Retenciones: When You Must Withhold Tax From a Supplier in Bolivia

Most SMEs think of taxes as something they pay on their own sales. But when your company pays a supplier who doesn't issue an invoice, Bolivian law makes you responsible for collecting part of that supplier's tax. You hold it back from the payment and pay it to the SIN yourself. That is a retención, and the business doing it is acting as an agente de retención.

Skip it and two things go wrong. The expense has no valid support, so it can be challenged when your profit tax (IUE) is reviewed. And the tax you should have withheld can be claimed from you.

Who has to withhold

In general, legal entities, public or private, act as withholding agents, and so do empresas unipersonales. Individuals who aren't running a registered business don't. Withholding applies when you pay someone who doesn't give you the invoice or equivalent fiscal document they should, typically an independent individual. If a supplier is required to invoice, the right answer is to ask for the invoice, not to withhold.

The current rates

The rates changed in 2023 for services. Plenty of spreadsheets still use the older 12.5% IUE + 3% IT (15.5%) for services. That's out of date.

Which form

• Form 604 — RC-IVA withheld on services and rent. It now asks for detail per payee (name, ID and reason for the payment), so keep that information from day one.
• Form 570 — IUE withheld on purchases of goods.
• Form 410 — IT withheld, on both services and goods.

Withheld amounts are paid the month after you make the payment, on the due date set by the last digit of your NIT.

Worked examples

A service: Bs. 2,800 to a freelance designer with no factura

Goods: Bs. 700 of shelving from a carpenter with no factura

When the supplier wants the full amount: grossing up

It happens all the time: the designer quoted Bs. 2,800 and expects Bs. 2,800 in hand. If you agree, you absorb the tax by grossing up. The payment is recorded at a higher gross amount so that the net after withholding equals what the supplier wants.

The expense on your books is the grossed-up figure, and the supplier signs a receipt for that amount. Decide this before the work starts. Grossing up after the fact is an unplanned 19% increase on a service.

The mistakes that cost money

• Paying cash with no receipt at all. With no signed receipt or contract showing the payee and amount, there is nothing to withhold against and nothing to support the expense.
• Using the old 15.5% rate for services. The difference is small per payment but adds up, and it's a visible error in a review.
• Withholding but paying the SIN late. Once withheld, the money is the state's. Late payment brings interest and UFV updates, and it looks worse than a simple error.
• Treating withholding as a substitute for invoices. If the supplier is a registered business that must invoice, withholding isn't the fix. Ask for the invoice, because only an invoice gives you crédito fiscal.

This article is general information for Bolivian businesses, not tax or legal advice. Rules and rates change; confirm how they apply to your business with your accountant or the SIN before acting.