Brazilian Transfer Pricing: Timing Is Everything

Resources providing insights on the potential impacts of the Brazilian tax authority's issuance of Provisional Measure 1152.

Ringing in the new year with new Brazilian transfer pricing

On December 28, 2022, the Brazilian government issued Provisional Measure No. 1,152 (the ‘‘Provisional Measure’’) bringing Brazil’s historical, formula-based transfer pricing rules ever closer to an arm’s length standard consistent with the OECD Guidelines. MNEs are working quickly to understand the practical transfer pricing and international tax consequences of these changes.

The Provisional Measure incorporates several very important features of the OECD transfer pricing framework including: 

  • Transfer pricing methodology and valuation techniques;
  • The possibility of testing related foreign parties to a Brazilian transaction;
  • The OECD concept for Cost Contribution Arrangements;
  • Rules addressing internal restructurings;
  • OECD standards for financial transactions control;
  • Authority for the Brazilian tax authorities to enter into advance pricing agreements and conclude mutual agreement procedures; and
  • Expanded BEPS Action 13 documentation requirements, including Master File and Local File
Brazilian Transfer Pricing: Timing Is Everything
In this article, the authors address changes to the Brazilian transfer pricing system that include becoming compliant with the OECD Guidelines.

Related content

Additional content

U.S. Foreign Tax Credit Regulations: The Last Straw for Brazil's Transfer Pricing Regime?
In this article, the authors examine potential double taxation of U.S. multinationals operating in Brazil resulting from the U.S. final foreign tax credit regulations and Brazil’s transfer pricing regime, which is not aligned with the arm’s-length standard. The article considers whether this outcome might accelerate Brazil’s accession to the OECD and adoption of the arm’s-length standard.

To learn more, please contact us

Jessie Coleman

Jessie Coleman

Principal, Washington National Tax, Economic & Valuation Services, KPMG US

+1 202-251-8879