Transfer Pricing Regulations Issued

Normative Instruction 38/97 (IN/SRF 38/97), published in the Official Gazette of 5 May 1997, establishes the regulations implementing the transfer pricing rules introduced by Law 9,430/96 (published in the Official Gazette of 30 December 1996).

IN/SRF 38/97 reproduces several provisions in Law 9,430/96 and sets forth new rules dealing in greater detail with each prescribed method. IN/SRF 38/97 also clarifies some legal terms (e.g. "related parties" and "similar goods") and contains new rules dealing with other issues. The main features of the new regulations are summarised below.

Comparable prices

The new rules contain specific guidelines on the comparability standards, according to which comparable prices can be adjusted by reference to the differences in the terms and conditions of the transaction and the special characteristics and content of the goods and services being compared. In the case of identical goods, regard must be given to the payment terms and