Representatives of the Brazilian Internal Revenue Service (Receita Federal do Brasil) met with the Organisation for Economic Cooperation and Development (OECD) on April 12, 2022, to present new transfer pricing rules. The proposed rules could help Brazil join the OECD and make certain Brazilian taxes creditable in the U.S. under the new foreign tax credit (FTC) regulations.
Brazil’s inclusion as a member of the OECD has been discussed since 2018. One of the fundamental criteria for inclusion is the implementation of a new transfer pricing system. The intent is to improve trade agreements between Brazil and countries located abroad, and between linked or interdependent companies, avoiding double taxation or double non-taxation, and simplifying the legislation.
The adoption of the new transfer pricing system is expected to be performed between the years 2022 and 2023. The new rules would still need to be submitted to the Brazilian National Congress and approved to become effective.
Should these rules become effective, aligning the transfer pricing system to the international rules of the OECD could have significant effects on the current interaction of Brazil’s tax system with other jurisdictions. For example, the changes to Brazil’s transfer pricing system may alleviate some issues relating to the creditability of certain Brazilian taxes for U.S. federal income tax purposes.
Partner, Washington National Tax Office
Washington DC, Washington DC
- Technology and telecommunications
- Private equity
Tax professional standards statement
This content supports Grant Thornton LLP’s marketing of professional services and is not written tax advice directed at the particular facts and circumstances of any person. If you are interested in the topics presented herein, we encourage you to contact us or an independent tax professional to discuss their potential application to your particular situation. Nothing herein shall be construed as imposing a limitation on any person from disclosing the tax treatment or tax structure of any matter addressed herein. To the extent this content may be considered to contain written tax advice, any written advice contained in, forwarded with or attached to this content is not intended by Grant Thornton LLP to be used, and cannot be used, by any person for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.
The information contained herein is general in nature and is based on authorities that are subject to change. It is not, and should not be construed as, accounting, legal or tax advice provided by Grant Thornton LLP to the reader. This material may not be applicable to, or suitable for, the reader’s specific circumstances or needs and may require consideration of tax and nontax factors not described herein. Contact Grant Thornton LLP or other tax professionals prior to taking any action based upon this information. Changes in tax laws or other factors could affect, on a prospective or retroactive basis, the information contained herein; Grant Thornton LLP assumes no obligation to inform the reader of any such changes. All references to “Section,” “Sec.,” or “§” refer to the Internal Revenue Code of 1986, as amended.
More tax hot topics
No Results Found. Please search again using different keywords and/or filters.