New Transfer Pricing Rules in Brazil
Rodrigo Eduardo Pricoli*
Bruno Henrique Coutinho de Aguiar**
Provisional Measure number 478 published in the end of 2009 has modified the Brazilian Tax Law, especially the Transfer Pricing Rules.
Based in the current wording of this Measure (it is still subject to the Congress approval and can be modified), it is possible to verify some relevant impacts for multinational companies established in Brazil.
One of the main changes is the revocation of the PRL method (Resale Price less Profit); replaced by a similar method called Sale Price less Profit – PVL, with different profit rates and calculating instructions.
Another important change is a new requirement for using the PIC method (Independent Comparable Price), which will only be accepted in case the comparable transactions used in the calculation represent, at least, 10% of the value of the respective imported good, right or service.
In the schedule below is a summary of the main modifications made by Provisional Measure 478, comparing the new transfer pricing rules with those applicable until 2009:
|
Law provision |
Until 2009 |
Provisional Measure 478 |
|
Profit Margin |
20% or 60% |
35%, and can shall be modified by the Ministry of Treasury |
|
Calculating PRL/PVL |
The parameter price does not consider the participation rate of the imported good, service or right in the cost of the product sold. |
The parameter price considers the participation rate of the imported good, service or right in the cost of the product sold. |
|
Importation Price for PRL/PVL |
Not clear, but the best interpretation pointed to the FOB price |
CIF price + Customs Duties |
|
Requirements for the transactions used when calculating PIC |
Comparable transactions must be entered into between non related parties. |
Besides being entered into between non related parties, comparable transactions must achieve, at least, 10% of the value of the respective imported goods, rights or services. |
|
Deadline for opting between methods |
N/A |
Until before a tax audit is started |
Although the new rules are effective since 01/01/2010, according to the Brazilian legal system, all Provisional Measures must be approved by the Congress and converted into an Ordinary Law.
Nevertheless, it is important for the companies to evaluate the impacts of the mentioned modifications and consider them when planning for 2010.
____________
* Lawyers of of Rayes, Fagundes & Oliveira Ramos Lawyers
