The largest economy in South America has always been the exception when it comes to global transfer pricing…but all of that is about to change.
On December 29, 2022, the Brazilian government released a presidential decree that contains legislation to align Brazil’s unique transfer pricing system with the OECD Transfer Pricing Guidelines. This provisional measure introduces the arm’s length principle, as well as OECD transfer pricing methods and practices. For adoption, the provisional measure must be transposed into law by the Brazilian parliament (congress and senate) within 120 days.
Assuming the legislation is adopted by the Brazilian parliament, for fiscal year 2023 (now!), taxpayers will have a choice whether to apply Brazil’s prior transfer pricing rules or the new OECD-based rules. Beginning 1 January 2024, the new OECD-based rules would be mandatory.
KPMG LLP (US) is hosting a one-hour TaxWatch Webcast which will focus on what the provisional guidance means and what businesses with Brazil operations need to consider. Speakers, including senior professionals from KPMG in Brazil and the U.S. and a transfer pricing director from Uber, will discuss:
- An overview of the provision measure and expectations for it becoming permanent
- A comparison of Brazil’s historical formulaic approach to transfer pricing to the OECD Transfer Pricing Guidelines
- The intersection between the Brazil provisional measure and the U.S. Foreign Tax Credit Regulations
- How companies are approaching this change – both in the short and long term
- Potential planning opportunities in light of the provisional measure