Bolivia may not be the first LATAM country you consider when expanding into the region, but it is becoming an increasingly popular choice for entrepreneurs looking to capitalize on new and growing markets. Indeed, despite being one of the least developed countries in South America, the country has seen an increase in foreign direct investment and its huge natural resources such as tin, copper, silver and iron offer unique opportunities for savvy investors.
In addition, as the country is a member of the World Trade Organization and is an associate member of MERCOSUR, trade in the country has significantly bolstered in recent years – particularly when you consider the double taxation avoidance agreements in place with countries such as the United Kingdom, Germany, and several South American countries.
Below, we’ve put together a guide to incorporating a new business in Bolivia, whether you’re a Latin American native or an investor from the other side of the world. We also share some tidbits on how to maximize your investment and be a successful entrepreneur in Bolivia.
Before entering into a new market such as Bolivia, it makes sense to spend time in the country to determine the level of demand for your products and services. Speak with local business leaders and potential customers, attend trade fairs and networking events to spread the word about your new venture. You should also acquire data on your industry’s performance and assess key players. Entering into an oversaturated niche could be tricky, especially in a landlocked market with slow levels of growth and low disposable incomes.
Get a Visa
Entrepreneurs who are planning to enter the market can apply for a Business Visa, provided they are going to invest US$30,000 or more in the country. Applying for a visa takes a couple of weeks, and offers investors permanent residence after two years of living in the country. Subsequently, citizenship is available after three years of living in the country without interruption which is great if you’re looking to permanently relocate. If you’re visiting the country to assess demand or to meet a contact, you do not need to apply for a visa if you’re staying for less than 30 days. You can extend your trip for 60 days, for free, provided you apply before the end of your 30 day period at one of the Department of Immigration offices, situated across the country.
Decide on the Entity Type
Whilst the most common legal entity in Bolivia for investors is the limited liability company, there are several entity types to consider when incorporating, each offering unique benefits.
- Limited Liability Company (Sociedad de responsabilidad limitada): Requires one director and two shareholders, and just US$1 to begin the incorporation process.
- Public Corporation (Sociedad Anonima): Suitable for small and medium-sized enterprises, public corporations require three directors (one must be a resident of Bolivia) and three shareholders, who can be of foreign nationalities. Incorporating a public corporation also requires a resident company secretary, a resident agent, and a controller and auditor. Companies that generate more than US$160,000 must submit annual financial statements to the Tax Bureau and Fundempresa.
- Limited Liability Partnership (Sociedad en comandita simple): LLPs require two shareholders and two directors who can be of any nationality, and at least US$1 in capital investment. Shareholder liability in LLPs is limited to their contributions, and all transfers of shares are tax exempt, but only when transferring inside of Bolivia.
- Branch (Sucursal): Setting up a branch office in Bolivia allows your company to be 100% foreign owned, but the office must be registered in Bolivia and you must appoint a manager of the Branch office who has power of attorney over the branch.
- Representative Office (Oficina de Representacion): Lastly, the representative office. Although this can be foreign-owned, representative offices cannot conduct income-generating activities, so are only suitable for market research and promoting the parent company. Suitable if you’re not committed to expanding in Bolivia just yet.
Register Your Company
Registering a company in Bolivia takes around ten weeks, and requires a minimum share capital of just US$1. Businesses are required to have a physical office, so before getting started, it is advised that you purchase or rent office space in the country, where all official documentation can be received. What’s more, the government is known to make checks on businesses – particularly those with foreign owners, so operating within the law is critical.
In order to successfully incorporate an SRL company in the country, you’ll need at least two shareholders and one director of any nationality. A company secretary is not required by law, but appointing one is advisable. Unlike in some markets, you do not need to travel into the country to complete the incorporation process, meaning you can set up and recruit staff from wherever you may be in the world. This is particularly attractive to CEOs and investors who want to expand into multiple markets in quick succession, saving you some time and money.
Because Bolivia is in close proximity to other Latin American markets such as Peru, Chile, Paraguay and Brazil, company incorporation enables access into multiple LATAM markets for trading, and all four countries can be easily accessed by road or through air, with daily flights from one of the country’s many airports, such as El Alto International Airport.
Once you have incorporated your company, you’ll be able to apply for a corporate business account and begin trading freely in the market. Working with a Bolivian accountant can make reporting profit and loss – and paying the country’s 25% corporate tax – much easier. Make the investment in a bookkeeper and you’ll be able to operate stress-free in the market.
Work with Biz Latin Hub
Biz Latin Hub offers a range of back office and secretarial services designed for international entrepreneurs looking to expand into a new Latin American market. From recruitment and due diligence to company incorporation and commercial representation, you can depend on the team. Contact us on [email protected] today, and we’ll get back to you with a personalized strategy that can unlock new commercial opportunities for your firm in Bolivia.