Brazil continues to move forward with the legislative steps needed to align Brazil’s transfer pricing regulatory framework with the Organization for Economic Cooperation and Development’s (OECD) Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations 2022 (“OECD Guidelines”). All that remains at this time is for President da Silva to sign the legislation into law. The OECD Guidelines are the international standard for transfer pricing methodology by which more than 70 countries adhere to and follow. Brazil, the only OECD member country yet to adopt the OECD’s arm’s length principle, will finally join with the passing of this new legislation.
Once this is signed into law, taxpayers in Brazil will have the option to adopt the new transfer pricing rules in 2023, and these rules will become compulsory for all taxpayers in 2024. Early adoption will benefit many multinationals that prefer to have globally harmonized transfer pricing systems where all group entities abide by the same transfer pricing policies. Those taxpayers wishing to adopt the OECD Guidelines in 2023 must formally declare their intention this September via the digital Portal of Virtual Service Center (Portal e-CAC). At this time, taxpayers will be required to book adjustments and raise the related invoices necessary for transitioning the year-to-date transfer pricing from figures that complied with Brazil’s prior laws to figures that are in line with the arm’s length recommendations in the OECD Guidelines.
We’re Here to Help
Bennett Thrasher’s transfer pricing practice can help evaluate whether your business will benefit from adopting Brazil’s new transfer pricing rules in 2023 or 2024 and support your transaction when the time is right. To learn more about how our professionals can support your transfer pricing needs, please contact Ben Miller by calling 770.396.2200.