{"id":146020,"date":"2026-08-13T09:18:07","date_gmt":"2026-08-13T09:18:07","guid":{"rendered":"https:\/\/my.legal500.com\/guides\/?post_type=comparative_guide&#038;p=146020"},"modified":"2026-08-13T09:18:07","modified_gmt":"2026-08-13T09:18:07","slug":"brazil-transfer-pricing","status":"publish","type":"comparative_guide","link":"https:\/\/my.legal500.com\/guides\/chapter\/brazil-transfer-pricing\/","title":{"rendered":"Brazil: Transfer Pricing"},"content":{"rendered":"","protected":false},"template":"","class_list":["post-146020","comparative_guide","type-comparative_guide","status-publish","hentry","guides-transfer-pricing","jurisdictions-brazil"],"acf":[],"appp":{"post_list":{"below_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">Machado Associados<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/my.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2026\/07\/Machado-Associados-Firm-Logo.jpg\"\/><\/span><\/div>"},"post_detail":{"above_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">Machado Associados<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/my.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2026\/07\/Machado-Associados-Firm-Logo.jpg\"\/><\/span><\/div>","below_title":"<span class=\"guide-intro\">This country specific Q&amp;A provides an overview of Transfer Pricing laws and regulations applicable in Brazil<\/span><div class=\"guide-content\"><div class=\"filter\">\r\n\r\n\t\t\t\t<input type=\"text\" placeholder=\"Search questions and answers...\" class=\"filter-container__search-field\">\r\n\t\t\t<\/div>\r\n\r\n\t\t\t\r\n\r\n\r\n\t\t\t<ol class=\"custom-counter\">\r\n\r\n\t\t\t\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What is the legal framework (legislation, regulations or administrative guidance) governing transfer pricing in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Brazil\u2019s transfer pricing regime is primarily governed by Law 14596\/2023, regulated by the Brazilian Federal Revenue Service (RFB) Normative Instruction 2161\/2023 and subsidiarily ruled by the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations 2022, provided that they are not contrary to or inconsistent with Brazilian law and regulations. Future amendments to the OECD Guidelines will have the same status only if expressly approved by the RFB.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">To what extent are the OECD Transfer Pricing Guidelines incorporated into or relied upon in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>With the enactment of Law 14596\/2023, Brazil substantially aligned its transfer pricing regime with the OECD Transfer Pricing Guidelines. RFB Normative Instruction 2161\/2023 expressly provides that the OECD Transfer Pricing Guidelines constitute supplementary sources for the interpretation of the Brazilian transfer pricing rules.<\/p>\n<p>Although Brazilian legislation incorporates the main principles and concepts of the OECD Guidelines, the regulatory framework does not yet provide comprehensive detailed guidance on all matters addressed by the OECD Guidelines. RFB Normative Instruction 2161\/2023 establishes General Rules applicable. Further regulatory guidance may still be required in relation to matters such as intangibles, cost contribution agreements, business restructurings, financial transactions, Advance Pricing Agreements (\u201cAPA\u201d), among others.<\/p>\n<p>In August 2024, the RFB submitted draft regulations on intra-group services and unilateral APAs to public consultation. As of July 2026, no final regulations on these matters have been published by the RFB.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How are \u201crelated parties\u201d and \u201ccontrol\u201d defined in your jurisdiction, and how do these concepts affect the application of the arm\u2019s length principle and the scope of the transfer pricing rules?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Parties are considered related when one party is subject, directly or indirectly, to the influence of another in a manner that may cause their transactions to differ from those that would be agreed between independent parties under comparable circumstances.<\/p>\n<p>Related parties include, among others:<\/p>\n<ul>\n<li>the controlling company and subsidiaries;<\/li>\n<li>a business unit, when such unit is treated as a separate taxpayer for income tax purposes, including the head office and its branches;<\/li>\n<li>affiliates;<\/li>\n<li>entities included in consolidated financial statements, or that would be included if the ultimate parent entity of the multinational group to which they belong were to prepare such statements assuming its capital were traded on the securities markets of its jurisdiction of residence;<\/li>\n<li>entities where one of them has the right to receive, directly or indirectly, at least 25% of the profits of the other or of its assets in the event of liquidation;<\/li>\n<li>entities that are, directly or indirectly, under common control or in which the same partner or shareholder owns 20% or more of the share capital of each;<\/li>\n<li>entities in which the same partners or shareholders, or their spouses, domestic partners, relatives by blood or affinity up to the third degree, hold at least 20% of the share capital of each;<\/li>\n<li>the spouse, domestic partner, or relative by blood or affinity up to the third degree of a member of the board, officer, or controlling shareholder of that entity; and<\/li>\n<li>parties domiciled in tax havens and those subject to privileged tax regimes, as listed by Brazilian regulation.<\/li>\n<\/ul>\n<p>Under the previous Brazilian transfer pricing regime, in force prior to Law 14596\/2023, exclusive distributors were expressly considered related parties. However, the new framework adopts a broader, influence-based definition and does not include exclusive distributors in its illustrative list. Transactions involving excusive distributors should be evaluated in further detail to determine transfer pricing implications.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Do transfer pricing rules apply to both cross-border and domestic transactions?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Brazilian transfer pricing rules only apply to cross-border transactions.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any exemptions or exclusions from the transfer pricing rules in your jurisdiction (for example, for small and medium\u2011sized enterprises, specific transaction types, or materiality thresholds)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Brazilian transfer pricing rules do not provide for specific exemptions or exclusions based on the company size, nor do they establish a general materiality threshold. They do, however, provide targeted simplification measures, including a simplified approach for qualifying low-value-adding intra-group services, and thresholds applicable to transfer pricing documentation.<\/p>\n<p>Micro and small companies that have validly opted for the simplified tax regime established by Complementary Law 123\/2006 (Simples Nacional) are generally regarded as outside the express scope of the transfer pricing regulations. This should not be characterised as a general exemption based solely on company size.<\/p>\n<p>Differently from rules previously in place, taxpayers that opt for the Deemed Profit Regime (in which tax deductions are not allowed) must comply with transfer pricing rules on export and import transactions, as provided by Normative Instruction 2161\/2023. The application of the transfer pricing rules to such taxpayers has been challenged before the courts.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any notable deviations from OECD principles in local law or practice?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Following the enactment of Law 14596\/2023, the Brazilian transfer pricing regime became broadly aligned with the OECD Transfer Pricing Guidelines. Nevertheless, certain Brazilian rules are more prescriptive or differ from the approaches described in the OECD Guidelines.<\/p>\n<p>From a documentation perspective, the Brazilian compliance rules require more granular transaction-level disclosure in the ECF, than the OECD documentation standard. While the OECD three-tiered documentation generally requires information by material category of controlled transactions, the ECF requires taxpayers to segregate the types of controlled transactions and disclose the applicable method for each of them, accompanied by comparables and results.<\/p>\n<p>The Brazilian transfer pricing rules also apply to all transactions with tax havens, as well as with beneficiaries of privileged tax regimes, even where the parties are not related, broadening the scope of application of the rule sin comparison to OECD Guidelines.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What transfer pricing methods are recognised under local law?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Brazilian law recognises all traditional and transactional transfer pricing methods: Comparable Uncontrolled Price (CUP); Resale Price (RPM); Cost Plus (CPM); Transactional Net Margin (TNMM); and Profit Split (TPSM). Other methods may also be applied, provided that the taxpayer demonstrates that the expressly prescribed methods are either inapplicable or do not produce reliable results.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is there a prescribed hierarchy or priority among the transfer pricing methods?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>No prescribed hierarchy or order of priority among the transfer pricing methods is provided under Brazilian rules. Accordingly, the taxpayer must select the most appropriate method.<\/p>\n<p>Although there is no strict hierarchy among the methods, RFB Normative Instruction 2161\/2023 provides that, when reliable information is available on prices or consideration arising from comparable transactions, the CUP method is considered the most appropriate \u2013 particularly in transactions involving commodities \u2013 unless another method can be shown to be more appropriate.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How are arm\u2019s length ranges determined in your jurisdiction, and do domestic tax rules, guidelines, or case law prescribe specific statistical methodologies or calculation approaches for interquartile ranges?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Under the Brazilian transfer pricing rules, the arm\u2019s length range consists of financial indicators derived from comparable uncontrolled transactions identified through the application of the most appropriate transfer pricing method.<\/p>\n<p>In determining the appropriate range, observations with a lower degree of comparability or insufficient reliability must be excluded. If, after this filtering process, uncertainties remain regarding comparability that cannot be precisely identified, quantified or adjusted, or regarding the reliability of the observations, the interquartile range must be used. If no such uncertainties remain, the full range is considered appropriate. The interquartile range is not appropriate where a single comparable provides the highest degree of reliability and comparability.<\/p>\n<p>If the financial indicator of the controlled transaction falls within the appropriate range, no transfer pricing adjustment is generally required. If it falls outside the range, the controlled transaction must generally be adjusted to the median.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">To what extent are comparability adjustments permitted in your jurisdiction, and which types of adjustments are most commonly applied or rejected by tax authorities?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Comparability adjustments must be made to eliminate material effects arising from differences between the controlled transaction and the comparable transaction, or between the tested party and the comparable party, provided that such adjustments can be made with reasonable accuracy and that the following conditions are met:<\/p>\n<ul>\n<li>the adjustments shall be made if, and only if, they are expected to increase the reliability of the results;<\/li>\n<li>the adjustments are made only after the application of consistent criteria for filtering and selecting transactions between unrelated parties that present the highest degree of comparability;<\/li>\n<li>the same difference is not adjusted more than once, whether through the same comparability adjustment or through different adjustments, so that the effect of eliminating the same difference is not counted multiple times;<\/li>\n<li>the need to make numerous or substantial comparability adjustments may indicate that the transactions between unrelated parties are not sufficiently comparable; and<\/li>\n<li>each adjustment is properly justified and documented, including information demonstrating the need for the adjustment by reference to the relevant differences, the reasons for making the adjustment, the procedures adopted, and the calculations performed, with details of all steps followed, variables used, and results obtained for the comparables.<\/li>\n<\/ul>\n<p>At the moment, there are not yet sufficient administrative precedents under the current Brazilian transfer pricing regime to determine which types of comparability adjustments are generally accepted or rejected by the tax authorities.<\/p>\n<p>Nevertheless, under the previous Brazilian transfer pricing rules, there are important cases regarding comparability adjustments arising from the term of agreements. In these cases, all relating to the taxpayer, the discussion was centered on adjustments made by the tax authorities, based on the initial contractual term and the internal rate of return.<\/p>\n<p>Although the cases concern the previous transfer pricing regime, their emphasis on the reliability, justification, and evidentiary support of comparability adjustments may be relevant to future cases arising under Brazil\u2019s OECD-aligned rules.<\/p>\n<p>Country risk adjustments may be relevant where reliable domestic comparables are unavailable, and taxpayers must rely on comparables from other jurisdictions. Brazilian regulations expressly contemplate the use of non-domestic comparables, provided that reasonably accurate adjustments can be made to account for material differences, including differences in country risk.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What rules apply to year end transfer pricing adjustments in your jurisdiction, particularly in relation to statutory accounting requirements and their recognition for tax purposes?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>According to Brazilian rules, the year-end adjustments may be made up to the end of the calendar year in which the transaction takes place.<\/p>\n<p>The following conditions must be met for the year-end adjustment to be considered valid:<\/p>\n<p>(i) the year-end adjustment must be performed by the time the Brazilian Corporate Income Tax Return (ECF) is filed \u2013 provided that the accounting entry is permanently recorded in the accounting books for the calendar year to which the controlled transaction refers;<\/p>\n<p>(ii) must be carried out in a symmetrical and definitive manner in the accounting records of the Brazilian legal entity and of the other parties to the controlled transaction, observing the same value and nature of the controlled transaction;<\/p>\n<p>(iii) must be supported by the issuance of debit notes, credit notes, or tax and commercial documentation, as applicable, indicating the nature and amount of the adjustment;<\/p>\n<p>(iv) must ratified by a statement from the legal representative of the other parties to the controlled transaction, stating that the adjustment was in the same amount as that made by the Brazilian legal entity, attested by the representative; and<\/p>\n<p>(v) not refer to transactions carried out with any entity located in tax havens or subject to privileged tax regimes.<\/p>\n<p>Specifically for situations in which the year-end adjustment results in an increase in the Corporate Income Tax (IRPJ) and the Social Contribution on Net Profit (CSLL) taxable bases or in a reduction of the tax loss, the requirements mentioned in items (iv) and (v) do not apply.<\/p>\n<p>Finally, these adjustments may be made without prior authorization from the RFB.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are secondary adjustments applied\/included in the legislation in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Brazilian legislation does not currently provide for secondary adjustments. The original version of Provisional Measure 1152\/2022 included a secondary adjustment mechanism. However, the mechanism was removed during the congressional process that converted the Provisional Measure into Law 14596\/2023.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What statutory provisions, regulations, or administrative guidance govern the transfer pricing treatment of transactions involving intangibles in your jurisdiction, including any specific references to OECD Transfer Pricing Guidelines Chapter VI?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Law 14596\/2023 sets out the general transfer pricing treatment for intangibles. These provisions establish the framework for identifying, valuing, and allocating the returns associated with such assets, taking into account the functions performed, assets used, and risks assumed by the parties involved.<\/p>\n<p>The Brazilian legislation expressly references the OECD Transfer Pricing Guidelines, including Chapter VI, as a subsidiary source of interpretation. Detailed administrative regulations on transactions involving intangible assets remain pending. Accordingly, taxpayers and practitioners currently rely directly on Chapter VI of the OECD Guidelines for guidance on this subject.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How does your jurisdiction apply the DEMPE concept (Development, Enhancement, Maintenance, Protection, and Exploitation) when determining entitlement to intangible\u2011related returns?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The general provisions regarding intangibles are set out in Law 14596\/2023. These provisions establish that the relevant functions related to intangibles comprise the development, enhancement, maintenance, protection, and exploitation activities, commonly referred to as DEMPE functions.<\/p>\n<p>Consequently, the delineation of any transaction must identify not only the legal owner of the intangible, but also the parties that perform these functions, assume and control economically significant risks, and possess the financial capacity to bear them. Accordingly, mere legal ownership of an intangible is not, by itself, sufficient to justify the attribution of the returns derived from its exploitation.<\/p>\n<p>While the statutory framework introduces these concepts, detailed administrative regulations concerning intangibles are still pending. In the meantime, the OECD Transfer Pricing Guidelines serve as a subsidiary source of guidance.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What legal or administrative criteria determine which entity is entitled to intangible related returns (e.g., entities controlling economically significant DEMPE related risks)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The allocation of returns on controlled transactions involving intangibles must be determined based on the contributions made by the parties, particularly regarding the relevant functions performed in relation to the intangible and the economically significant risks associated with those functions. The mere legal ownership of an intangible does not, by itself, entitle the legal owner to any return from its exploitation. In addition, the remuneration of a related party, including the legal owner, that is responsible for providing financing may not exceed:<\/p>\n<ul>\n<li>a risk-free return, where the party lacks the financial capacity or does not exercise control over the economically significant risks associated with the financing and does not assume or control any other economically significant risk relating to the transaction; or<\/li>\n<li>a risk-adjusted return, where the party has the financial capacity and exercises control over the economically significant risks associated with the financing but does not assume and control any other economically significant risk relating to the transaction<\/li>\n<\/ul>\n<p>In essence, an economically significant risk is treated as assumed by the party that both exercises effective control over the risk \u2013 thus making relevant decisions and actually exercise decision-making authority over the risks \u2013 and has the financial capacity to bear its consequences.<\/p>\n<p>While the statutory framework introduces these concepts, detailed administrative regulations concerning intangibles are still pending. In the meantime, the OECD Transfer Pricing Guidelines serve as a subsidiary source of guidance.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Does local law or administrative guidance provide specific rules for hard to value intangibles, including whether ex post outcomes may be used as presumptive evidence for testing ex ante assumptions?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The general provisions regarding intangibles are set out in Law 14596\/2023. However, detailed regulations on the subject have not yet been issued by the RFB.<\/p>\n<p>Under the Law, controlled transactions involving hard-to-value intangibles (HTVIs) must consider:<\/p>\n<p>(i) the pricing or valuation uncertainties that existed at the time the transaction was entered into; and<\/p>\n<p>(ii) whether those uncertainties were addressed in a manner consistent with how independent parties would have dealt with them under comparable circumstances, including through the use of short-term agreements, price adjustment clauses, or contingent payment arrangements.<\/p>\n<p>Information that becomes available after the controlled transaction has been completed may be used by the tax authorities as evidence of the uncertainties that existed at the time of the transaction and to assess whether the taxpayer appropriately addressed them.<\/p>\n<p>If these requirements are not met, the transaction value may be adjusted for IRPJ and CSLL purposes. Unless an arm\u2019s length price can be reliably determined as a one-time payment on the transaction date, any such adjustment must be made through annual contingent payments that reflect the pricing or valuation uncertainties associated with the hard-to-value intangible transferred.<\/p>\n<p>No ex post adjustment should be made if: (i) the taxpayer can demonstrate, through contemporaneous documentation, that the projections, assumptions, risks, and foreseeable uncertainties were properly considered at the time of the transaction and that any material divergence between projected and actual results was caused by unforeseeable events; or (ii) the difference between the projected remuneration and the remuneration supported by actual results does not exceed 20%.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Does local law or administrative guidance expressly recognise cost sharing or cost contribution arrangements for the development or use of intangibles, and what requirements must such arrangements meet under applicable rules?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Law 14596\/2023 expressly recognises cost contribution arrangements, under which two or more related parties agree to share the contributions and risks associated with the acquisition, production or joint development of intangibles, in proportion to the benefits each participant expects to obtain.<\/p>\n<p>A participant must control the economically significant risks associated with the arrangement, have the financial capacity to assume them and have a reasonable expectation of obtaining benefits. In the case of intangibles or tangible assets, the participant must receive an interest or right in the relevant assets and be capable of exploiting them in its activities. Detailed regulations specifically addressing the application of these rules have not been issued yet.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What transfer pricing information may be exchanged cross\u2011border, and subject to what legal conditions or limitations?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Brazilian transfer pricing legislation does not currently contain specific rules governing the cross-border exchange of transfer pricing information in general. However, Brazil is a signatory to the Convention on Mutual Administrative Assistance in Tax Matters and the Multilateral Competent Authority Agreement on the Exchange of Country-by-Country Reports (CbCR MCAA).<\/p>\n<p>Under the CbCR MCAA, the Brazilian competent authority may exchange a CbCR received from a reporting entity resident in Brazil with the competent authorities of jurisdictions in which one or more constituent entities of the relevant multinational enterprise group are tax resident or operate through a permanent establishment, provided that the agreement is in effect between the relevant jurisdictions. The CbCR includes information on the global allocation of income, taxes paid and accrued, and certain indicators of economic activity across the jurisdictions in which the group operates.<\/p>\n<p>Information received through the CbCR may be used to assess high-level transfer pricing risks, other base erosion and profit shifting risks and, where appropriate, for economic and statistical analyses. It may not be used as a substitute for a detailed transfer pricing analysis based on a full functional and comparability analysis, nor does the information contained in a CbCR, by itself, constitute conclusive evidence that transfer prices are appropriate or inappropriate. Accordingly, transfer pricing adjustments may not be based solely on CbCR information.<\/p>\n<p>CbCR data may, however, be used as a basis for further enquiries into the group\u2019s transfer pricing arrangements or other tax matters during an audit.<\/p>\n<p>Any resulting adjustment must be supported by an appropriate analysis of the relevant transactions and circumstances. The information exchanged is also subject to the confidentiality, data protection and appropriate-use restrictions established under the CbCR MCAA and the Convention on Mutual Administrative Assistance in Tax Matters.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">To what extent may exchanged information be relied upon in transfer pricing assessments or litigation?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Exchanged information may be used as a basis for making further enquiries into the MNE Group&#8217;s transfer pricing arrangements or into other tax matters in the course of a tax audit and, as a result, appropriate adjustments to the taxable income of a Constituent Entity may be made.<\/p>\n<p>Specifically regarding information obtained under the CbCR MCAA, CbCR information may not, however, replace a detailed transfer pricing analysis based on the relevant facts, functions, risks, assets, and comparability factors.<\/p>\n<p>The information contained in a CbCR does not, by itself, constitute conclusive evidence that the transfer pricing arrangements are appropriate or inappropriate. Accordingly, a transfer pricing adjustment may not be based solely on exchanged CbCR information.<\/p>\n<p>The CbCR forms part of the three-tiered transfer pricing documentation framework, together with the Master File and the Local File, which is intended to provide tax authorities with relevant and reliable information for transfer pricing risk assessment.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What statutory or regulatory transfer pricing documentation requirements apply in your jurisdiction (including any master file, local file, or country\u2011by\u2011country reporting obligations)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The taxpayers are required to file the following documentation, subject to the applicable financial thresholds for each document:<\/p>\n<p>(i) Master File;<\/p>\n<p>(ii) Local File;<\/p>\n<p>(iii) Country-by-Country Report;<\/p>\n<p>(iv) Specific transfer pricing disclosures within the ECF; and<\/p>\n<p>(v) Commodity Transactions Registry (RTC) specifically for the registration of controlled transactions involving commodity exports and imports.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Who is required to prepare transfer pricing documentation, and what thresholds or conditions trigger the obligation?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Brazilian taxpayers subject to the transfer pricing rules must maintain sufficient documentation to support their controlled transactions and demonstrate compliance with the arm\u2019s length principle. Regardless of whether they are required to submit a Local File or Master File, taxpayers must report key transfer pricing information regarding their controlled transactions in the ECF.<\/p>\n<p>The CbCR is also filed through the ECF. Each Brazilian constituent entity of an MNE group must identify the entity responsible for filing the CbCR, provide the information itself if it is the entity responsible for the filing or indicate that the group qualifies for an exemption.<\/p>\n<p>The Local File must be prepared by the Brazilian taxpayer and must address its own controlled transactions.<\/p>\n<p>The Master File may be prepared centrally by another group entity. A Master File prepared in English or Spanish may be submitted without a Portuguese translation, unless one is requested by the Brazilian tax authorities. A Master File prepared in another foreign language must be accompanied by a Portuguese translation.<\/p>\n<p>The formal filing requirement for the Local File and Master File is waived where the total amount of controlled transactions, before transfer pricing adjustments, carried out in the calendar year preceding the reporting period is lower than BRL 15 million (for example, transactions carried out in FY 2025 for the FY 2026 files). Where the amount is equal to or greater than BRL 15 million but lower than BRL 500 million, a simplified Local File must be submitted. Where the amount is equal to or greater than BRL 500 million, a complete Local File must be submitted.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the timing requirements for preparing and submitting transfer pricing documentation, and must documentation be contemporaneous?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>As a general rule, the ECF must be submitted by the last business day of July of the year following the relevant calendar year. When applicable, the CbCR is subject to the same filing deadline.<\/p>\n<p>The Local File and Master File must be submitted within three months after the deadline for filing the ECF for the corresponding calendar year (generally October).<\/p>\n<p>The RTC must be completed in a specific electronic system made available by the RFB by the tenth day of the month following the execution of the relevant contract, regardless of the manner in which the contract is formalized.<\/p>\n<p>These filing deadlines do not eliminate the need to maintain contemporaneous records and supporting documentation as the controlled transactions occur to demonstrate compliance with the applicable transfer pricing rules should the tax authorities request them.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What penalties or sanctions apply for failure to prepare, maintain, or submit compliant transfer pricing documentation?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>If the taxpayer fails to provide the information necessary for the accurate delineation of a controlled transaction or for the performance of the comparability analysis, the tax authorities may:<\/p>\n<ul>\n<li>allocate to the Brazilian entity the functions, risks, and assets attributed to another party to the controlled transaction where there is no reliable evidence that such functions were effectively performed, such risks were assumed, or such assets were used by that party; and<\/li>\n<li>adopt reasonable estimates and assumptions for purposes of delineating the transaction and performing the comparability analysis.<\/li>\n<\/ul>\n<p>Regarding pecuniary penalties, the following fines apply to the Local File and Master File filings:<\/p>\n<ul>\n<li>in case of delay: a fine corresponding to 0.2% per month of delay, calculated on the taxpayer&#8217;s gross revenue for the period to which the obligation refers; or<\/li>\n<li>in case of documentation submitted without complying with the requirements: a fine equivalent to 3% of the taxpayer&#8217;s gross revenue for the period to which the obligation refers.<\/li>\n<\/ul>\n<p>In addition, in the event of inaccurate, incomplete, or omitted information provided in the Master File, a specific penalty of 0.2% of the consolidated global revenue of the multinational enterprise group for the fiscal year preceding the year to which the information relates may apply.<\/p>\n<p>Furthermore, the failure to timely provide information or documentation requested by the tax authorities during a tax audit or other inspection procedure, as well as any conduct that hinders or obstructs the audit process, may result in a fine of 5% of the amount of the relevant controlled transaction.<\/p>\n<p>The total penalties described above are subject to a statutory cap of BRL 5 million.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there specific transfer pricing reporting requirements in relation to the filing of the corporate tax return (e.g. specific forms on intra group transactions or special disclosures on compliance)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Brazilian tax rules require taxpayers to report detailed information on controlled transactions directly through the ECF on a \u201cper transaction\u201d approach. Specifically, they are required to disclose relevant transactional data to the RFB within dedicated sections of the ECF, regardless of whether they are exempt from filing the Local and Master Files.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are advance pricing agreements (APAs) available under the laws or administrative guidance of your jurisdiction, and what is their legal basis?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Advance pricing agreements are provided for under Law 14596\/2023. The RFB may also establish the requirements applicable to the submission and resolution of ruling requests by taxpayers, including those involving hard-to-value intangibles.<\/p>\n<p>To operationalize this framework, the RFB launched a public consultation in 2024 to draft the specific administrative regulations governing APAs and their related procedures. However, the final administrative guidance regulating the APA process has not yet been formally issued.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What types of APAs are permitted (unilateral, bilateral, and\/or multilateral), and are there any statutory or treaty based limitations on their use?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Although the Law does not expressly use the terms unilateral, bilateral or multilateral APA, the procedure contemplated by Law 14596\/2023 is structured as an arrangement between the taxpayer and the RFB and is therefore unilateral in nature. The RFB has also expressly described the proposed procedure submitted to public consultation as a Unilateral APA.<\/p>\n<p>Bilateral and multilateral APAs are not expressly provided for or regulated under the Brazilian domestic transfer pricing legislation.<\/p>\n<p>As of July 2026, the RFB had conducted a public consultation on draft regulations for the unilateral APA procedure, but no final regulation establishing an operational APA programme was identified in the official sources reviewed. Accordingly, APAs should presently be described as authorised by statute but still awaiting detailed implementation.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the safe harbour rules or simplified measures available for certain transactions or taxpayers, if any?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Currently, the only simplified measure implemented under the Brazilian transfer pricing rules applies to low value-added services, for which the remuneration must be calculated by applying a gross profit margin to the total direct and indirect costs associated with the transaction. The applicable margin is:<\/p>\n<ul>\n<li>at least 5%, if the service provider is a Brazilian legal entity; and<\/li>\n<li>no more than 5% in the event that the provider is a related party abroad.<\/li>\n<\/ul>\n<p>Services that the multinational group also provides to unrelated parties are not considered low value-added services.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How has the nature of transfer pricing audits evolved in your jurisdiction over the past two to three years\u2014more targeted, or more expansive and data driven?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Transfer pricing audits in Brazil are currently undergoing a transition. Historically, audits focused primarily on compliance with the former formula-based methods adopted in Brazil.<\/p>\n<p>Since the new arm\u2019s length regime became mandatory in 2024, audits are expected to become more fact-intensive, economically focused and data-driven, although there is not yet sufficient publicly available audit experience to identify a settled enforcement pattern under the new rules. The RFB\u2019s broader audit strategy already relies extensively on electronic filings, data analysis, risk assessment and cross-checking of information. Recent audit experience also indicates that, even in cases discussing the former transfer pricing legislation, the tax authorities have examine economic criteria that were not traditionally central to Brazilian transfer pricing audits, including the comparability of transactions, their commercial rationale and their underlying economic circumstances.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How developed is domestic case law, and does it meaningfully shape practice, or are outcomes still driven primarily by tax authorities?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Domestic case law \u2013 either administrative or judiciary \u2013 in Brazil remains relatively underdeveloped in the transfer pricing area, particularly under the new OECD-aligned regime introduced by Law 14596\/2023. While there is a body of administrative case law under the former rules, mainly before the Administrative Court of Tax Appeals (CARF), it is generally fact-specific and restrict to the previous fixed-margin regime, meaning it does not provide a consolidated framework for the application of the new arm\u2019s length standard.<\/p>\n<p>As a result, the initial years of practice under the new regime continue to be shaped primarily by the Brazilian tax authorities, particularly through regulations, audit positions, consultation procedures, and administrative guidance. Although CARF decisions under the old framework may influence the general approach adopted in audits and disputes, their influence on the new rules is expected to develop only as cases under the current regime mature.<\/p>\n<p>For the time being, however, taxpayers tend to rely primarily on the statute, RFB regulations, and OECD-based guidance, rather than on settled domestic judicial or administrative precedent.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What types of transactions or structures (e.g., IP migration, platform contributions, financing, residual profit allocations) have most frequently triggered transfer pricing adjustments or disputes with the tax authority?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>At this early stage, there is not yet sufficient precedent under the new Brazilian transfer pricing regime to identify a consistent pattern of specific transactions or structures that most frequently trigger adjustments or disputes.<\/p>\n<p>However, audits under the previous rules are still ongoing, given that the Brazilian tax authorities have a five-year statute of limitations to review transactions and assess taxes. Therefore, in the short term, taxpayers will face a transitional audit environment characterized by the coexistence of reviews under the former, formula-based regime and increasingly substantive, documentation-driven scrutiny under the new arm\u2019s length framework.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Looking five years ahead, which development is likely to reshape transfer pricing practice most profoundly in your jurisdiction\u2014digital business models, fiscal and political pressure on tax authorities, administrative capacity, or other structural changes?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Looking five years ahead, the evolution of the tax administration\u2019s approach appears to be the most profound factor that will reshape transfer pricing practice in Brazil.<\/p>\n<p>Even though a significant portion of the OECD principles is still pending detailed regulation, the changes already introduced by Law 14596\/2023 are substantial. The transition from Brazil\u2019s former formula-based system to the arm\u2019s length framework requires both taxpayers and the RFB to master highly complex economic analyses, including the accurate delineation of controlled transactions, functional and risk profiles, benchmarking studies, and specialized transactions involving intangibles, financial instruments, business restructurings, and intra-group services.<\/p>\n<p>Furthermore, the corresponding updates to ancillary obligations have not progressed at the same pace as the legislation. For instance, critical administrative processes remain unaligned.<\/p>\n<p>Finally, another key structural issue concerns the treatment to be applied to unregistered or hard-to-value intangibles, which will require significant technical expertise to audit.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\r\n<div class=\"word-count-hidden\" style=\"display:none;\">Estimated word count: <span class=\"word-count\">5494<\/span><\/div>\r\n\r\n\t\t\t<\/ol>\r\n\r\n<script type=\"text\/javascript\" src=\"\/wp-content\/themes\/twentyseventeen\/src\/jquery\/components\/filter-guides.js\" async><\/script><\/div>"}},"_links":{"self":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide\/146020","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide"}],"about":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/types\/comparative_guide"}],"wp:attachment":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/media?parent=146020"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}