BRAZIL Law and Practice Contributed by: Paulo Honório de Castro Júnior, Bruno Marques Feitosa, Matheus Di Felippo and Urick Soares, William Freire Advogados
The Global File and the Local File must be presented in electronic format and deposited in the Federal Rev - enue Service’s own environment (RFB’s Virtual Service Center – e-CAC), within three months after the dead - line set for transmission of the ECF of the correspond - ing calendar year. The Country-to-Country Declaration must be present - ed by filling out a specific section of the ECF (Brazilian Tax Return). The taxpayer is exempt from sending the Local File in cases where the value of the controlled transactions is less than BRL15 million. For transactions between BRL15 million and BRL500 million a simplified shipping method is defined. For controlled transactions exceeding BRL500 million, the Local File must be sent in its entirety, as regulated by Normative Instruction No 2,161/2023. Sending the Global File is also waived in cases where the total controlled operations are less than BRL15 million. In the event that the taxpayer fails to provide the infor - mation necessary for the precise delineation of the controlled transaction or for carrying out the compa - rability analysis, the tax authority will be required to adopt the following measures: • allocate, to the Brazilian entity, the functions, risks and assets attributed to another party of the controlled transaction that do not have reliable evidence of having been effectively performed, assumed or used by it; and • adopt reasonable estimates and assumptions to carry out the transaction design and comparability analysis. In addition, the following specific penalties apply. • Regarding the Global Archive and the Local Archive: (a) fine equivalent to 0.2%, per calendar month or fraction thereof, on the value of the taxpayer’s gross income for the period to which the obli -
gation refers, in the event of failure to submit it in a timely manner; or (b) fine equivalent to 3% of the value of the tax - payer’s gross income for the period to which the obligation refers, in the event of presenta - tion without meeting the requirements for its presentation. • As for the Global File, a fine of 0.2% on the value of the consolidated revenue of the multinational group for the year prior to which the information refers, in the event of presentation with inaccurate, incomplete or omitted information. • Regarding the lack of timely presentation of information or documentation required by the tax authority during a tax procedure or other prior inspection measure, or for other conduct that entails embarrassment to the inspection during the tax procedure, a fine equivalent to 5% of the value of the corresponding transaction, as priced by the tax authority. The fines applied will not be less than BRL20,000 and may not exceed the amount of BRL5 million. Taxpayers will always be guaranteed the right to con - tradictory and full defence, being able to present the reasons why they do not agree with the tax authority’s understanding. 8.2 Transfer Pricing Documentation The declarations required by Brazilian legislation are in line with those provided for in the OECD Transfer Pricing Guidelines. Therefore, the Brazilian taxpayer must deliver the fol - lowing documents to the Brazilian authorities. • Country-by-Country Declaration, containing infor - mation relating to the global allocation of revenues and assets and income tax paid by the multination - al group to which it belongs, together with indica - tors related to the global economic activity of the multinational group. • Global Archive, containing information relating to the structure and activities of the multinational group to which it belongs and the other entities forming part of the multinational group.
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