The international tax landscape is changing, and Brazil is no exception. With the imminent implementation of the global minimum tax, multinational companies operating in the country will need to reconsider their Transfer Pricing policies to ensure compliance with the new regulations.
What is the global minimum tax?
The global minimum tax is an OECD-led initiative that seeks to ensure that large multinational companies pay at least 15% tax on their profits, regardless of where they are generated. This change comes as part of global efforts to combat tax evasion and tax base erosion, ensuring that profits are not shifted to low-tax jurisdictions. Brazil, as part of this global movement, is aligning itself with these measures, which will directly affect the Transfer Pricing strategies of companies with operations in the country.
Effect on Transfer Pricing
With the advent of the global minimum tax, multinational companies operating in Brazil will have to carefully evaluate their intercompany transactions and their Transfer Pricing policies. This is because tax authorities will be more attentive to discrepancies that may arise in related-party transactions, and any adjustments in global tax policies could affect profitability and regulatory compliance. The obligation to maintain proper transfer pricing documentation will become even more critical, as companies will need to demonstrate that their transactions are conducted on arm’s length terms, complying with both local regulations and international guidelines.
Preparing for compliance
Given this scenario, it is essential for multinational companies to review their tax structures and Transfer Pricing policies in anticipation of any adjustments that Brazilian tax authorities may implement. Internal audits, functional analysis and the correct determination of comparables will be key to avoid tax risks and penalties. In addition, companies must be prepared to justify any variations in their transfer pricing structures in response to new tax transparency requirements and the implementation of the global minimum tax.
How should companies in Brazil prepare?
Companies should review their intercompany operations and ensure that their Transfer Pricing policies comply with the arm’s length principle. In addition, it is advisable to conduct tax audits and obtain specialized advice to mitigate any risks arising from the new global tax. Effective tax planning will be essential to maintain competitiveness and avoid unfavorable adjustments.
Call to Action
If your company needs specialized advice to prepare for the impact of the global minimum tax in Brazil and ensure compliance with Transfer Pricing regulations, contact us at TPC Group. We are ready to help you navigate this complex tax landscape
Source: https://legislacaoemercados.capitalaberto.com.br/vem-ai-o-imposto-minimo-global/
