Brazil to Revisit Transfer Pricing Regime

Brazil to Revisit Transfer Pricing Regime

The OECD is working with Brazil to examine the similarities and gaps between the Brazilian and OECD approaches to valuing related-party, cross-border transactions for tax purposes.

The joint project – launched on February 28 – will continue for a period of 15 months and will assess the potential for Brazil to move closer to the OECD’s transfer pricing rules, which are a critical benchmark for OECD member countries, and are followed by countries around the world. The OECD is currently considering Brazil’s request to initiate an accession process to the OECD.

The project will analyze the legal and administrative framework behind the Brazilian transfer pricing system, as well as its implementation.  It will examine strengths and weaknesses in the Brazilian approach while exploring options for greater alignment with the OECD’s internationally accepted standard, the OECD Transfer Pricing Guidelines, which would be an important element of any future process of accession to the Organisation.

As a member of the Group of Twenty countries, Brazil has worked closely with the OECD on international tax policy issues for many years, and is a member of the OECD’s Global Forum on Transparency and Exchange of Information for Tax Purposes and the Inclusive Framework on base erosion and profit shifting.

OECD Secretary-General Angel Gurría said: “Brazil is a key partner of the OECD, so we are glad to take this step together toward bridging the gaps in transfer pricing. Effective transfer pricing rules are critical for avoiding double taxation and ensuring that taxable profits are not artificially shifted away. The project we are launching today will enable us to better understand the options for improving the application of transfer pricing rules in Brazil, and achieving greater convergence. This will help enhance the investment climate in Brazil by reducing the risk of double taxation.”