Yesterday, representatives of the OECD and the Brazilian Federal Revenue Service (RFB), in partnership with the Brazilian Association of Financial Law (ABDF) and the Brazilian IFA branch, held a Webinar to discuss the next steps of the project that intends to converge the Brazilian transfer pricing rules with the OECD standards.

In February 2018, the OECD and RFB launched a joint project to examine the similarities and differences between the Brazilian and OECD transfer pricing approaches regarding valuing cross-border transactions between related parties for tax purposes.

On July 11, 2019, after the first 15 months of work, the OECD and the RFB released a joint statement to present the results of the plan that assessed the strengths and weaknesses of the existing transfer pricing structure in Brazil and possible options for alignment with the OECD standards.

On December 18, 2019 in Brasilia, the joint OECD-RFB Report “Transfer Pricing in Brazil: Towards Convergence with the OECD Standards” was launched, as attached.

At the beginning of this year, the OECD and the RFB lunched a survey inviting certain Brazilian taxpayers for input on transfer pricing issues relating to the design of safe harbour provisions, the use of comparable data, the use of advanced pricing arrangements (APAs) and other simplification measures, as part of the implementation phase of the joint transfer pricing project (third phase of the project).

The Webinar held this morning was marked by the presence of Mr. Thomas Balco, head of the transfer pricing department at the OECD’s Fiscal Policy and Administration Center, Ms. Grace Perez Navarro, Deputy Director of the OECD, Ms. Cláudia Pimentel, coordinator of international taxation of the RFB, and representatives of Brazilian companies and law practitioners.

Today, Mr. Thomas Balco and Ms. Cláudia Pimentel reiterated the need for the Brazilian TP rules to converge with the OECD standards, to avoid the effects of double taxation (in order to avoid the outflow of investments) and double non-taxation (in order to avoid BEPS).

The survey, lunched at the beginning of the year, had its deadline extended to October 30, 2020. The survey is aimed at understanding the difficulties that Brazilian taxpayers may face in applying the rules in line with the OECD standards.

As for next steps of the OECD-RFB project, it was stated that based on the needs of taxpayers and the quality of feedback collected by the survey, efforts will be dedicated to designing safe harbors in order to achieve tax simplification. Similarly, framework APAs will be considered based on the demand and quality of the survey’s feedback.

Additionally, the feedback will indicate the access of comparable data and the use of foreign comparable prices where local comparable prices are not available.

Should you have any doubts concerning transfer pricing, please do not hesitate to contact us.

Castro Barros Tax Department