Monday, 02 May 2022

(When) Will transfer pricing in Brazil be more aligned with OECD standards?

On 12 April 2022, the OECD and the Brazilian tax authority (Brazil's Receita Federal (‘RFB’)) met in view of a proposed new transfer pricing system, which would be more aligned with the OECD Transfer Pricing Guidelines (‘OECD TPG’). As current Brazilian transfer pricing rules contain important differences with the OECD TPG, such alignment would be interesting for multinational companies having a tax presence in Brazil, as such differences may result in tax uncertainty/increased risks during transfer pricing audits, inconsistencies in transfer pricing policies throughout the group and a higher administrative burden.

Based on the communication, Brazil would be inclined to fully adopt international standards on transfer pricing. Some important expected changes would be the introduction of the arm’s length principle, recognition of the importance of relevant functions, risks and assets for delineating transactions, amending of existing rules for commodities to be more aligned with market conditions, application of the transfer pricing methods in accordance with the OECD TPG and the introduction of the three-tiered transfer pricing documentation approach including the Master file and Local file.

In 2018, the OECD and the RFB launched a joint project to examine differences in cross-border tax rules, which now would result in an alignment of Brazilian transfer pricing rules with OECD standards. In 2019, announcements were made and an in-depth report was published which identified a pathway for Brazil to converge with OECD transfer pricing standards. Since 2019, little news was announced on the matter (also considering the impact of the pandemic during this period) until now. According to the press release of the OECD, the efforts of the OECD and Brazil have continued during 2020 and 2021 to finalize the tax policy design of the new system.

Brazil recognizes that there is still some work to be done in order to avoid double taxation and double non-taxation but believes that overcoming these elements will attract more investments, would allow Brazil to be more integrated into global economic chains and would also develop, expand and protect its tax base. The OECD says it is ready to support Brazil in operationalizing the new system and stated that this will facilitate the Two-Pillar Solution to address the tax challenges of digitalisation.

Actions are expected in the next years, although no clear timeline was communicated at this stage. Legislation still must be formally approved by the Brazilian Government. Important to note is that elections will be held in Brazil during 2022. The results of these elections may have an impact on whether an agreement will be reached or not.

A swift approval and implementation of these new rules is obviously to be welcomed as it would clearly facilitate transfer pricing matters for e.g. Belgian multinational companies with a tax presence in Brazil.

Ben Plessers – Senior Manager at Tiberghien economics (

Tine Slaedts – Partner at Tiberghien economics (