Brazil Introduces Major Transfer Pricing Changes
This TaxWatch webcast focuses on what the recent provisional guidance means and what businesses with Brazil operations need to consider.
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
In this article, the authors address changes to the Brazilian transfer pricing system that include becoming compliant with the OECD Guidelines.
