— Bolivia’s tax service is replacing its punitive enforcement model with a compliance-based approach, cutting taxpayer registration from two months to hours and broadening deductible expenses for independent professionals
— A new intermediate regime called 7-RG introduces a 5% monotax on gross sales for small entrepreneurs earning under Bs 400,000 ($57,500) annually, bridging the gap between the simplified and general tax systems
— A debt amnesty will forgive all tax obligations prior to 2018 below Bs 10 million ($1.4 million) and eliminate penalties on more recent debts, addressing a Bs 700 billion ($100 billion) portfolio of largely uncollectable claims
Bolivia tax reform is attempting something no previous government has managed: turning one of Latin America’s most informal economies into a functional tax base without relying on the threats and penalties that have defined the country’s fiscal culture for decades. The National Tax Service (SIN) launched a sweeping package of measures this week that its president, Jorge Zogbi, described as a “paradigm shift.”
With an estimated 85% of Bolivia’s workforce operating informally, the stakes are enormous. The Rio Times, a Latin American financial news outlet, examines how the reforms fit within President Rodrigo Paz’s broader economic restructuring agenda — and whether simplification alone can achieve what coercion never did.
Bolivia Tax Reform: What Changes
The most visible immediate change is the taxpayer identification number (NIT), which previously took up to two months to obtain and now takes hours. This single bottleneck had been one of the most cited reasons for avoiding formal registration. Beyond registration, independent professionals will be allowed to deduct a broader range of expenses — training, fuel, everyday purchases — reducing the effective burden of VAT and the Transactions Tax.
The centerpiece is the new 7-RG regime: a monotax of 5% on gross sales that consolidates VAT, the Transactions Tax, and corporate income tax into a single bimonthly payment. It targets small entrepreneurs earning below Bs 400,000 ($57,500) per year who are too large for the simplified regime but cannot manage the obligations of the general system. After three years, participants automatically migrate to the general regime. Crucially, 7-RG participants can issue invoices — allowing them to do business with companies and the state for the first time.
Clearing the Debt Backlog
The SIN is carrying approximately Bs 700 billion ($100 billion) in outstanding tax debts — a figure the finance ministry says is largely uncollectable, generated by system errors, botched notifications, and incorrectly filed forms rather than deliberate evasion. The reform proposes full amnesty on all obligations prior to 2018 below Bs 10 million ($1.4 million), and eliminates fines and interest on debts from 2018 onward, offering 24-month payment plans. Taxpayers have 120 days after the law’s passage to apply.
“There will be a fiscal sacrifice, but we are not trying to collect at any cost,” Zogbi told El Deber Radio. Early results are encouraging: January-February tax revenue reached Bs 9.5 billion ($1.4 billion), up from Bs 7 billion ($1 billion) in the same period last year. The Paz government has also engaged the World Bank and Inter-American Development Bank to model the reform on best practices from Chile and Brazil.
Additional bills before the legislature would cut the statute of limitations from eight to four years, eliminate several minor taxes, and restructure the VAT to make its real rate — currently calculated “from within” at an effective 15% rather than the nominal 13% — more transparent. Economist Jaime Dunn called the measures “positive but insufficient,” arguing Bolivia needs a deeper structural overhaul with a single simplified rate closer to 10%.
The Bolivia tax reform marks an important directional shift, but whether simplifying the rules can overcome an informal economy built over generations remains the defining question. With the Transparency and Tax Relief bill now before the Legislative Assembly, the answer will depend as much on political will as on technical design.