BRAZIL Law and Practice Contributed by: Paulo Honório de Castro Júnior, Bruno Marques Feitosa, Matheus Di Felippo and Urick Soares, William Freire Advogados
7.3 Co-Ordination Between the APA Process and Mutual Agreement Procedures So far, there is no provision regarding the interaction or co-ordination between APAs and Mutual Agree - ment Procedures (MAPs). 7.4 Limits on Taxpayers/Transactions Eligible for an APA The Article 6 of the draft Normative Instruction pro - vides that taxpayers may submit an APA proposal if they engage in – or intend to engage in – transactions subject to transfer pricing rules and have participated for at least six months in one of the RFB’s tax compli - ance programmes. Currently, the RFB manages three compliance pro - grammes: • Confia (Co-Operative Tax Compliance Program); • Sintonia (Tax Compliance Enhancement Program); and • OEA (Authorised Economic Operator Program). Furthermore, the draft regulation grants the Brazilian Federal Revenue Service the authority to set an annual cap on the number of APA proposals it will review, based on its operational and administrative capacity (Article 6, sole paragraph, draft Normative Instruction). APA proposals involving transactions that show signs of aggressive tax planning or tax avoidance will not be accepted by the Brazilian Federal Revenue Service. 7.5 APA Application Deadlines There is no specific deadline for requesting an APA. However, the agreement will be valid for up to four years and may be extended for an additional two years upon the taxpayer’s request and approval by the Brazilian Federal Revenue Service. 7.6 APA User Fees Submission of a consultation request will be subject to a fee in the amounts of: • BRL80,000; and • BRL20,000, in the case of a request to extend the period of validity of the response to the consulta - tion.
7.7 Duration of APA Cover As a rule, the APA will take effect from the tax period established as the starting point of its applicability and will be valid for up to four years and may be extend - ed for an additional two years upon the taxpayer’s request and approval by the Brazilian Federal Rev - enue Service. 7.8 Retroactive Effect for APAs According to the sole paragraph of Article 10 of the draft Normative Instruction, the APA may be applied retroactively to prior tax periods, provided that such application is authorised by the Brazilian Federal Rev - enue Service and that the relevant facts and circum - stances for those periods are consistent with those considered in the agreement. 8. Penalties and Documentation 8.1 Transfer Pricing Penalties and Defences The Brazilian taxpayer must present the documen - tation and provide information necessary to dem - onstrate its transactions subject to transfer pricing control, including that necessary for the design of the transaction and the comparability analysis. In this context, the following documents must be pre - sented. • Country-by-Country Declaration – containing infor - mation relating to the global allocation of revenues and assets and income tax paid by the multina - tional group to which it belongs, together with indicators related to the global economic activity of the multinational group, in line with the Action 13 of BEPS. • Global File – containing information relating to the structure and activities of the multinational group to which it belongs and the other entities that are part of the multinational group, in line with Actions 8 and 9 of the BEPS. • Local File – containing information relating to controlled transactions and the parties involved in controlled transactions, in line with BEPS Actions 8 and 9.
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