The entry into force of Law No. 14,596/2023 marked a structural change in the Transfer Pricing regime in Brazil, by aligning national legislation with the arm’s length principle adopted by the OECD. After approximately one year of adapting to the new model, many multinational companies have already begun processes to review their internal policies, operational structures and documentation practices to meet the new regulatory requirements.
One of the main challenges observed in this period has been the interpretation and practical application of the methods provided for in the new legislation, especially in more complex operations, such as intra-group services, transactions involving intangibles and distribution structures with limited functions. Unlike the previous model, based on margins and fixed parameters provided for in Brazilian legislation, the new system requires a more in-depth economic analysis and comparability with transactions carried out between independent parties.
Another relevant aspect of the new legislation is the system of transfer pricing adjustments, which also represents a significant change in relation to the previous model. In the old regime, any divergences in relation to the legal parameters resulted, in general, in unilateral tax adjustments in the IRPJ and CSLL calculation basis, often without direct reflection on the pricing policy effectively practiced between the related parties. In the new model, in line with international practices, the adjustments now have a more consistent economic logic, and may involve compensatory or secondary adjustments, bringing the financial results of the companies closer to the conditions that would be observed between independent parties.
This change increases the importance of the review of previous transfer pricing policies, since companies now have greater responsibility in defining and monitoring their margins and commercial conditions throughout the fiscal period. In other words, it is not just about performing an adjustment calculation at the end of the year, but about ensuring that intragroup transactions are structured according to the arm’s length principle from their origin.
In view of this new scenario, the first year of application of the legislation shows that the issue of Transfer Pricing in Brazil has started to require a more strategic and integrated approach. Companies that anticipate economic analysis, properly structure their documentation, and continuously monitor their intragroup transactions tend to reduce tax risks and increase predictability in their international operations. The first full cycle of application of the new rules represents an opportunity for companies to review their transfer pricing policies, ensuring alignment with international guidelines and greater tax certainty.
For more information you can contact:
Sandra Adolpho – sandra.adolpho@basefirma.com