BRAZIL Law and Practice Contributed by: Paulo Honório de Castro Júnior, Bruno Marques Feitosa and Urick Soares, William Freire Advogados
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 assump - tions 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 obligation refers, in the event of failure to submit it in a timely manner; or (b) fine equivalent to 3% of the value of the taxpayer’s gross income for the period to which the obligation refers, in the event of presentation without meeting the require - ments 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 presen - tation 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 trans - action, 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 contradictory 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 following documents to the Brazilian authorities. • Country-by-Country Declaration, containing information relating to the global allocation of revenues and assets and income tax paid by the multinational group to which it belongs, together with indicators related to the global economic activity of the multinational group. • Global Archive, containing information relat - ing to the structure and activities of the mul - tinational group to which it belongs and the other entities forming part of the multinational group. • Local File, containing information relating to controlled transactions and the parties involved in controlled transactions. Additionally, for commodity transactions, tax - payers are required to submit a monthly file known as the Commodity Transaction Register (RTC). The RTC must include detailed information regarding: • the commodity traded; • the volume and value of the transactions; • the shipment date;
• the contractual terms; and • the pricing method applied.
The completion of the RTC has been the sub - ject of doubts and uncertainties, on which the
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