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OECD, Brazil update on alignment of transfer pricing rules

The OECD and Brazil's Receita Federal (RFB) have presented the outcomes of a joint 15-month work programme on transfer pricing. A one-day event hosted by Brazil’s National Confederation of Industry (CNI) brought together almost 300 senior officials from the Brazilian government, the OECD, representatives of multinationals operating in Brazil, and government representatives from Brazil's major trading and investment partners.

 The work programme was launched in February 2018 to undertake an in-depth analysis of Brazil's transfer pricing legal and administrative framework and examine the similarities and divergences between the Brazilian and OECD transfer pricing approaches to valuing cross-border transactions between associated enterprises for tax purposes.

The differences identified were assessed from the perspective of meeting the primary objectives of transfer pricing rules as well as from the perspective of other tax policy objectives.  

The assessment of the strengths and weaknesses of Brazil's existing transfer pricing framework concluded with the exploration of possible options for Brazil's alignment with the OECD standard.  The options under consideration are immediate alignment or a gradual alignment. Both options contemplate adherence to the arm's length principle, inclusion of simplification measures to ensure ease of compliance, effectiveness of tax administration, and tax certainty from a cross-border perspective.

Special Secretary of the Brazilian Federal Revenue Marcos Cintra welcomed the conclusions of the project, which provides the necessary technical and analytical material for Brazil to consider the possible options for alignment with the OECD standard, while also addressing the specific situation and specificities of Brazil.

"We look forward to the future of OECD's collaboration with Brazil, especially through the Centre for Tax Policy and Administration of the Organisation, and we believe that this constructive dialogue will decisively support the reform process that the country needs, with the long-awaited tax reform. There is much to be done, but there are already concrete results to show, and we hope that this initiative will become one of the milestones of the transformations that the country proposes to make," said Cintra.

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