April 03, 2023

Brazilian New Transfer Pricing Rules Approved by the House of Representatives


On March 30, 2023, the Brazilian House of Representatives approved Conversion Bill n. 08/2023 for the enactment into law of Provisional Measure (“PM”) n. 1,152/2022, which introduced new Transfer Pricing (“TP”) rules aimed at aligning the Brazilian system with the OECD standard.

The conversion bill will now be subject to consideration and approval by the Brazilian Federal Senate by June 1, 2023.

The conversion bill incorporated some relevant changes to the initial text of PM n. 1,152/2022. Among other amendments, we highlight the following:

(i) rejection of the non-deductibility rule regarding amounts paid, credited, delivered, employed or remitted as royalties and technical, scientific, administrative or similar assistance to entities that are resident or domiciled in tax haven jurisdictions or beneficiaries of privileged tax regimes;

(ii) rejection of the provision for the “Secondary Adjustment”, which intended to address the consequences of profit shifting in terms of financial flows between the parties by adopting a ‘deemed loan approach’; more precisely, as a general rule, the adjusted amount would be regarded as a loan bearing an annual 12 percent interest rate, due January 1 of the year subsequent to the one in which the spontaneous adjustment or the primary adjustment applies;

(iii) adjustments to the rules regarding commodities in order to reinforce that the comparable independent price (“PIC”) method shall be considered the “best method” where there is reliable information on comparable independent prices for commodities, including quotation prices and internal comparables, and the carve-out provision in the sense that an exception is made to situations where it can be established, on the basis of the facts and the circumstances of the transaction, as well as on additional elements such as the assets, roles and risks of each entity in the value chain, that another method is better suited in order to observe the arms’ length principle.

For additional information on the new Brazilian TP rules, see our previous Legal Updates:

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