Brazil to Soon Send Draft Transfer Pricing Bill to Congress

Brazil’s government plans to send a draft document dealing with transfer pricing reform to its congress in August, an official said.

As a prerequisite for joining the Organization for Economic Cooperation and Development, Brazil has committed to overhauling its transfer pricing rules, which govern how companies value transactions between related entities.

The mismatch between Brazil’s system and the rest of the world’s has led to both double taxation and lost tax revenue, according to an analysis done as part of the project to bring Brazil in line with the OECD system.

• The OECD’s transfer pricing guidelines call for a group’s related entities to value transactions as if they were unrelated—a concept known as the arm’s length principle. Brazil’s current system is more objective, relying on fixed margins.
• The format of the transfer pricing legislation hasn’t yet been decided, said Sandro de Vargas Serpa, deputy special secretary of the Brazilian Federal Revenue Agency. He was speaking Friday at an event hosted by the Brazilian Association of Financial Law.
• Brazil is also evaluating the potential impact of applying the global tax deal’s 15% minimum tax, said Claudia Pimentel, general coordinator of taxation at the agency, speaking at the same event.