BRAZIL Law and Practice Contributed by: Paulo Honório de Castro Júnior, Bruno Marques Feitosa and Urick Soares, William Freire Advogados
• allocating profits between related parties, when supported by functional and economic analysis; • documentation and reporting requirements, reducing the complexity of compliance with ancillary obligations; and • monitoring and periodic review of the agree - ment, with objective and pre-defined criteria. Article 8 of the draft establishes that the APA may cover all of the taxpayer’s controlled trans - actions, or just a portion of them. 7.2 Administration of Programmes The administration of the APA will be the respon - sibility of the Special Secretary of the Fed - eral Revenue Service, linked to the Ministry of Finance. 7.3 Co-Ordination Between the APA Process and Mutual Agreement Procedures So far, there is no provision regarding the interac - tion or co-ordination between APAs and Mutual Agreement Procedures (MAPs). 7.4 Limits on Taxpayers/Transactions Eligible for an APA The Article 6 of the draft Normative Instruction provides that taxpayers may submit an APA pro - posal if they engage in – or intend to engage in – transactions subject to transfer pricing rules and have participated for at least six months in one of the RFB’s tax compliance programmes. Currently, the RFB manages three compliance programmes: • Confia (Cooperative Tax Compliance Pro - gram); • Sintonia (Tax Compliance Enhancement Pro - gram); and
• OEA (Authorized Economic Operator Pro - gram). Furthermore, the draft regulation grants the Brazilian Federal Revenue Service the author - ity to set an annual cap on the number of APA proposals it will review, based on its operational and administrative capacity (Article 6, sole para - graph, draft Normative Instruction). APA proposals involving transactions that show signs of aggressive tax planning or tax avoid - ance will not be accepted by the Brazilian Fed - eral Revenue Service. 7.5 APA Application Deadlines There is no specific deadline for requesting an APA. However, the agreement will be valid for up to four years and may be extended for an additional two years upon the taxpayer’s request and approval by the Brazilian Federal Revenue Service. 7.6 APA User Fees Submission of a consultation request will be subject to a fee in the amounts of: • BRL80,000; and • BRL20,000, in the case of a request to extend the period of validity of the response to the consultation. 7.7 Duration of APA Cover As a rule, the APA will take effect from the tax period established as the starting point of its applicability and will be valid for up to four years and may be extended for an additional two years upon the taxpayer’s request and approval by the Brazilian Federal Revenue Service.
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