In February 2018, the OECD and Brazil launched a joint project to 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 builds on Brazil’s robust engagement in the OECD’s tax work. Brazil has been actively participating in the OECD tax work since joining the Global Forum on Transparency and Exchange of Information for Tax Purposes in 2010 and since 2013 as a member of the OECD/G20 BEPS Project, which had a substantial focus on transfer pricing. In 2017, Brazil also expressed interest in initiating the process to join the OECD.
The launch of the project was an important milestone in deepening the dialogue between the OECD and Brazil on transfer pricing matters. In light of the findings of this assessment, the project explored the potential for Brazil to move closer to the OECD transfer pricing standard, which is a critical benchmark for OECD member countries, and followed by most countries around the world.
The work carried out on this project resulted in conclusions that the current Brazilian system undermines the fiscal and development interests of the country. It was concluded that alignment with the international standard was the best option for Brazil. Full alignment was considered necessary because, otherwise, significant gaps would remain in the system with negative effects on tax certainty, the compliance burden, as well as risks of persisting double taxation and loss of tax revenue.
The work that was spearheaded by RFB and benefited from the involvement of all stakeholders, including business and academia in Brazil, led to the publication of Provisional Measure No. 1,152 on 29 December 2022, unveiling the text of the new transfer pricing rules, which is currently under consideration in the Brazilian Congress.