholding must be made are those established in subparagraphs a), b), e), f), g) and h) of article 19 of Law No. 843 (current Ordered Text) , which are:

  • Income from the rental, subletting or other form of exploitation of urban or rural real estate.
  • Income from the rental, sublet or other form of exploitation of movable things, rights and concessions.
  • The fees of directors and trustees of corporations and limited by shares, the salaries of the partners of all other types of companies and the sole owner of sole proprietorships.
  • All other regular income.
  • Those coming from the exercise of the profession or trade freely or independently.
  • The fees, remuneration or income from payments, regardless of their denomination of persons not domiciled in the Plurinational State of Bolivia, from the work carried out in national territory.
  1. Nature of withholdings for payments without invoice support: In turn, article 13 of Supreme Decree No. 21531 is amended, establishing that the withholdings provided, have a single and final payment nature without the possibility of subsequent re-settlement, except for errors or omissions. . Likewise, it indicates that the lack of withholding and/or impoundment within the established period will make the substitute responsible before the SIN, making him (the substitute) subject to the sanctions established in the Bolivian Tax Code.
  2. Withholdings on payments without invoice to natural persons: Another of the provisions of Supreme Decree No. 4850 implies the modification of the second and third paragraphs of article 3 of Supreme Decree No. 24051 of June 29, 1995, Decree regulating the IUE, indicating in the most important part that legal persons, public or private, including sole proprietorships, as well as State institutions and agencies that make payments to natural persons for the sale of movable property, of any nature, located or placed in Bolivian territory, and that are also operations not supported by an invoice, they must withhold without any deduction, 25% of the 20% of the total amount paid, a percentage that the norm presumes corresponds to the profit obtained by the seller of the good.
  3. Deductible concepts for the IUE: Subsection f) of article 12 of Supreme Decree No. 24051 was also modified, regarding the deductible concepts for the calculation of the IUE, being among these concepts, fees or other remuneration for advice, direction or services provided in the country or from abroad, provided they are supported by the invoice or proof of the withholding made.
  4. Proof of purchases: Additionally, Supreme Decree No. 4850, provides for the modification of the last paragraph of article 15 of Supreme Decree No. 24051, determining that, to prove the payments made for the purchase of goods and services, the documents and accounting records They must be supported by the invoice or the deposit receipts of the withholdings made.
  5. IT withholding that sole proprietorships must do: Finally, the first paragraph of article 10 of Supreme Decree No. 21532 of February 27, 1987, IT Regulations, was modified, including sole proprietorships, in the obligation already established for public or private legal entities and State institutions and agencies, so that when these entities make a payment to natural persons, except for taxpayers of the simplified tax regime, for concepts taxed by the IT, transaction tax, and provided that Said transactions are not supported by the corresponding fiscal note, the one percent (1%) rate will be withheld in accordance with the provisions of article 75 of Law No. 843, rate that will be calculated on the total amount of the operation without place to any deduction and must be deposited until the fifteenth (15th) day of the month following that in which the withholding was made in any of the auto curly located in the jurisdiction of the domicile of the withholding agent. It is necessary to highlight that the lack of withholding will imply sanctions against those responsible for failing to carry them out.

III. CONCLUSIVE ANALYSIS

In relation to the modifications made by Supreme Decree No. 4850 of December 28, 2022 that regulates Law No. 1448 of July 25, 2022, to Supreme Decree No. 21531 of February 27, 1987 (RC-IVA) , Supreme Decree No. 21532 of February 27, 1987 (IT) and Supreme Decree No. 24051 of June 29, 1995 (IUE) and the incorporation into Supreme Decree No. 21531, regulations that regulate Law No. 843 , it is necessary to carry out the following conclusive analysis:

  1. The purpose of Supreme Decree No. 4850 is to adjust the tax treatment for natural persons who exercise their profession or trade freely or independently and persons who are not domiciled in Bolivia, for income obtained from a Bolivian source, in the understanding that, Law No. 1448 of July 25, 2022, excluded from the application of the Corporate Profit Tax to natural persons who exercise their profession or trade independently, being subject to the application of the RC-IVA.
  2. In accordance with the modifications introduced, those now taxpayers of the RC-IVA must present an affidavit on a quarterly basis, considering in it all the income they received during the months corresponding to the quarter and will apply a rate of 13% for the calculation of said tax.
  3. On the other hand, legal persons, public or private, including sole proprietorships, as well as State institutions and agencies that accredit or make payments to natural persons and undivided estates, when the operations are not supported by the corresponding invoice, for this purpose. , withholding agents corresponding to 13% of the operations are appointed when they are not supported by an invoice. Among others that are already established prior to Supreme Decree No. 4850, the concepts for which this withholding proceeds are: All other habitual income; those from the exercise of the profession or trade freely or independently; and the fees, remuneration or income from payments, regardless of their denomination of persons not domiciled in the Plurinational State of Bolivia, from the work carried out in national territory.
  4. Regarding the foregoing, it is necessary to highlight that, in order to increase the number of taxpayers, if there is a commercial operation as described in article 19 of Law No. 843, now legal persons, whether public or private, and even sole proprietorships and, of course, State institutions and agencies must act as withholding agents, an end that ultimately comes to replace the taxpayer of the obligation.
  5. It should also be clarified that the lack of withholding and/or impoundment within the terms provided in Supreme Decree No. 4850, implies that the substitute who should have made the withholding must assume the sanctions provided in the Bolivian Tax Code, an end that undoubtedly matters. a greater responsibility for those who act as withholding agent, a fact that will result in substitutes preferring to demand that all operations be supported by the corresponding invoice, in order to avoid even involuntary omissions.
  6. Likewise, it has been provided that taxpayers domiciled abroad can deposit their taxes in US dollars, an aspect that will be subject to specific regulation by the SIN. Also establishing that when there is a sale of movable property by natural persons and they are not supported by the corresponding invoice, a withholding of 25% of 20% of the total amount paid must be made, this percentage assumes the norm that is equivalent to to the profit received by the seller in the transaction.
  7. In general terms, from the modifications provided in Supreme Decree No. 4850, it is possible to notice that there will be greater requirements in the issuance of an invoice, fiscal note or equivalent document, if what is intended is not to assume the responsibility of acting as agent of withholding, taking into account that for this, deadlines and forms must be met for the storage of the withheld amounts.
  8. As it has been seen at the ends of this article, the purpose of Supreme Decree No. 4850, is ultimately to regulate and carry out a normative adaptation so that natural persons who carry out activities as independent professionals and trades, as well as fees, remuneration or income from payments, whatever their denomination, of persons not domiciled in the Plurinational State of Bolivia, from work carried out in national territory, now pay the RC-IVA tax instead of the IUE, establishing for this purpose, modifications and additions in the Supreme Decrees regulating the RC-IVA, IT and IUE.
See Supreme Decree N° 4850
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