As part of the implementation phase of a joint transfer pricing project between the OECD and Brazil, the OECD Secretariat and Receita Federal do Brasil (RFB) have launched a survey to seek public input to inform the work related to the development of safe harbours as well as other simplification measures and measures that can contribute to enhanced tax certainty.
The OECD and RFB jointly launched the "Transfer Pricing in Brazil" project in February 2018 to review and analyse the differences in the Brazilian transfer pricing rules as compared to the OECD standard. On 18 December 2019, the findings of the project were presented to the public with the publication of a joint report, Transfer Pricing in Brazil: Towards Convergence with the OECD Standard 1. The report identifies two options for Brazil to converge with the OECD standard while enhancing the positive attributes of its existing transfer pricing framework. Both options contemplate full adherence to the arm's length principle, which is at the core of the OECD standard while seeking to preserve simplicity and certainty. In this regard, consideration will be given to incorporating targeted, carefully designed safe harbours in appropriate circumstances. Safe harbours, which constitute simplified approaches for determining or approximating the arm’s length price – can achieve important benefits in terms of simplicity and certainty, if properly designed (in line with the arm’s length principle) and applied in appropriate circumstances (under specified eligibility criteria). They also reduce tax compliance costs for taxpayers and contribute to more efficient tax administration and tax certainty. Other measures and practices can also contribute to tax certainty in situations where safe harbours may not be an appropriate tool. Such measures and practices may include advance pricing arrangements (APAs), which also may provide a framework for achieving tax certainty in more complex and higher-risk transactions.
1. A brochure containing the main highlights from the report is also available in English and Portuguese.
