Brazil: Guidance on new OECD-aligned transfer pricing rules

Normative Instruction No. 2,132 provides guidance on new transfer pricing rules

Normative Instruction No. 2,132 provides guidance on new transfer pricing rules

Following publication of Provisional Measure No. 1,152, which would adopt OECD-aligned transfer pricing rules, the Brazilian tax authorities (Receita Federal do Brasil—RFB) published a first Normative Instruction (Instrução Normativa)* No. 2,132 (17 February 2023) providing guidance on the new rules.

* A normative instruction consists of a normative act in order to discipline the execution of a law, decree or regulation, without transposing or innovating in relation to the norm that it complements.

The instruction addresses three topics.

Optional adoption of the OECD-aligned transfer pricing rules

Taxpayers opting to adopt the new rules for 2023 (which become mandatory in 2024) must do so between 1 September 2023 and 30 September 2023 via the RFB’s Virtual Service Center (e-CAC) by attaching the option term included in the instruction. Special rules are available for companies starting operations after 1 September 2023 or ceasing operations before that date.

The option to adopt the new rules is irreversible, and a taxpayer cannot switch back to the former regime in subsequent years. 

Transfer pricing adjustments

The new transfer pricing rules establish four types of transfer pricing adjustments: spontaneous adjustments, compensatory adjustments, primary adjustments, and secondary adjustments. The instruction provides guidance on spontaneous, compensatory, and primary adjustments.

Spontaneous and compensatory adjustments are performed by the taxpayer if the transfer prices are not in line with the arm’s length principle (e.g., in the case a distributor’s net margin is outside the interquartile range of comparable net margins). In general, adjustments cannot reduce the tax base or increase the loss of the Brazilian entity. However, compensatory adjustments can reduce the tax base or increase the loss, which would allow transfer pricing adjustments for target net margins that are an integral part of many global transfer pricing models, as well as allow a loss-split under a residual profit split model.

Compensatory adjustments must occur prior to the closing of the respective fiscal year (i.e., 2023 in the case of the adoption of the OECD-aligned transfer pricing rules in 2023) and must satisfy the following requirements:

  • Recorded in accordance with Brazilian GAAP for the Brazilian entity, as well as accounting-wise by the other parties of the controlled transaction
  • Based on the issuance of debit or credit notes, or on other fiscal and/or commercial documents which are able to prove the nature and the amount of the adjustment
  • Accompanied by declarations by the legal representatives of the involved parties that corresponding adjustments have been made in the same amount as realized by the Brazilian taxpayer

In addition, the instruction states that the realization of spontaneous or compensatory adjustments will not automatically imply indirect tax or customs duty adjustments. However, debit notes from foreign companies lowering the operating margin of Brazilian distributors or debit notes for the provision of services to a Brazilian taxpayer likely would be taken into account to reassess the transaction price from a withholding tax or customs perspective (especially given a normative instruction last year allowed the usage of transfer pricing documentation for custom purposes).

The realization of compensatory adjustments does not require the authorization of the RFB.


Royalty payments are non-deductible if made to entities residing or domiciled in a country or dependency with favored taxation or that are beneficiaries of a privileged tax regime (as outlined in articles 24 and 24-A of Law 9430/1996) or when the royalty payment results in double non-taxation (i.e., if the same amount is treated as deductible in the other jurisdiction or not treated as taxable income or is destined to finance deductible expenses of the related party/parties). In addition, technical aspects of the adoption of the OECD-aligned transfer pricing rules for royalties are provided.

The guidance on the deductibility of royalty payments gives further clarity on the “barriers” to the remittance of royalties to foreign related parties. The provisional measure already restricted the deductibility of royalty payments made to related parties domiciled in a privileged tax regime. A privileged tax regime presents, at least, one of the following characteristics:

  • Does not tax income or does so at a maximum tax rate lower than 17%
  • Does not tax income earned outside its territory or does so at a maximum tax rate lower than 17%

For more information, contact a KPMG tax professional in Brazil:

Ericson Amaral |

Edson Costa |

Henrique De Conti |

Sebastian Hoffmann |


The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 3712, 1801 K Street NW, Washington, DC 20006.