Bruno Henrique Coutinho de Aguiar, a Tax Partner at Rayes, Fagundes & Oliveira Ramos Advogados Associados, provides an overview of the recent changes to Transfer Pricing Rules in Brazil.

Provisional Measure number 478, issued in the end of 2009, has modified the Brazilian Tax Law, especially the Transfer Pricing Rules, impacting Brazilian subsidiaries of foreign companies.

One of the main changes is the replacement of PRL method (Resale Price less Profit) by a similar method called Sale Price less Profit – PVL, with different profit rates and calculating instructions.

In addition, a new requirement for using the PIC method (Independent Comparable Price) was introduced: from now on, PIC method may only be used in case the comparable transactions take into account represent, at least, 10% of the value of the respective imported good, right or service.

Although the Provisional Measure 478 sets forth that it is effective since 01/01/2010, the new rules are still subject to the approval of the Brazilian Congress. Nevertheless, it is important for the companies to evaluate the impacts of the mentioned modifications and take them in consideration when planning for 2010. In case they increase the tax burden, companies can claim its application only for 2011 transactions.

Further informaton on the new Transfer Pricing Rules can be found by clicking the 'Download Document' button.

Article Date: 26th January 2010