Country-by-Country Statement in Brazil: Current Regulations

April 11, 2024

By enacting Normative Instruction No. 1681/2016, Brazil has laid the regulatory groundwork for the mandatory annual filing of the Country-by-Country Report. This document, crucial in the Transfer Pricing area, establishes clear guidelines for Brazilian tax resident entities, which are members of multinational groups. Through key definitions and detailed provisions, these regulations aim to ensure transparency and fairness in international transactions, as well as to strengthen the auditing of related entity transactions. 

Key Definitions

Chapter I establishes the key definitions for the mandatory Country by Country reporting, which among them are: 

  1. Multinational group: It refers to entities related through direct or indirect control, resident in different tax jurisdictions, or subject to tax in a different jurisdiction through a permanent establishment.
  2. Control: It defines the relation between an investor entity and an invested one, where the investor has partner rights that grant him/her preponderance in the corporate deliberations and the power to elect the majority of the administrators.
  3. Entity member of a multinational group: It includes independent business units reported in the consolidated financial statements of the multinational group, as well as those excluded due to size or materiality, and permanent establishments that prepare separate financial statements.
  4. Permanent establishment: It refers to a fixed facility through which an entity partially or totally performs its activity in another jurisdiction. 

These definitions are fundamental to understanding the reporting obligations and responsibilities of entity members of a multinational group under Brazilian regulations. 

Country-by-Country Reporting Obligations

Chapter II of the regulations establishes the obligation to file the Country-by-Country Report for tax residents in Brazil who are ultimate controlling shareholders of a multinational group. Likewise, it specifies that entities resident in Brazil who are not the ultimate controlling of the multinational group may be required to file the report if certain conditions are met. These conditions include situations such as the exemption of the ultimate controlling entity from filing in its jurisdiction of tax residence, the lack of an international agreement between the jurisdiction of the ultimate controlling entity and Brazil for the automatic exchange of the report within the established deadline, or a systemic failure in the jurisdiction of the ultimate controlling entity. In addition, the regulations detail the conditions under which a substitute entity may file the report instead of the entity resident for tax purposes in Brazil. 

On the other hand, consolidated income thresholds are established to determine whether an entity is exempt from filing the report. Specifically, entities resident in Brazil whose total consolidated revenues of the multinational group in the fiscal year before the reporting one are less than R$ 2,260,000,000.00 (two thousand two hundred and sixty million reais) if the ultimate controlling party is a tax resident in Brazil, € 750,000,000.00 (seven hundred and fifty million euros), or its equivalent translated at the exchange rate of January 31, 2015, to the local currency of the jurisdiction of residence for tax purposes of the ultimate responsible party. Entities complying with these income criteria may report to the RFB (Receita Federal do Brasil – Federal Revenue of Brazil/Brazilian IRS) their exemption from filing the report under the terms of Chapter IV of the regulations. 

Country-by-Country Reporting Deadline

Chapter III of the regulations addresses the form and deadline for the Country by Country reporting. According to Article 5, this report shall be annually provided regarding the immediately preceding fiscal year, completing the ECF (Escrituração Contábil Fiscal – Tax Accounting Bookkeeping) and transmitting it to the SPED (Sistema Público de Escrituração Digital – Public Digital Accounting System), according to the RFB Normative Instruction No. 1,422, dated December 19, 2013. The generation, storage, and annual transmission of the ECF to SPED does not exempt the filers from keeping the documents that originated the information contained therein, as established by the applicable legislation. 

In addition, Article 6 establishes the Country-by-Country Report will be filed within the same deadline as that established for completing the ECF and transmitting it to SPED. 

Country-by-Country Reporting Entity

Chapter IV of the regulations establishes the procedures for indicating the reporting entity of the Country-by-Country Report. According to Article 7, any member entity resident for tax purposes in Brazil must report the RFB if it is the ultimate controlling entity of the multinational group and operates as the substitute entity or, otherwise, identify and specify the jurisdiction of tax residence of the reporting entity. 

In the case referred to in § 1 of Article 7, where the entity resident in Brazil is not the ultimate controlling party but is required to file the report, it may proceed as the reporting entity. 

Article 8 states that, according to Article 7, the absence of indications of the reporting entity will prevent the FEC transmission. 

In addition, § 2 of Article 7 details specific conditions under which ultimate controlling entities of multinational groups resident abroad may be accepted as reporting entities in jurisdictions in the process of implementing the Country-by-Country Report, as long as they comply with certain requirements, such as the voluntary filing of the Country-by-Country Report to their tax administrations and the entering into agreements among competent authorities with Brazil, among others. 

Detailed Content of the Country-by-Country Report

Chapter V of the regulations details the structure of the Country-by-Country Report, which includes aggregate information by the jurisdiction in which the multinational group operates and the identification of each entity member of the group. The aggregate information by jurisdiction covers aspects such as total income, revenues before income tax, paid and due taxes, capital stock, retained earnings, number of employees, and tangible assets other than cash. 

Regarding the identification of each group entity, its jurisdiction of tax residence, the jurisdiction whose laws establish the entity, and the nature of its main business activities must be specified. In addition, the additional information may be included in free text to provide additional clarifications based on the multinational group’s criteria.  

The values relating to the Social Contribution on Net Profit are addressed in the relevant sections of the Country-by-Country Report. 

The information contained in the Country-by-Country Report must be provided in a single currency, which will be that of the ultimate controlling entity of the multinational group. This information must be filed for all the entity members of the group and aggregated for those residents in the same tax jurisdiction. 

Finally, the information in the free text must be provided by election in a single language, such as Portuguese, English, or Spanish, following the definitions and instructions contained in the ECF Design Guidance Manual published by the General Inspection Coordination through an Executive Declaratory Act (EDA) published in the DOU (Diário Oficial da União – Official Gazette of the Union). 

Non-Compliance Penalties

Chapter VII of the regulations establishes the penalties for entities residents for tax purposes in Brazil failing to comply with the obligations set forth therein. The penalties are detailed as follows: 

  1. For late filing: A fine of 0.2% of the value of the taxpayer’s gross income is applied for each calendar month of late filing.
  2. For failing to file required information promptly: 5% of the value of the corresponding transaction appraised by the tax authority.
  3. For omission or inaccurate or incomplete information: 0.2% of the value of the consolidated income of the multinational group for the previous year to which the information refers. 
  4. For failure with the requirements: 3% of the value of the taxpayer’s gross income for the corresponding period.

These fines range between R$ 20,000.00 and R$ 5,000,000.00. In order to determine the value of the fine for the omission, the maximum value established will be used, and the failure to provide the value of the consolidated income of the multinational group in the previous year or failure to verify the information adequately will be considered. 

In addition, provisions for the deadline for the application of fines and exceptions for formal errors or immaterial information are established without affecting the reliability of the results. 


In summary, the Brazilian Country-by-Country Reporting regulations are a fundamental element of the Transfer Pricing framework. Due to the provision of a clear and detailed framework for financial reporting in multinational environments, this regulation promotes transparency, fairness, and tax compliance. Conversely, it also imposes significant penalties for those failing to comply with its obligations, underscoring the significance of rigorously following its provisions. Finally, these regulations contribute to the integrity and stability of the international tax system by ensuring the proper taxation of related-party transactions.