By
Georgios Theodoros Anastassiadis[1]
1. Brief Introduction to the Brazilian Transfer Pricing
Legislation
The Brazilian transfer pricing rules were introduced into the
local legislation by means of Law 9,430, from 1996, coming into
force in 1997. Having been inspired by the US legislation, these
rules' main goal is to prevent the shifting of taxable profits
from Brazil to other jurisdictions, be it via overvaluing imports
or undervaluing exports carried out with affiliated companies
abroad and entities established in low taxation countries.
The underlying principle of this mechanism is to set a parameter
price, for each operation subject to the legislation, that reflects
market conditions practiced by independent parties without any
favoring situation, which is also known as the arm's length
principle. In this context, methods were created to calculate the
parameter prices, based upon this principle, for both import and
export operations.
