BRAZIL Law and Practice Contributed by: Paulo Honório de Castro Júnior, Bruno Marques Feitosa and Urick Soares, William Freire Advogados
The new Brazilian rules now explicitly incorpo - rate the OECD’s approach to related-party finan - cial transactions, meaning: • intercompany loans must be assessed under arm’s length conditions (eg, interest rate, credit rating, terms); and • financial guarantees and other intra-group arrangements are subject to valuation under OECD principles. 12. Co-Ordination With Customs Valuation 12.1 Co-Ordination Requirements Between Transfer Pricing and Customs Valuation Considering that the anti-avoidance function present in the transfer pricing control rules also manifests itself in the rules that determine cus - toms valuation, reflections naturally arise about the possible effects of the transfer pricing rules on typical customs taxes. After all, both norma - tive frameworks intend to compare transactions carried out with the parameters that would be verified for these same transactions if carried 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 Corporate 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 cus - toms valuation procedure, the new set of trans - fer pricing rules in Brazil, especially as it is based
in the best implementation of the arm’s length principle, can be used as a reference for the cus - toms 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 Valuation Technical Committee, which allows the customs authority to use informa - tion found in price studies of transfers prepared by the importer to assess the circumstances of the sale. This guideline was incorporated in several passages of Normative Instruction No 2,090/2022, namely in the part where it repro - duces the aforementioned Comment 23.1 “A study on transfer prices can constitute a good source of information, if it contains relevant information about the circumstances 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 determin- ing the value of imported goods and those of the OECD Transfer Pricing Guidelines.” 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 process 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 tax -
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