Worldwide transfer pricing reference guide 2014

Brazil
Taxing authority and tax law
Taxing authority: Department of Federal Revenue of Brazil (Receita Federal).
Tax law: Internal Revenue Code by Decreto 3000, 26 March 1999 (RIR99).
Relevant regulations and rulings
• Law No. 9.430, enacted 27 December 1996, introduced transfer pricing rules in Brazil by providing three different methods on imports
and exports of assets, goods and services:
• Imports:
• Comparable independent price method (PIC) defined as the weighted average sales price for similar products/services to unrelated
parties or between unrelated parties
• Resale price minus gross profit method (PRL) defined as weighted average sales price minus certain adjustments less a statutory
gross profit margin
• Production cost plus profit method (CPL) defined as the weighted average actual costs incurred during the year to produce the same
or similar product/services plus taxes and a gross profit markup of up to 20%
• Exports:
• Export sales price method (PVEx) defined as weighted average sales price to other customers or between unrelated parties during
the same year
• Resale price method defined as weighted average sales prices in the country of destination under similar payment terms minus taxes
imposed by that country and a gross profit margin of 15% (for wholesale) or 30% (for retail)
• Purchase or production cost method (CAP) defined as weighted average cost of acquisition or production increased by taxes and
duties imposed by Brazil plus a gross profit mark up of at least 15% on the sum thereof
• Normative Instruction 243/02 provided the most relevant interpretations and was valid until the issuance of Normative Instruction
1.312/12 in 2012 with further amendments by Normative Instruction 1.321/13, 1.322/13 and 1.395/13
• Federal Law 12.715, published on 17 September 2012, introduced significant changes to the Brazilian transfer pricing rules.
The amendments included:
• Imports:
• Introduction of a minimum requirement for the application of the Brazilian uncontrolled price method (PIC), for internal
comparables, on imports
• New minimum statutory gross profit margin is required when applying the PRL method, for the import of goods, services or rights,
ranging from 20%–40% depending on the company’s industry
• FOB price as basis for PRL calculation
• Transfer pricing methods for commodities:
• Intercompany imports and exports of commodities will have to be tested using PCI (quotation on imports) and PECEX
(quotation on exports), respectively. Additionally, the law authorizes the Brazilian tax authorities to determine what will be
considered as commodities, and which commodity exchange should be recognized for applying the newly introduced methods.
• The safe harbor rules no longer apply for the importation and exportation of commodities
• Procedural changes:
• Inability to change previously selected transfer pricing methodology once the tax inspection has been initiated, unless the method is
disqualified by the tax authorities
• In December 2012, the Law 12.766 introduced further changes to the Brazilian transfer pricing rules for interest paid to related parties
• The calculation of the maximum amount of deductible expenses and minimal revenue arising from interest, subject to transfer pricing
regulations, should observe the following:
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