BOLIVIA 2025 SALARY INCREASE: IMPACT ON RC-IVA CALCULATION FOR EMPLOYEES

The Complementary Regime to the Value Added Tax (RC-IVA) is a tax levied on the income of natural persons in Bolivia, particularly on wages received by dependent employees. With the enactment of Supreme Decree No. 5383 for fiscal year 2025, significant changes have been introduced that directly affect how the RC-IVA is calculated and the resulting tax obligations for workers.

This article provides a clear yet technically rigorous explanation of how the taxable base is calculated, what changes were introduced by DS 5383, and how to apply the updated RC-IVA calculation—with a practical example included.

HOW IS THE RC-IVA TAX BASE CALCULATED?

The RC-IVA taxable base for dependent employees is determined by considering the following:

• Total earnings: all income from salary, overtime, bonuses, commissions, per diems, etc., as per Article 19 of Law 843
• Less mandatory social security contributions: i.e., withholdings paid to the public pension administrator (Gestora Pública), under Article 25 of Law 843
• Less the legal non-taxable minimum: equivalent to 2 national minimum wages (SMN), as per Article 26 of Law 843
• Less the presumed deduction: until now, it was assumed that 13% of 2 SMN was spent on non-invoiced expenses (markets, transport, etc.), further reducing the taxable base. This is established under Paragraph 2, Subsection c) of Article 8 of Supreme Decree No. 21531

In practice, this created the well-known “4 minimum wage rule,” since workers earning under 4 SMN generally were not required to pay RC-IVA or submit invoices.

WHAT CHANGES DID SUPREME DECREE NO. 5383 INTRODUCE?

Supreme Decree No. 5383, enacted on May 1, 2025, provides the following:

• “Subsection 2 of Paragraph c) of Article 8 of Supreme Decree No. 21531 of February 27, 1987, is amended as follows:
  ‘2. The equivalent of the VAT rate applied to one (1) National Minimum Wage, as compensation for presumed VAT related to purchases made during the period from taxpayers under special regimes, who are prohibited from issuing invoices or equivalent tax documents.’”

In short: the presumed deduction is no longer based on 2 SMN, but only on 1 SMN; this means:

• The taxable base increases
• More workers become subject to RC-IVA
• Workers already subject to the tax will need to submit more invoices to avoid the 13% withholding

HOW SHOULD RC-IVA BE CALCULATED NOW?

Below is an updated practical example reflecting the changes introduced by DS 5383, using a National Minimum Wage (SMN) of Bs 2,750:

As shown, without submitting invoices, the worker would now owe Bs 380—whereas previously, the amount was only Bs 23. To avoid RC-IVA withholding, the worker must present invoices showing sufficient VAT credit to offset the new taxable amount.

CONCLUSION