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OECD and Brazil share outcomes of project to align Brazil's transfer pricing rules to OECD standard

 

11/07/2019 – The OECD and Brazil's Receita Federal (RFB) issued a joint statement at the high-level event held on 11 July 2019 in Brasília, Brazil, to present the outcomes of the 15-month work programme carried out by OECD jointly with RFB.

 

This one-day-long event hosted by National Confederation of Industry (CNI) brought together almost 300 senior officials from the Brazilian government, the OECD, representatives of MNEs operating in Brazil, and government representatives from Brazil's major trading and investment partners.

 

This event was organised to highlight an important milestone reached in the joint transfer pricing project between OECD and RFB, which was supported by the United Kingdom Foreign and Commonwealth Office.  The work programme was launched in February 2018 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. The differences identified were then further assessed from the perspective of meeting the primary objectives of transfer pricing rules as well as from the perspective of other tax policy objectives. The analysis benefited from the input provided by Business at OECD, numerous other MNEs and the tax administrations representing Brazil's major trading and investment partners, which shared their experience with application of the existing transfer pricing framework in Brazil.

 

The assessment of the strengths and weaknesses of  Brazil's existing transfer pricing framework concluded with the exploration of possible options for Brazil's alignment with the OECD standard.  The options under consideration are immediate alignment or a gradual alignment. Both options contemplate adherence to the arm's length principle, inclusion of simplification measures to ensure ease of compliance, effectiveness of tax administration, and tax certainty from a cross-border perspective.

 

Within the context of the potential accession of Brazil to the OECD, transfer pricing is one of the key areas where alignment with the OECD standard will be assessed, because it constitutes one of the core principles that any new member wishing to accede to the OECD must adhere to.

 

Special Secretary of the Federal Revenue Marcos Cintra welcomed the conclusions of the project, which provides the necessary technical and analytical material for Brazil to consider the possible options for alignment with the OECD standard, while also addressing the specific situation and specificities of Brazil.

 

"We look forward to the future of OECD's collaboration with Brazil, especially through the Centre for Tax Policy and Administration of the Organisation, and we believe that this constructive dialogue will decisively support the reform process that the country needs, with the long-awaited tax reform. There is much to be done, but there are already concrete results to show, and we hope that this initiative will become one of the milestones of the transformations that the country proposes to make," said Special Secretary Marcos Cintra.

 

Media queries should be directed to Grace Perez-Navarro, Deputy Director of the OECD Centre for Tax Policy and Administration (CTPA), or to the CTPA Communications Team.