New transfer pricing rules signed into law

Law aligns Brazilian taxation with international standards and changes prices for related-party transactions

On June 15, Law No. 14,596/2023 was published, setting out the new transfer pricing rules applicable in Brazil. The act, which results from Provisional Presidential Decree No. 1,152/2023 being voted into law, aims to bring the country’s legislation more in line with the standards held by the Organization for Economic Cooperation and Development (OECD).

Read more: Federal Revenue Service regulates early adoption of new transfer pricing rules

What the new transfer pricing law says

The content of Law No. 14,596/2023 is quite significant, as it includes new provisions for the framework, such as:

The scope and application of the arm's length principle, in accordance with the standards of the OECD;

The definition of controlled transactions, which covers any type of commercial or financial relationship between related parties, such as:

- Transactions with intangible assets;

- Intra-group services;

- Cost-sharing agreements;

- Business restructuring;

- Financial transactions;

- Commodity transactions.

The concept of related parties and comparable transactions;

The transfer pricing methods in line with those endorsed by the OECD, including provisions on how to select the most appropriate method to be applied;

Advance Pricing Agreements (also known as "APAs") and processes related to the settlement of disputes.

The changes will be effective as of 2024, but taxpayers may adopt them as early as 2023 if they file a request between September 1 and 30, 2023.

It should be noted that the new transfer pricing rules in Brazil, as provided under Law No. 14,596/23, still require further regulation by the Federal Revenue Service.

Transfer pricing compliance

Domingues e Pinho Contadores performs the assessment and application of transfer prices, helping its clients remain in compliance with the rules in force. You can count on our support: dpc@dpc.com.br.