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OECD To Set Out Proposals For Brazilian Transfer Pricing Reform

by Ulrika Lomas, Tax-News.com, Brussels

16 December 2019


The OECD is to soon release a report to support Brazil's federal tax agency to potentially converge its transfer pricing rules with the OECD's transfer pricing guidelines.

Back in February 2018, the OECD launched a 15-month three-stage work program with Brazilian authorities. As part of that program, the OECD committed to undertake an in-depth analysis of Brazil's transfer pricing legal and administrative framework and examine the similarities and divergences between the Brazilian and OECD transfer pricing approaches to valuing cross-border transactions between associated enterprises for tax purposes.

This review was concluded in July 2019. The OECD now intends to release a report that will include the findings of the in-depth analysis of similarities and differences between the transfer pricing framework currently in place in Brazil as compared to the OECD guidance (OECD Transfer Pricing Guidelines for Multinational Enterprise and Tax Administrations), and also set out options for Brazil to converge with the OECD transfer pricing standard while enhancing the positive attributes of the existing framework. The report is due to be published on December 18, 2019.

Earlier in July 2019, the previous report said Brazil's transfer pricing regime diverges from the OECD guidelines in 30 areas, and 27 out of the 30 issues identified in the Brazilian transfer pricing rules increase the risk of double taxation.

Further it said a large number of the gaps or issues identified create BEPS risks, leading to potential loss of revenue. It said significant tax uncertainty results from the misalignment of the rules with the OECD transfer pricing standard given that, out of the 30 issues identified, only three instances lead to positive outcomes regarding tax certainty from an international perspective.

TAGS: Transfer Pricing | tax | transfer pricing | Brazil | Tax | BEPS

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