Impacts and Opportunities of Law 1613 of the 2025 General State Budget for Businesses and Entrepreneurs

Tax Incentives

• VAT Exemptions (Art. 8 and 9):
  • Imports of capital goods and industrial plants are exempt from VAT.
  • Beneficiary sectors include agriculture, industry, construction, and mining.
  • Imports of hydrocarbons are also VAT-exempt.
• Interest: Facilitates the acquisition of machinery and essential resources for companies, promoting modernization and industrialization.
• Risk: These exemptions mainly benefit large companies with significant investment capacity, leaving small businesses behind.

Incentives for Profit Reinvestment (Art. 10)

• Companies reinvesting profits are exempt from the Corporate Income Tax (IUE-BE) applicable to foreign shareholders.
• Interest: Encourages reinvestment in Bolivia, potentially strengthening competitiveness.
• Risk: More attractive to large companies, while small and medium enterprises (SMEs) often lack the capacity to reinvest.

Flexibility for Tax Debts (Art. 11)

• Payment plans for outstanding tax debts and penalties can be resumed until 2024.
• Interest: Provides financial relief for struggling businesses.
• Risk: May encourage recurring non-compliance, leading to stricter oversight that could negatively impact compliant taxpayers.

Public Debt and Treasury Bonds (Art. 13 and 14)

• Issuance of securities in external markets could create opportunities for local businesses to participate in infrastructure projects funded by these resources.
• Interest: Indirect access to capital for national projects.
• Risk: Unsustainable public debt could harm the broader economy and businesses.

Industrialization and Import Substitution (Art. 8)

• Incentives for purchasing capital goods for local production.
• Interest: Supports companies aiming to compete with imported products.
• Challenge: Effectiveness depends on local production capacity and logistical efficiency.

Biodiesel Production and Renewable Energy (Art. 21)

• Exemption from the Transaction Tax (IT) and zero VAT rate for biodiesel-related sales.
• Interest: Benefits companies investing in clean energy.
• Risk: Only companies with significant resources can take advantage of this provision.

Growth Opportunities

• VAT exemptions for machinery and capital goods provide opportunities for entrepreneurs starting businesses in sectors such as agriculture, industry, construction, and mining.
• Interest: Reduces initial investment costs for new projects.
• Challenge: Entrepreneurs need access to financing to benefit from these incentives.

Access to Tax Incentives

• Profit reinvestment policies can be an opportunity if entrepreneurs consolidate sufficient profits to reinvest.
• Interest: Potential for tax-free reinvestment.
• Risk: Entrepreneurs often reinvest continuously to survive, making these benefits more applicable to established businesses.

Competition Challenges

• Large companies receiving substantial incentives could limit opportunities for entrepreneurs.
• Interest: Highlights the need for complementary policies to strengthen the entrepreneurial ecosystem.
• Risk: Concentration of benefits among large players.

Emerging Sectors

• Incentives for biodiesel production and carbon markets (Art. 18 and 21) open opportunities for renewable energy and sustainability initiatives.
• Interest: New markets supported by the government.
• Risk: High entry barriers due to costs and regulations.

Price Regulation and Food Control (Seventh Additional Provision)

• Controls on food storage and pricing could impact small producers and entrepreneurs in the agricultural sector.
• Interest: Reduces speculation in essential markets.
• Risk: Regulatory and compliance costs could be burdensome for small players.