Steps to Establishing an Office

Foreign investments are welcome in Bolivia. There are specific laws designed to facilitate the bureaucratic requirements for establishing an office in Bolivia.

It is strongly suggested that companies wishing to establish an office in Bolivia hire the services of a local attorney to avoid unnecessary delays and pitfalls.

Under Bolivia's commercial code, business can be conducted under the following types of business entities:

1. Corporation (Sociedad Anonima, S.A.). Owners of capital are described as shareholders.

2. Private companies (Sociedad de Responsabilidad Limitada, S.R.L.) Owners of capital are described as quota holders and have limited liability.

3. General Partnership (Sociedad Colectiva, S.C.) Participants are described as partners. Partners are responsible for joint and individual liability.

4. Limited Partnership (Sociedad en Comandita Simple, S.C.S.) Participants are described as partners. There are two types of partners: General Partners (Socios Colectivos), who have unlimited liability; and Limited Partners (Socios en Comandita), who have limited liability.

5. Limited Partnership Company (Sociedad en Comandita por acciones, S.C.A.) Owners of capital are described as shareholders and partners.

6. Branch of a foreign company.

7. Sole Proprietorship.

The corporation, private company and branch are the most common vehicles for foreign investment.

Joint Ventures/Licensing

Joint venture operations are governed by the Investment Law and the Supreme Decree 22526 of June 13, 1990.

A joint venture in Bolivia is defined as a specific business venture carried out by two parties with separate legal licenses. Once the objectives are clearly defined, a contract is signed between the parties and each party is liable for the percentage owed. If one of the parties has other business interests, these are not included in the joint venture operations, unless specifically stated. Corporations and/or individuals, foreign or domestic, may enter into joint venture agreements. Foreign companies are not required to have a local legal license in advance. However, they must have legal documents that show their legal status in the country of origin.

a. The Right of Association: Workers may form and join organizations of their choosing. Although the Labor Code requires prior governmental authorization to establish a union, permits only one union per enterprise, and allows the government to dissolve unions, the government has not enforced these provisions in recent years. While the Code denies civil servants the right to organize and bans strikes in public services (including banks and public markets), nearly all civilian government workers are unionized. Workers are not penalized for union activities. In theory, the Bolivian Labor Federation (COB) represents virtually the entire work force; approximately one­half of the workers in the formal economy belong to labor unions. Some members of the informal economy also participate in labor organizations. Workers in the private sector frequently exercise the right to strike. Solidarity strikes are illegal, but the government does not prosecute those responsible, nor does it impose penalties.

The COB has called numerous strikes to protest the government's economic reforms, but they were poorly attended and ineffectual. The radical Trotskyite leadership of the urban teachers union has conducted several strikes closing public schools for a few days at a time, in opposition to the educational reform program that deprived the union of its exclusive control of education. The COB demonstrations that habitually have disrupted public order in major cities have been largely absent in 1997. There were, however, several short-lived strikes by health and municipal workers and by workers in some private enterprises, over specific issues involving their workplaces.

Unions are not free from influence by political parties. Most parties have labor committees that try to sway union activity, causing fierce political battles within unions. Most unions also have party activists in the unions.

The law allows unions to join international labor organizations. The COB became an affiliate of the formerly Soviet­dominated World Federation of Trade Unions (WFTU) in 1988.

b. The Right to Organize and Bargain Collectively: Workers may organize and bargain collectively. Collective bargaining (voluntary direct negotiations between unions and employers without participation of the government) is limited but growing.

The COB contends that it still is the exclusive representative of all Bolivian workers. Consultations between government representatives and COB leaders are common but have little effect on wages or working conditions. The COB issues a list of demands and the government concedes some points, but rarely grants wage increases exceeding inflation. Capitalization of the major state enterprises has further eroded COB's legitimacy as the sole labor representative. Private employers, now including management of some of the capitalized enterprises, may use public sector settlements as guidelines for their own adjustments and in fact often exceed them. These adjustments, however, usually result from unilateral management decisions or from talks between management and employee groups at the local shop level, without regard to the COB.

The law prohibits discrimination against union members and organizers. Complaints go to the National Labor Court, which can take a year or more to rule. Union leaders say problems are often moot by the time the court rules. Labor law and practice in the seven special free trade zones are the same as in the rest of Bolivia.

c. Prohibition of Forced or Compulsory Labor: The law prohibits forced or compulsory labor. Reported violations were the unregulated apprenticeship of children, agricultural servitude by indigenous workers, and some individual cases of household workers effectively imprisoned by their employers.

d. Minimum Age for Employment of Children: The law prohibits employment of persons under 18 years of age in dangerous, unhealthy or immoral work. The labor code is ambiguous on conditions of employment for minors aged 14 to 17; it permits apprenticeship for those 12 to 14. This practice has been criticized by the International Labor Organization. Urban children hawk goods, shine shoes, and assist transport operators. Rural children often work with parents from an early age. Children are not generally employed in factories or formal businesses but, when employed, often work the same hours as adults.

The past two governments attempted to revise the labor code but desisted in the face of COB opposition. Responsibility for enforcing child labor provisions resides in the Labor Ministry, but the provisions generally are not enforced.

e. Acceptable Conditions of Work: The law establishes a minimum wage (about $45 per month), bonuses and fringe benefits. The minimum wage does not provide a decent standard of living, and most workers earn more. Although the minimum wage falls below prevailing wages in most jobs, certain benefit calculations are pegged to it. The minimum wage does not cover about 20 percent of urban workers--e.g., vendors and shoe polishers--nor does it cover farmers, some 30 percent of the working population.

Only half the urban labor force enjoys an 8-hour workday and a workweek of 5 or 5 1/2 days, because the maximum workweek of 44 hours is not enforced. The Labor Ministry's Bureau of Occupational Safety has responsibility for protection of workers' health and safety, but relevant standards are poorly enforced. Work conditions in the mining sector are particularly bad. Although the State Mining Corporation has an office charged with safety, many mines, often old and using antiquated equipment, are dangerous and unhealthy.

In some cooperative mines, miners earn less than three dollars per 12­hour day. They work without helmets, boots or respirators in mines where toxic gases abound. They must buy their own supplies (including dynamite), have no scheduled rest periods and must survive underground from 24 to 72 hours continuously with little water and food.

f. Rights in Sectors with U.S. Investment: The majority of U.S. investment is in mining, power generation and the petroleum industry. Rights in these are legally the same as in other sectors. However, conditions and salaries for workers in the petroleum industry are generally better than in other industries because of stronger labor unions in that industry.

Labor Force: Of the 7 million people living in Bolivia, an estimated 2.3 million are in the labor force. According to a recent survey of commercial establishments in the urban areas, 688,000 people work for private and public companies, 173,000 people work for government agencies (central, regional and municipal), 104,000 are unemployed and some 516,000 are underemployed. That means about 820,000 people work in agriculture. In fact, the 1992 census found that 42 percent of the population still lives in the rural areas.

The legal minimum wage is only 42 dollars a month but the average wage for a factory worker is about 100 dollars per month. Benefits, including a Christmas bonus equal to one month's salary as well as retirement payments, add another 30 percent to the wage bill for most companies.

Most companies are unionized; all unions belong to the Confederation of Bolivian Workers. However, the militant leaders of the Confederation are often ignored by the rank­and­file workers. The labor law permits Bolivian workers the right to organize and bargain collectively.

Bolivia has an abundant low­cost labor force. The official unemployment rate in urban areas is 7 percent. That rate does not take into account underemployment or rural unemployment. For purposes of the official unemployment rate, a part­time street vendor is considered employed. Foreign investors have found the labor force to be stable with low rates of turnover and with high levels of manual dexterity. There is not yet a high level of skill in textile manufacturing in Bolivia.

Most firms enjoy positive relations between labor and management. COB, the main umbrella labor union, is likely to continue challenging the administration, especially if capitalization results in initial job cuts, not growth. Bolivian labor law guarantees workers the right of association, restricts child labor, and provides for worker safety. Enforcement, however, is often lacking. While there is little high­tech manufacturing or industry, relatively untrained and uneducated workers in the mining industry have learned how to use high­tech equipment at the country's largest private gold mine owned by a U.S. company.

Holidays

The following legal holidays are observed throughout the country:

New Year's Day	January 1
Carnival	Varies
Good Friday	Varies
Labor Day	May 1
Corpus Christi	Varies
Independence Day	August 6
All Saints Day	November 1
Christmas Day	December 25

Local State Holidays

February 10	Oruro Day
April 15	Tarija Day
May 25	Sucre Day
July 16	La Paz Day
September 14	Cochabamba Day
September 24	Santa Cruz Day
September 24	Pando Day
November 10	Potosi Day
November 18	Beni Day

Bolivia's banking system is made up of the Central Bank and 18 privately-owned banks, four of which are foreign banks. Citibank is the only U.S. bank with a branch office in Bolivia (La Paz). Commercial banks account for over 80 percent of the deposits and loan portfolio of the formal Bolivian financial system. The remaining 20 percent is concentrated in savings and loans, credit unions, and other financial institutions. As of June 1, 1996, total deposits in the banking system were $2.6 billion, of which over 89 percent were in dollar denomination deposits.

All commercial banks provide regular banking services, accepting deposits for both checking and savings accounts and offering loans on short and medium term. Local banks are authorized to hold dollar-denominated time deposits. The Central Bank performs functions similar to those performed by the U.S. Federal Reserve. The Central Bank also provides government guarantees on loans to official agencies.

A new banking law, aimed at modernizing the Bolivian banking system, has been in effect since April 1993. The previous banking law dated back to 1928 and had been amended numerous times, resulting in a web of conflicting regulations. The new law, while not perfect, addresses such emerging areas as factoring and leasing, parameters for bank holding companies, regulatory roles of the Central Bank and the Superintendency of Banks, how banks will interact with capital markets, and generally ensures compatibility with the Commercial Code. A new Central Bank law passed in 1995 imposed certain needed controls over the banking sector, including higher reserve requirements and a prohibition (in 3 years) of the insider lending that has been the bane of Bolivia banks.

Foreign Exchange Controls Affecting Trading

There are no foreign exchange controls. See the section entitled "Conversion and Transfer Policies" under the Investment Climate section.

The Boliviano (BS.) is divided into units of 100 centavos, although coins denominated at less than 50 centavos are rarely used. Travelers checks, dollars and other currencies can be readily exchanged in exchange houses, banks and major hotels. It is difficult to cash personal checks in Bolivia as a non-resident. The Boliviano is freely convertible for all transactions. As of June, 1996, the rate of exchange was 5.06 Bs. for one U.S. dollar.

Several money exchange houses legally operating in Bolivia offer prompt conversion of several currencies at legal rates, in addition to transfers.

For more detailed information on Bolivia's financial system, including information on securities exchanges, debt-equity investment bonds, export financing lines for Bolivian exporters, project facilities, and financing for private enterprise development, consult the financing guide published by the U.S. Department of Commerce's Latin American/Caribbean Business Development Center.

General Financing Availability

Credit is difficult to obtain and is generally extended only on a short-term basis. Interest rates range from 14 to 18 percent for loans in U.S. dollars and from 38 to 43 percent for Boliviano loans without maintenance of value provisions. (note: these were the rates as of June, 1996) Collateral requirements for all but the most valued clients are very high. Interest rates are influenced by the Central Bank's certificate of deposit rates, as well as by high administrative costs resulting from bank operational inefficiency. Foreign companies are eligible to borrow from the local financial system.

The financial market in Bolivia has grown at a rate of 35% per annum in real terms, as a result of Bolivians returning capital and foreign financial institutions placing funds in the market. Foreign currency deposits reached a record $2.9 billion at the end of 1996. The new Banking Law, passed in May of 1993, has stimulated growth in the market closely regulated by the Banking Superintendency.

Bolivia has no tradition of giving value to paper as its two independent stock exchanges - created as part of the IMF and World Bank conditions for structural adjustment - do not trade in shares. The La Paz stock exchange started operations in 1989 trading in Central Bank deposit certificates, then Bonds and the fixed term deposits of private banks. The government has yet to approve a stock market law athough President Sanchez de Lozada would like to see it approved before he completes his term of office in August 1997.

Bolivia's novel capitalization program (50% partial privatisation) is having a better than expected effect on foreign investment inflows. Since 1995, nine international companies and consortia have 50% partially privatized state-owned companies for electricity, telecommunications, the national airline, the railways and the oil & gas sector's production and transport divisions.

Visas: Any foreigner that wishes or needs to work in Bolivia must first obtain a working memorandum from the Ministry of Labor. To do so, they need to present a legal request and their passport with a valid visa. The GOB has three different non-immigrant categories for the entry of any foreigner into Bolivia. These are:

1. Tourist visa, free of charge and valid 30 days. This visa is valid for business purposes and may be extended for another 30 days upon the payment of $20 in the offices of the Immigration Service.

2. Temporary residence visa, with the following requirements: valid passport containing specific-purpose visa (for any purpose other than tourism); legal petition addressed to the Director General of Immigration and Foreign Affairs, requesting temporary residence; work contract legalized by the Ministry of Labor, specifying the duration of the contract; certificate from the institution for which the person is going to work (or a certificate of studies, for students only); police security clearance, issued by the Bolivian Police; legal address, registered with the Bolivian Police; temporary residence request form, change of visa request form, required even if it is their first visa; for temporary residence of up to two years a fee of 750 Bs. ($150) must be paid. (note: the Bolivian Government reserves the right to accept or deny the temporary residence of foreigners in Bolivia).

3. Indefinite residence visa, with the following requirements: valid passport containing two-year temporary residence visa; legal petition addressed to the Director General of Immigration and Foreign Affairs requesting indefinite residence; medical certificate issued by the National Institute of Employment Health; police security clearance issued by Bolivian Police; legal address registered with Bolivian Police; payment of $50 to the National Treasury; birth certificate legalized by a Bolivian consulate; police security clearance, issued in the country of origin and legalized by a Bolivian consulate; indefinite visa request form, change of visa request form, work contract legalized by the Ministry of Labor. (note: the GOB reserves the right to accept or deny the indefinite residence of foreigners in Bolivia.)

B. The above categories cover principals, managers, trained and specially qualified employees involved in the company's operations.

C. No special qualifications are required to secure entry. The person/investor is not limited in the type of work he/she can perform. There are no limits to the amount of money invested to qualify for entry.

D. There are no specific restrictions for a person/investor entering Bolivia. There is no requirement to train nationals. A businessperson may remain as long as required. There is no need for a person/investor to have been previously employed with a related company outside Bolivia. There is no numerical limitation on the number of businesspersons/investors from the U.S. that may enter Bolivia. The spouse and children of the visa holder are entitled to enter the country with the visa holder; however, their names must be included in the legal petition to the Director General of Immigration and Foreign Affairs.

E. The qualifications or restrictions referenced above for U.S. businesspersons/investors do not differ from those for individuals from other countries.

The head of immigration is Dr. Ivan Decker Molina, Under Secretary of Migration, Ministerio de Gobierno, La Paz, tel (591) (2) 359665 or 370475, fax 376701.

The Bolivian government is anxious to attract foreign investors. It knows that large infusions of foreign investment are needed to achieve significant per­capita growth. As discussed earlier, the innovative capitalization program, designed to attract major foreign investment to sectors formerly dominated by the state, is the centerpiece of the GOB's investment strategy. Although somewhat behind schedule, it has to date been an open and transparent process, and the winning bidders have been generally satisfied with their post-capitalization experiences and treatment.

Since 1985, 100 percent foreign ownership is allowed with no requirement to register foreign investments. There is no screening of foreign investment or preferential or discriminatory treatment applied to foreign investment.

In 1990 and 1991, the government passed three important laws designed to set forth clear rules of the game for private investment. The 1990 Investment Law guarantees all investors national treatment, free currency conversion, unrestricted remittances, and the right to international arbitration in most industries. New mining and hydrocarbons laws authorize joint ventures with the state­owned corporations and provide a new tax system designed to allow foreign firms paying taxes in Bolivia to obtain foreign tax credits in their home countries. The Mining Law also allows foreign firms to operate within the 50­kilometer border belt in joint venture or service contracts with Bolivian mining companies, with the exception of firms from the country adjacent to such border. The 1996 Hydrocarbons Law appears to permit international arbitration, but it is unclear if additional implementing legislation is required. Access to international arbitration in the hydrocarbon sector is the last significant obstacle to the completion of the pending U.S.-Bolivia Bilateral Investment Treaty.

New laws regarding banking and exports were passed in 1993. The Banking Law legalized many activities that were previously not clearly legal, such as factoring, leasing, issuing stocks and bonds, administering mutual funds, and foreign currency hedging. Banks can now maintain accounts in foreign currencies (as a matter of fact, over 95 percent of deposits were in dollar or dollar­pegged accounts). The roles of the Central Bank and the Superintendency of Banks were defined, as were capital and reserve requirements. The Export Law, designed to make the tax system neutral vis­a­vis exports, grants tax rebates to exporters. A hoped­for result is that Bolivian exports will become more competitive. Also, a 1992 Privatization Law permits the GOB to sell those state­owned companies not prohibited for sale by the constitution. Smaller government companies are the main target of this law.

All future oil exploration activity will be carried out via joint-venture contract with Yacimientos Petroliferos Fiscales Bolivianos (YPFB) reduced to an administrative role. Most of the mines currently owned by COMIBOL, the state­owned mining company, may not be purchased outright, but may be operated in a joint venture or leasing contract with COMIBOL. COMIBOL, however, is currently near bankruptcy and has now stated its willingness to enter into joint ventures or leasing contracts for all of its holdings (previously COMIBOL had mines and areas off limits to foreigners). Bolivia's long­distance telephone, airline and railroad companies are now privately owned as a result of capitalization.

Although there is no restriction on foreign ownership of land, the current land title system, dating from the 1952 revolution's agrarian reform, makes direct investment difficult in some rural areas of Bolivia. It is easier to contract or form joint ventures with local agricultural producers. The GOB has said that amending the agrarian titling law is also a priority and hopes to have the Congress pass a reform bill in June, 1996.

Bolivia has one of the simplest and lowest tariff regimes in the region. Capital goods are currently subject to a 5 percent tariff, with all other imported goods taxed at 10 percent. An elimination of the capital goods tariff was proposed by the current government in its pre­election platform. Since taking office in August 1993, government officials have dropped this proposal because they discovered the fiscal cupboard to be bare. The list of products defined as capital goods has been expanded considerably, though some investors believe it needs to be updated annually in a systematic manner. Despite the simple tariff structure, imports are subject to a number of additional taxes and fees which can amount to another 15­35 percent. The Bolivian Customs system is being partially privatized, with the goal of increasing efficiency and eliminating opportunities for corruption.

There is no discrimination against foreign investors, other than the legal prohibition on mining concessions within 50 kilometers of the border. However, Bolivian firms with mining concessions near the borders may contract foreign partners to develop their mines.

U.S. and foreign firms are able to participate in government research programs. Work permit, visa and residence requirements are not discriminatory. There are no special incentives for investment, other than new tax systems for hydrocarbon and mining companies which could permit foreign companies to receive foreign tax credits in their home country.

Bolivia has signed Bilateral Investment Agreements with Germany, Italy, France, Spain, Chile, Venezuela, Colombia, Peru, Argentina, Brazil, Mexico, China, Canada, Belgium, Great Britain, Sweden, Switzerland and the Netherlands.

The Bolivian government has almost no trade or investment barriers. Import licenses are required only for medicines, weapons, and chemicals which can be used for processing cocaine. Products imported from the other Andean Pact countries (Venezuela, Colombia, Ecuador and Peru) enter Bolivia free of duty, which gives them some advantage over products imported from the United States. However, Bolivia imports much less from its Andean Pact neighbors than it does from the U.S. The U.S. remains Bolivia's major trading partner.

It is Bolivian Government policy to promote free market competition. While there is no anti­monopoly law, the state­owned monopolies should all be in private hands by the end of 1996. The government, as part of its capitalization plan, approved legislation in 1994 creating SIRESE, an autonomous regulatory body comprising a General Superintendent and five Superintendencies which will regulate and control utilities (telecommunications, electricity, transport, hydrocarbons, and water resources). Free competition in those sectors will eventually be allowed; for example, with ENTEL, the new owners will have a six-year monopoly on long-distance service, while local cooperatives will have the same period to offer local phone service without competition (assuming they meet service and growth goals in their contract with the GOB). After six years the entire telecommunications market will be thrown open.

Aside from petroleum prices, the Bolivian Central Government no longer controls prices for goods or services. (Petroleum prices are controlled because only the government­owned monopoly sells petroleum products.) The GOB plans to deregulate petroleum prices in the near future. Until recently municipalities had the power to control prices of electricity. Legislation passed in the spring of 1994 gives the Central Government rate­setting authority in sectors to be capitalized, which included the energy sector. Municipalities still possess authority to set water, garbage collection, and intra­city public transportation rates.

Foreign Direct Investment Statistics

The Bolivian Government does not collect or publish data on the stock of foreign direct investment or on the flow of outbound investment by Bolivians in other countries. The government estimates the inflow of foreign investment based upon surveys and extrapolation from economic growth statistics. The requirement for investment permits was eliminated in 1985. The Bolivian Central Bank estimated that foreign direct investment in 1995 approached $500 million, nearly four times the estimated amount for 1994. The most foreign direct investment is in the mining, electricity and hydrocarbons sectors.

Bolivia's existing Intellectual Property Rights (IPR) legislation is weak and government enforcement efforts are inconsistent. The only way currently to ensure protection is to hire a good local attorney to chase down offenders and take them to court. The government is aware of the problem and is taking steps to modernize its legislation and implementation capabilities. The government has agreed to a modification of Andean Pact Decision 313 (Decision 344) which at least would provide a higher floor for patent and trademark protection. The agreement increases patent protection from 15 to 20 years, offers parallel protection, gives patent protection to plant species, and makes the agreement the floor, not the ceiling, for individual agreements that Bolivia may strike with other countries on IPR. The government will use Decision 344 as a guideline in the legislation it is drafting to improve protection of intellectual property rights. The GOB also negotiated a free­trade agreement with Mexico in 1994, which requires a higher standard of IPR protection. In addition, draft legislation has been prepared which would provide comprehensive anti-piracy protection and extend copyright protection to computer software.

Patent registration requests are reviewed by clerks for form rather than substance. A notice of the proposed patent registration is then published in the Official Gazette. If there are no objections within 50 days, a patent is then granted for a 15­year period. The patent must then be used in Bolivia within two years in order to be valid. Protection for the layout design of a computer chip is not specifically protected under any law, but apparently can be patented.

Trademark registration is carried out similarly to patents, except that the period for objections to a trademark registration is 18 months. Once obtained, a trademark is valid for a ten­year, renewable term. It becomes null if not used for an 18­month period. There are no provisions to protect trade secrets.

The Bolivian Copyright Law, passed in April of 1992, provides IPR protection to literary, artistic and scientific works for the lifetime of the author plus 50 years. It protects the rights of Bolivian authors, of foreign authors domiciled in Bolivia, and of foreign authors published for the first time in Bolivia.

Foreigners not domiciled in Bolivia will enjoy protection under this law to the extent provided in international conventions and treaties to which Bolivia is a party. Bolivian copyright protection includes the exclusive right to copy or reproduce work; revise, adapt or prepare derivative works; distribute copies of the work; and publicly communicate the work. The exclusive right to translate the work is not explicitly granted in the law, but the law does prevent unauthorized adaptation, transformation, modification and editing. The law provides for IPR protection for computer programs and data bases to be promulgated by separate regulations. Draft regulations for IPR on software have been finished but are awaiting presidential approval. The law does provide IPR protection to musical compositions, but does not provide specific protection to sound recordings. Implementing regulations are still forthcoming.

The Bolivian Film and Video Law, passed in December of 1991, contains elements of IPR protection. The law created a National Movie Council (CONACINE) to coordinate, control and carry out various activities related to the movie industry. It requires all films and videos shown or distributed in Bolivia to be registered with CONACINE and to show a seal from CONACINE. The intent of the law was that films or videos not bearing the CONACINE seal could be confiscated and burned.

TV stations are generally perceived to be among the worst IPR offenders in Bolivia, usually by showing films that are still in cinemas, thus siphoning off business from the normal cycle of cinemas, pay-for-TV/cable, home video, and network TV. Many stations do not pay rights for showing TV programs. The Superintendent of Telecommunications has recently implemented measures designed to ensure that only licensed material is televised. Offenders will be subjected to fines or lose their broadcasting licenses.

In September 1996, the U.S. Trade Representative placed Bolivia on the Special 301 Watch List for failure to protect Intellectual Property Rights (IPR) adequately. At that time, the International Intellectual Property Alliance (which represents U.S. copyright industries) estimated that U.S. companies lost $42 million in 1995 and $28 million in 1996 in Bolivia due to piracy of motion pictures, sound recordings, computer programs and books.

Regional Andean Pact Decisions primarily define scope of protection for patents, trademarks, copyrights and plant varieties. These decisions are currently being reviewed by the Andean Community. The current decisions are deficient with respect to patents and trademarks in the areas of compulsory licensing, working requirements and transitional ("pipeline" protection). In May 1997, Bolivia issue a Supreme Decree on software which clarifies that computer software is protected under Bolivia's copyright law.

Weak enforcement of existing laws has done little to discourage piracy in Bolivia, despite the high-level attention drawn to the issue by the USTR's designation. There is some movement, however: in September 1997, the Banzer Administration enacted Law No. 1788, which created a National Service of Intellectual Property which (once established) will be responsible for protecting IPR. For the first time, patents, trademarks and copyright issues will be the responsibility of one agency.

Bolivia's accession to the WTO obliges it to comply with the Trade-Related Aspects of Intellectual Property Rights (TRIPS) by the end of 1999. Bolivia is a member of the Bern Convention for the Protection of Literacy Works and the Paris Convention for the Protection of Industrial Property.

Protecting Your Product from IPR Infringement

A foreign company wishing to market and protect its product/trademark/name in Bolivia must first register the brand name, etc. with the Office of Industrial Property in the Secretariat of Industry and Commerce, located on the Avenida Camacho, corner with Calle Bueno in downtown La Paz. Protection of intellectual property in Bolivia has improved; however, companies should be prepared to eventually take their case to the courts in order to protect their IPR rights.

As a part of the New Economic Policy, Bolivia has adopted a simplified taxation system. There are only eight different taxes applied to domestic economic activity.

a. Value Added Tax. The most important tax is the Value Added Tax (Spanish acronym IVA). It is levied at a flat rate 13% of value added in all normal economic activity (sales, rent and leases, services, imports). IVA payments should normally be made monthly by the business, before the fifteenth of the following month.

b. Transactions Tax. The Transaction Tax is applied to all normal economic activity, and on the transfer of goods or rights. It is levied at a flat rate of 3% of the gross value of all transactions.

c. Complementary regime to IVA. There is also a complementary tax regime to the Value Added tax applied to many forms of personal income, salaries, and wages. These are subject to a 13% withholding payment which is reimbursed to the worker upon presentation of receipts indicating IVA paid on purchases. The complementary regime also covers tax payments on honorary and dividends, and on remittances of profits abroad which similarly are subject to a 12.5% tax.

d. Excise Taxes. There are excise taxes applied to the purchase or importation of specific goods. The goods covered are generally considered "luxury goods" such as: alcoholic beverages, soft drinks, vehicles, tobacco, perfume, jewelry, consumer electronics. Goods for export are exempt. Excise taxes vary according to the goods taxed.

e. Property Tax. The property tax is levied on the rents attributable to real estate, vehicles, boats, and airplanes. Taxes are calculated from formulas based on the characteristics of the asset. Rural smallholders are exempt from the real estate tax.

f. Earnings Tax: A25% tax is levied on net earnings as determined by the firm's financial statements

g. Foreign Travel Tax. A tax is levied to all Bolivians and foreign residents traveling abroad. The tax is currently Bs. 100 for travel to neighboring countries and Bs. 150 for other countries. Non-resident aliens and small children are exempt.

h. Gift and Inheritance Tax. The final tax in the Bolivian system is a tax on gifts and inheritance. The tax is levied on fixed assets, stocks and other capital rights, and on motor vehicles. A 1% rate is charged to parents, children and spouses, 10% to siblings and other dependents, and 20% to all others.

The municipalities require payment of authorization an annual patents for all business.