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Brazil: Project to align Brazil's transfer pricing rules to OECD guidelines

Brazil: Project to align transfer pricing rules

Brazil currently is seeking full membership in the Organisation for Economic Cooperation and Development (OECD), but one challenge with regard to Brazil’s accession to OECD membership is the need for Brazil to harmonize its transfer pricing rules with the OECD transfer pricing guidelines.


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In particular, the transfer pricing rules in Brazil currently reflect fixed profit margins—that is, margin levels that are stipulated by the national legislature on an industry-specific basis (as well as other unique characteristics). This would need to be addressed before Brazil could join the OECD.

Project to align Brazil's transfer pricing rules to OECD guidelines

In February 2018, the OECD and Brazil launched a joint project to assess the similarities and divergences between Brazil's and OECD’s transfer pricing approaches, with a goal of exploring possible options for aligning Brazil’s transfer pricing rules with the OECD's transfer pricing guidelines. The outcomes of this 15-month project were presented on 11 July 2019, at an event that brought together some 300 senior officials from the Brazilian government, the OECD, representatives of multinational enterprises (MNEs) operating in Brazil, and government representatives from Brazil's major trading and investment partners.

As set forth in a joint statement [PDF 300 KB] issued by the OECD and Brazil's tax authorities (Receita Federal—RFB) following the 11 July 2019 meeting, there are two conceivable options (both having a goal of fully aligning Brazil’s transfer pricing rules with OECD standards):

  • Option one: The first option seeks immediately alignment of the Brazilian transfer pricing rules with the OECD guidelines.
  • Option two: The second option intends for the same process, but with the alignment structured in stages so as to allow a gradual implementation of the new and/or amended provisions over a longer period of time.

The second approach would afford an opportunity to prioritize the different national needs with respect to the tax structure, administrative implementation aspects, expertise of the workforce, etc. As such, the second option is being viewed by some as a more reasonable approach, with the OECD to set conditions for a progressive transition to the new system in the near-term.

However, without implementing one of these options for full alignment with OECD transfer pricing standards, the OECD still may see a risk of significant gaps remaining—gaps that could make it difficult for Brazil to integrate with regard to global value chains and join the OECD.

KPMG observation

Based on the results of this 15-month process, it is now up to the Brazilian government to make certain decisions regarding whether and how to align its transfer pricing rules to the OECD guidelines.

The resulting outcome could serve as the basis to assist decision-makers in planning for possible implementation of new transfer pricing rules (and as a guide in developing a roadmap how to proceed with future transactions). Other implications could provide opportunities for tax and cash benefits.


For more information, contact a tax professional with KPMG’s Global Transfer Pricing Services practice in Brazil:

Eliete Ribeiro | +55 (11) 3940-3288 |

Edson Costa | +55 (11) 3940-5313 |

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