BRAZIL Law and Practice Contributed by: Paulo Honório de Castro Júnior, Bruno Marques Feitosa and Urick Soares, William Freire Advogados
Therefore, it is possible to state that the current Brazilian rules are very close to the standards required by the OECD of its signatories, so that it can be concluded that there is full alignment with the body’s Guidelines. 9.2 Arm’s Length Principle From the publication of Law No 14,596/2023, the arm’s length principle started to be adopted as an adequacy paradigm for controlled trans - actions. With the publication of the aforementioned standard, every transaction subject to transfer pricing calculation must, by applying the most appropriate method, demonstrate that its pricing occurred under circumstances and conditions consistent with market practices, in compliance with the arm’s length principle. This principle replaces the fixed margin model previously adopted by Brazilian legislation for the purpose of verifying the adequacy of con - trolled operations. 9.3 Impact of the Base Erosion and Profit Shifting (BEPS) Project Since the first decades of the millennium, Brazil, as a member of the G20, has been at the fore- front of important agendas relating to projects that shape the rules of international taxation, such as Transparency and Exchange of Informa - tion for Tax Purposes, the OECD BEPS Project/ G20 and the Two-Pillar Solution to Address Fis - cal Challenges Arising from the Digitalization of the Economy. From this perspective, the influence of BEPS actions on Brazilian fiscal policy is undeniable, notably with regard to transfer pricing and infor - mation sharing rules.
The main influences of BEPS on Brazilian leg - islation are: • Law No 12,973/2014 – update of taxation rules on a universal basis (CFC Rules) – BEPS Action 3; • Normative Instruction No 1,571/2015 and Normative Instruction No 1863/2018 – pro - vide for mandatory provision of information regarding financial operations of interest to the Brazilian Federal Revenue Service and on the final beneficiary of legal entities (UBO) – Action 12 of BEPS; • Normative Instruction No 1,681/2016 – Coun - try-by-Country Declaration – BEPS Action 13; • Normative Instruction No 1,689/2017 – later replaced by Normative Instruction No 2,058/2021 – deals with the consultation process – Action 5 of the BEPS; and • Normative Instruction No 1,846/2018 – MAPA – BEPS Action 14. Parallel to this, Brazil advanced in studies to align Brazilian transfer pricing practices with OECD guidelines, which culminated in the issu - ance of Law No 14,596/2023, which, as already pointed out in this document, represents total alignment with the standard of the OECD, con - sequently, with great influences from BEPS. 9.4 Impact of BEPS 2.0 Brazil has formally implemented Pillar Two of the OECD/G20 Inclusive Framework through Provi - sional Measure No 1,262/2024, later converted into Law No 15,079/2024, along with Normative Instruction No 2,228/2024, issued by the Brazil - ian Federal Revenue Service. These instruments establish the domestic legal framework for applying the Global Anti-Base Erosion (GloBE) Rules, including a minimum effective tax rate of 15% for multinational enter -
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