BRAZIL Law and Practice Contributed by: Paulo Honório de Castro Júnior, Bruno Marques Feitosa, Matheus Di Felippo and Urick Soares, William Freire Advogados
13. Controversy Process 13.1 Options and Requirements in Transfer Pricing Controversies The application of transfer pricing rules follows the same procedure as the administrative and judicial pro - cess of tax claims. The process can be summarised as follows. Administrative phase: • Tax assessment – it is the administrative act by which the tax authority determines the taxpayer’s tax obligation, identifying the amount to be paid. • Assessment notification – the taxpayer is notified of the tax collection through an official document sent by the tax authority. • Challenge or administrative appeal – the taxpayer has the right to challenge the tax assessment by filing a challenge or administrative appeal, demon - strating any errors in the charge or legal reasons for the challenge. • Administrative decision – the tax authority analyses the objection or appeal and issues an administra - tive decision, whether or not it accepts the argu - ments presented by the taxpayer. • Payment or registration in active debt – if the administrative decision is unfavourable to the taxpayer and there is no longer any possibility of appeal, he/she must pay the tax or the tax author - ity may register the debt in active debt for judicial collection. Judicial phase: • Lawsuit – if the taxpayer disagrees with the admin - istrative decision, he/she can appeal to the judici - ary, filing a lawsuit to contest the collection of the tax. • Tax foreclosure – if the court decision is unfavour - able to the taxpayer, the Public Treasury may initiate the tax execution process to collect the tax, if the taxpayer does not make the spontaneous payment.
of the transfer pricing rules on typical customs taxes. After all, both normative frameworks intend to com - pare transactions carried out with the parameters that would be verified for these same transactions if car - ried out without any favouritism by the contracting parties. At this point, it should be noted that the RFB cat - egorically intended to separate the two institutes in Law No 14,596/2023, the content of which is clear regarding its applicability only to income taxes: “This Law provides for transfer pricing rules relating to Cor - porate Income Tax (IRPJ) and Social Contribution on Net Profit (CSLL).” If it is true, therefore, that Law No 14,596/2023 does not produce automatic effects on the customs valua - tion procedure, the new set of transfer pricing rules in Brazil, especially as it is based in the best implemen - tation of the arm’s length principle, can be used as a reference for the customs valuation procedure, under the terms and limits imposed by the rules relating to customs law. Transfer pricing rules can be taken into account by the applicator of customs value rules, as evidenced by Comment No 23.1 of the WCO Customs Valua - tion Technical Committee, which allows the customs authority to use information found in price studies of transfers prepared by the importer to assess the cir - cumstances of the sale. This guideline was incorpo - rated in several passages of Normative Instruction No 2,090/2022, namely in the part where it reproduces the aforementioned Comment 23.1: “A study on trans - fer prices can constitute a good source of information, if it contains relevant information about the circum - stances of the sale. On the other hand, a study on transfer pricing may not be relevant or appropriate due to the substantial and significant differences that exist between the Agreement’s methods for determining the value of imported goods and those of the OECD Transfer Pricing Guidelines.”
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