Brazil: New transfer pricing rules published

New transfer pricing rules under law that aligned Brazilian’s transfer pricing law with the 2022 OECD Guidelines

New transfer pricing rules under law that aligned Brazilian’s transfer pricing law with th

Brazil’s Federal Revenue (Receita Federal do Brasil or RFB) on 29 September 2023, published Normative Instruction Nº 2,161 (IN 2,161/23) providing new transfer pricing rules under Law Nº 14,596/23, which aligned Brazilian’s transfer pricing law with the 2022 OECD Guidelines.

IN 2,161/23 reflects a public consultation process, the first of its kind, which allowed stakeholders to comment on the RFB’s draft transfer pricing regime. Read TaxNewsFlash  

The most important point of IN 2,161/23 is guidance regarding the election period.

  • The RFB gives the taxpayer the option to adopt the system in 2023 (i.e., apply retroactively from 1 January 2023) or to phase-in mandatorily by 1 January 2024.
  •  Originally, the election period was September 2023 (IN 2,132 from February 2023) but a postponement to November 2023 was already foreseen as part of the public consultation document. Taxpayers can now elect early adoption in the RFB’s online portal eCAC by 31 December 2023, allowing taxpayers time to conduct a more detailed analysis of the impact of early adoption.

The final version of the IN also sees considerable improvement in regard to documentation requirements.

  • Taxpayers will be in one of three categories.
  • Taxpayers with intercompany transactions exceeding BRL 500 million (approximately U.S. $100 million at current exchange rates) must provide a complete Master file and Local file. Compared to the public consultation document, however, the Brazilian Master file (Arquivo Global) and Local file (Arquivo Local) are much closer aligned with the OECD models as outlined in the Annexes to Chapter V of the OECD Guidelines. Surprisingly, the RFB will accept the Master file in English and Spanish language but might request translations. The second category includes taxpayers with intercompany transactions exceeding BRL 15 million (approximately U.S. $3 million at current exchange rates) but below BRL 500 million. These taxpayers must provide a Local file “light” which contains very basic information on transfer prices. The last category, taxpayers with intercompany transactions below BRL 15 million, are exempt from providing transfer price documentation but, of course, need to adhere to the arm’s length principle. Interestingly, Art. 56 requires taxpayers to present certain transfer pricing information as part of the electronic corporate income tax return (ECF). Given that in general, transfer price documentation must be filed within three months after submission of the ECF, taxpayers will need to be at least partially ready well before that date. Transfer price documentation for 2023 and 2024 remains due by 31 December 2024 for early adopters and 31 December 2025 for regular adopters. One surprising one-time element relates to the transfer of intangibles under the old rules. Large taxpayers (i.e., with transactions exceeding BRL 500 million) that transferred intangibles (unclear if includes only outbound or also inbound cases), must provide information on such transfer in the Local file for calendar year 2024. Although the old rules apply, the RFB might use this information to confirm DEMPE functions in the group.

The RFB also sheds some light on what they expect from comparable company/transaction benchmarks.

  • If the benchmarks resulting from a reliable database identify fewer than four comparables, the RFB will accept a less rigid independence filter as long as the additional flexibility serves to increase the reliability of the range of comparables. In general, local comparables are preferred but non-domestic comparables are allowed if potential differences in comparability can be accounted for. RFB gives a country-risk adjustment as an example.
  • The RFB, in line with the OECD, also allows for the use of multiple-year data and weighted averages, plus provides examples for the calculation of interquartile ranges etc.

The RFB’s interpretation of transfer pricing methods is very closely aligned to the OECD Guidelines. The use of other methods is allowed, and valuation techniques widely used in transfer pricing for intangible assets are mainly referenced. The fact that the application of “other methods” must deliver an arm’s length outcome, however, might give taxpayers certain flexibility in the case of non-standard business models or complex transactions.

Interestingly, IN 2,162/23 also sheds some light on how the RFB may interpret the arm’s length principle. As expected, a holistic, substance-over-form approach replaces the previous “formulaic,” granular transaction-based view. This is reflected by the notion of that recurring losses in a generally profitable group might indicate non-compliance with the arm’s length principle (Art. 9 Paragraph 2).

Uncertainty increased, however, with regard to the impact of compensatory adjustment on other taxes. A compensatory adjustment is made by parties to a controlled transaction with a view to adjusting its value in such a way that the result obtained is equivalent to what would have been obtained if the terms and conditions of the controlled transaction had been established in accordance with the arm's length principle. The most common compensatory adjustment generally is year-end transfer price adjustment that ensures the less complex party to the transaction a target margin under a transactional net margin method (TNMM) framework. Although the wording in the public consultation document left room for interpretation, one could understand that under specific circumstances a compensatory adjustment would not trigger the adjustment of other taxes. In the final version, the helpful text is gone, and only the language that a compensatory adjustment does not automatically trigger an adjustment of other taxes remains. Especially for taxpayers that rely on imports and apply a TNMM logic, the world has become more uncertain.

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

Ericson Amaral |

Edson Costa |

Henrique De Conti |

Sebastian Hoffmann |



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