New Transfer Pricing Rules Guide in Brazil

March 30, 2023

On February 24, 2023, the Receita Federal (IRS) of Brazil published Normative Instruction No. 2,132, which establishes the regulation of the taxpayer’s election to apply the New Transfer Pricing Rules provided for in Provisional Measure No. 1,152, dated December 28, 2022, to controlled transactions in 2023.  


The Brazilian Tax Authority published a bill to align the Transfer Pricing rules with the Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations of the Organization for Economic Co-operation and Development (OECD) on December 28, 2022.   

Provisional Measure 1,152/2022 substantially amended the Brazilian tax legislation and the Transfer Pricing rules. 

Amendments for 2024

Brazilian taxpayers can adopt the new rules for the fiscal year 2023. Conversely, the application becomes mandatory for 2024.  

Multinational groups could be pressured further, which mitigating the risks and taking advantage of the opportunities related to the new Brazilian Transfer Pricing system will require a detailed assessment.  

The preparation of an initial assessment is important for multinational groups that will adopt the new system. The new Transfer Pricing regime is analyzed in detail below: 

Transfer Pricing Methods

The Transactional Net Margin Method (TNMM) and the Profit Split Method are incorporated into the new rules. Consequently, transactional methods will be available in Brazil.  

Under the current rules, taxpayers can adopt the most convenient method. Conversely, under the new rules, the most appropriate method would be the one that provides the most reliable determination of the terms and conditions to be agreed upon between unrelated parties in a comparable transaction. 

Comparable Transactions

Concerning the delimitation of controlled transactions, this provisional measure introduces the analysis of the facts and circumstances of the transaction, considering the roles and economic risks of the parties.   

On the other hand, concerning the comparability analysis, the terms and conditions of the related transaction would be compared with the terms and conditions to be established between unrelated parties, considering the economic characteristics, date of the transaction, availability of information, and other factors. 

Transfer Pricing Adjustments and Penalties

The provisional measure introduces secondary adjustments to avoid profit shifting to other countries. Finally, compensatory adjustments would be available that result from dispute resolutions provided for in double tax conventions.  

Likewise, it introduces specific Transfer Pricing penalties, with a minimum of R$ 20,000 and a maximum of R$ 5 million. These would be the grounds for penalties: 

  • Failure to timely file a payroll or similar obligation would incur a fine of 0.2% of gross income per month;  
  • The filing of inaccurate or incomplete information, or the omission thereof, would be subject to a penalty of 5% of the transaction value or 0.2% of the consolidated revenues of the multinational group;  
  • The filing of a statement not complying with the legal requirements to file an accessory obligation, 3% of the gross income.  
  • Failure to timely file information or documentation during an audit, 5% of the transaction value. 

Finally, rules are introduced for specific transactions such as commodities, intangibles, intra-group services, cost-sharing agreements, corporate restructuring, and financial transactions. 

Source: Bloomberg Tax 30/03/23