Bolivia Payroll and Benefits Guide

What global businesses need to know about payroll in Bolivia

One of only two landlocked countries in the continent (Paraguay being the other), Bolivia relies on heavy industry more than many other countries in a global marketplace where services often rule the roost. Industry and agriculture still generate more than half of Bolivia’s GDP, whether it’s mining (including gold, silver, zinc, lead and tin), natural gas generation, or a healthy crop of soybeans.

Bolivia is historically one of the poorest countries in South America. While casual and unskilled labor is easy to come by among its population of around 12 million, finding skilled and highly educated workers can be more of a challenge. The country’s weak rule of law, corruption issues, and murky international arbitration measures can also be significant impediments to a company’s global operations.

But there are plenty of positives to doing business in Bolivia, too. Wage levels are low, as are income tax rates and social security contributions, so it can be a great place to kick off a wider exploration of the South American market. Here’s what you need to know about employment law and running payroll in Bolivia.

Getting Started 

Firstly, it’s important to note that all documents in the business set-up process must be in Spanish. For this reason, and the benefit of accessing local expertise, we would strongly advise working with a local legal professional to help you get started.

The procedure is fairly similar to most other countries in the region: obtaining a name reservation certificate, filing your articles of incorporation and bylaws (and getting them notarized), registering with the National Tax Service, and acquiring a business license. However, you will also be required to place your company deed confirming your details in a national newspaper.

Once you’ve opened a Bolivian bank account and deposited the necessary capital, you can then complete your registrations with FUNDEMPRESA, the local Chamber of Commerce, the Ministry of Labor, and the Bolivian health insurance and pension systems.

Employment Considerations

Written employment contracts are required in Bolivia and must be registered with the Labour Ministry. Foreign employees do not require work permits but their work agreements must be registered with the Bolivian labor authorities within 90 days of signing. Workers need a special purpose visa to sign the agreement and a one-year residence visa to carry it out. Most labor activity in Bolivia is unionized and nearly all unions belong to the Confederation of Bolivian Workers (COB).

The standard working day in Bolivia is eight hours, and employees can work for up to six days a week. Any work over the level defined as ‘standard’ in the employment contract is overtime, which is normally limited to two hours per day and paid at 200% of the normal rate. Collective bargaining can vary these levels, however,

Probation periods generally run for between one and three months, but there is no legal requirement to provide notice periods (although termination must be confirmed in writing).

Compensation, Bonuses and Severance

As of the end of 2023, the national minimum wage in Bolivia was BOB 2362 per month (approx. £265; $340; €315). The rate has steadily climbed in recent years, so foreign businesses should keep an eye out for any potential increases in the future.

The payment of a 13th-month ‘Aguinaldo’ bonus is mandatory in Bolivia, similar to many other South American countries. Employees should receive one month’s extra salary each December, which is exempt from tax or social security contributions. Employees are also entitled to a profit-share bonus for companies that are particularly successful: up to 25% of profits may have to be shared in this manner.

Severance pay can vary according to the circumstances of the termination but is generally one month’s salary per year of service.

Tax and Social Security

Bolivia has a flat income tax rate of 13%, with no exempt bracket or personal allowance applicable. Employers must deduct income tax from their employees’ wages and submit them to the National Service of Internal Revenue. 

Corporation tax runs at 25%, but there are also extra taxes targeted at the finance, insurance, energy and mining industries. VAT runs at an effective rate of 14.94%, with other fixed rates applicable to alcohol, tobacco, soft drinks and motor vehicles.

There are six main types of social security contribution in Bolivia:

  • Housing: 2% employer
  • Risk premium: 1.71% employer, 1.71% employee
  • Healthcare: 10% employer
  • Solidarity contribution: 3% employer, 0.5% employee
  • Pensionary fund: 0.5% employee
  • Disability/old age: 10% employee

Holidays and Leave

Paid leave entitlement in Bolivia starts at 15 days per year after one year of service, rising to 20 days after five years and 30 days after ten years. There are 11 days of public holidays in Bolivia each year, most of which fall on weekdays.

Maternity leave is 90 days, divided equally on either side of the due date. Employers should pay full salary during this time, but can then claim 90% of the money back from social security. Paid paternity leave is three days.

Paid sick leave for medically certified illnesses can run for up to 26 weeks per year. From the fifth day onwards, employers should pay full salary but as with maternity leave, they can claim this money back from social security, albeit at a lower rate of 75%.

In Summary

From a payroll perspective, Bolivia is a lot simpler to administer than a lot of other countries in the region – but that still doesn’t mean that cultural quirks won’t creep up along the way. The need to deal with all your documentation in Spanish is another reason why local experience is so important. We recommend working with a global payroll partner in the long term, as well as a Bolivian legal practitioner.

This article is for informational purposes only and is not intended to convey or constitute legal or any other advice. It is not a substitute for advice from a qualified professional.

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