In a global environment where international taxation and Transfer Pricing play a key role in the structuring of multinational businesses, the Brazilian company MBRF S.A. has taken a significant strategic step by creating a joint venture focused on the halal market in the Middle East.
The company announced the formation of Sadia Halal Holding Company, in partnership with Halal Products Development Company (HPDC), a subsidiary of Saudi Arabia’s sovereign wealth fund, the Public Investment Fund. This transaction, valued at approximately US$2.07 billion, strengthens BRF’s presence in one of the regions with the highest growth in halal product consumption.
Operational consolidation in the MENA region
The new entity centralizes BRF’s production and commercial operations in key countries such as Saudi Arabia, the United Arab Emirates, Qatar, Kuwait, and Oman, in addition to integrating direct exports from Brazil to the MENA region.
This move allows the company to optimize its supply chain, strengthen its strategic positioning, and serve an ever-growing consumer base in the MENA region, in a market characterized by high regulatory and cultural standards.
Implications for Transfer Pricing
One of the most significant aspects of this operation lies in its contractual structure. The joint venture will be supported by a long-term (10-year) supply agreement from the production plants in Brazil to the new entity.
This agreement stipulates that transactions must be conducted under market conditions (arm’s length principle), which implies:
- The need to implement transfer pricing policies aligned with international standards.
- The preparation of comparability studies to support the reasonableness of the agreed-upon prices.
- The management of tax risks arising from intercompany transactions across multiple jurisdictions.
- Compliance with local and master documentation requirements, in line with OECD recommendations.
In this context, proper planning and documentation of Transfer Pricing policies will be key to mitigating tax contingencies and ensuring the sustainability of the operating model.
Brand Licensing and Strategic Positioning
The joint venture will operate under the well-known Sadia brand, which strengthens its position in the halal segment and allows it to capitalize on the intangible value associated with the brand.
This element also introduces additional considerations regarding Transfer Pricing, particularly in relation to the valuation and remuneration for the use of intangibles.
IPO Plans in Saudi Arabia
As part of its expansion and monetization strategy, MBRF has announced the start of preparations for a potential initial public offering (IPO) of the joint venture on the Riyadh Stock Exchange.
According to estimates by Banco Safra, this process could be finalized in 2027, which would allow:
- Attracting regional capital.
- Increasing the visibility of the halal business.
- Unlock value for shareholders.
The creation of this joint venture represents not only geographic expansion but also a transformation in the operational and tax structure of the Brazilian company MBRF S.A. In an environment where transparency and tax compliance are priorities, proper Transfer Pricing management and international tax planning will be critical to the success of this initiative.
At TPC Group, we help companies efficiently manage their international operations, ensuring Transfer Pricing compliance and optimizing their global tax structure. Contact us to ensure the compliance and tax efficiency of your global operations.
MBRF creates Sadia Halal with Saudis, plans IPO