Transfer pricing is a globally relevant tax issue that is mandatory in Brazil. Transfer pricing is related to the assessment of market prices in transactions between two or more related companies from different jurisdictions. The aim is to ensure a fair price between related companies, preventing profit evasion through commercial transactions.

Currently, countries considered developed adopt the rules determined by the Organization for Economic Cooperation and Development (OECD). Brazil has received the invitation and is in the process of joining the economic group, which currently has its own assessment rules for transfer prices.

How do I know if my company needs to comply with Brazilian transfer pricing rules?

Every company that carries out import or export operations of goods, services and rights or recognizes revenue/expenses resulting from financial transactions with companies considered related or located in countries with favorable taxation, even if not related, must submit an annual transfer pricing analysis in Brazil. It is important not to forget that triangulated transactions, such as through an intermediary or back-to-back transactions, are also subject to analysis.

Obligations, responsibilities and risks

Companies that need to prove the appropriate transfer price must annually present in their Fiscal Accounting Records (ECF) the transfer price calculations, following methodologies defined by the Brazilian Federal Revenue Service (RFB). Currently provided for in Law 12.715 of 2012 and regulated by Normative Instructions 1.312 of 2012 to the most recent 1.870 of 2019.

The tax rules and controls related to transfer pricing are complex and the government is increasingly interested in taxing transactions of this nature. The inspection process can be time-consuming and stressful, and the penalties can be significant.

Our professionals are prepared to help your company develop efficient global transfer pricing policies, optimizing the pricing of operations and maximizing results, while minimizing the likelihood of exposure to tax adjustments and fines.