Senate approves new OCDE-aligned transfer pricing rules
The Federal Senate approved the Bill of Law no. 8/2023 (which refers to the Provisional Measure no. 1,152/2022) that modifies the Corporate Income Taxes (“CIT”) legislation to provide for new transfer pricing (“TP”) rules aligned with the guidelines of the Organization for Economic Cooperation and Development (“OECD”).
As anticipated, the new regime introduces important modifications to the TP regime in force, abolishing the fixed profit margins methods and introducing methods that are aligned with the arm’s length standard.
Even though three amendments have been presented to the bill of law and the Senators had discussed the deadline for implementation of the new rules, the approved wording has no alterations to the version approved by the House of Representatives on 03.30.2023 . If sanctioned, the rules will be in force from 01.01.2024 onwards, as general rule, and from 01.01.2023 onwards if the taxpayer opts for the voluntary early adoption in 2023.
The next step is the sanction or veto of the President of the Republic in 15 (fifteen) business days counted from the date of receipt of the bill of law. In the first case, the provisional measure is immediately converted into law, with its validity taking place according to taxpayer’s early adoption or not. In case of vetoes, the wording is reappreciated by the National Congress, who has the power to maintain or cancel them.
Lefosse’s Tax Team closely monitors the changes that impact the Brazilian market. For further clarification on this matter, or others that may be of interest to you, contact our professionals.
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