Brazil approves new transfer pricing rule


The Brazilian Federal Senate approved legislation on May 10 implementing a transfer pricing system to align with the guidelines established by the Organisation for Economic Co-operation and Development (OECD) in December 2022. The legislation is a Provisional Measure, meaning the next step will be to enter force as law after an analysis by the Brazilian President. Adoption of the rules could help Brazil join the OECD and alleviate some issues related to the credibility of certain Brazilian taxes for U.S. tax purposes.


Aspects of the new transfer pricing framework include:

  • Introduction of the arm’s length principle
  • Implementation of all transfer pricing methods according to the OECD standard
  • Elimination of royalty deductibility limitation
  • Introduction of mutual agreement procedures and advance pricing agreements 

Once approved by the Brazilian President, the Provision Measure will be published into law shortly after and effective as of Jan. 1, 2024. However, resident taxpayers may early adopt the new transfer pricing framework as of Jan. 1, 2023, by informing the Brazilian tax authorities between Sept. 1 and Sept. 30, 2023.


Once in place, the change could be a step toward Brazil joining the OECD, which has been discussed since 2018. One of the fundamental criteria for inclusion is the implementation of a new transfer pricing system aligned to the OECD standard. The change could also 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.


For more details, see Grant Thornton Brazil’s story, “Brazilian Senate Approves New Transfer Pricing Rule and Provisional Matter May Shortly be Converted into Law.



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