BRAZIL Law and Practice Contributed by: Paulo Honório de Castro Júnior and Bruno Marques Feitosa, William Freire - Advogados Associados
Normative Instruction RFB No 1,846/2018 (as amend - ed), which regulates MAP procedures domestically, confirms that the request must comply with the dead -
Accordingly, while Brazil has established the statutory basis for APAs within its OECD-aligned transfer pric - ing regime, the programme remains in the process of full regulatory implementation. 9.2 Other Mechanisms In addition to MAP and the forthcoming APA pro - gramme, Brazil offers limited mechanisms to obtain tax certainty in international tax matters. The primary formal instrument is the advance tax ruling ( consulta fiscal ), regulated under federal tax procedure rules. Taxpayers may submit a binding consultation to the RFB regarding the interpretation of tax legislation in a specific factual context. If the request is properly formulated, and the facts are fully disclosed, the rul - ing is binding on the tax authorities with respect to the applicant provided the factual assumptions remain accurate. However, rulings address legal interpreta - tion and do not involve negotiated outcomes. Brazil has also developed co-operative compliance initiatives aimed at fostering transparency and dia - logue with large taxpayers. Participation in such pro - grammes may facilitate more direct interaction with the tax administration and is expected to be relevant for access to instruments such as unilateral APAs. These initiatives, however, do not constitute formal safe harbours or binding advance agreements in themselves. Accordingly, while Brazil provides ruling procedures and emerging co-operative compliance frameworks, mechanisms for advance, negotiated certainty in international tax matters remain comparatively recent and are still evolving.
line established in the relevant treaty. 8.3 Mandatory Binding Arbitration
Mandatory binding arbitration is not generally avail - able in Brazil. Brazil’s double taxation treaties histori - cally do not include arbitration clauses comparable to Article 25 (5) of the OECD Model Convention. As a result, unresolved MAP cases are not automatically subject to binding arbitration if the competent authori - ties fail to reach agreement. Brazil has also not signed or ratified the MLI, which in some jurisdictions introduces mandatory binding arbitration into covered tax treaties. Brazil has not yet fully operationalised its advance pricing agreement (APA) programme, although the legal framework authorising APAs was introduced by Law No 14,596/2023 and regulated at a general level by Normative Instruction RFB No 2,161/2023. These instruments, which aligned Brazil’s transfer pricing system with the OECD arm’s length principle as from January 2024, formally permit the conclusion of APAs. However, the specific procedural rules governing the submission, analysis and negotiation of APAs are still pending final regulation. In August 2024, the RFB launched a public consultation on draft APA regula - tions, with comments accepted until 15 October 2024. The final rules are expected to be issued, with imple - mentation targeted for January 2025. The programme is expected to allow unilateral APAs, primarily providing legal certainty vis-à-vis the Brazil - ian tax authorities. Bilateral or multilateral APAs will depend on the willingness and engagement of treaty partners and the use of MAP mechanisms. As cur - rently designed, eligibility is conditioned upon prior enrolment in a Receita Federal co-operative compli - ance or collaboration programme. 9. Dispute Prevention 9.1 Advance Pricing Agreements
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