New Transfer Pricing Regulations in Brazil

February 15, 2024

Alignment with International Standards

The Brazilian Transfer Pricing regulation underwent a significant update in the last two years, based on the latest Guidelines of the Organization for Economic Cooperation and Development (OECD) of 2022, mainly to strengthen the integrity of the Brazilian tax system, promoting tax justice, improving competitiveness and attracting investment, as well as facilitating international trade by aligning with accepted international standards.

Prior to this reform, Law No. 9.430 of 1996 established certain predetermined methods with fixed margins, regardless of the Arm’s Length Principle. Conversely, after approving Provisional Measure No. 1,152 in 2022, which outlined the new Transfer Pricing provisions, Brazil subjected itself to recognized international standards based on OECD guidelines. The new provisions were subsequently consolidated by Law No. 14,596 of 2023 and detailed by Regulatory Instruction No. 2161 of 2023, thus establishing the new Transfer Pricing regime applicable to transactions between Brazilian companies and related parties abroad.

Targeting the Global Transfer Pricing Model

This article will examine the progress of the Brazilian Transfer Pricing regulations, highlighting their most significant changes and their implications for commercial transactions between domestic companies and their international counterparts.

Prior to the publication of Provisional Measure No. 1,152 in 2022, Law No. 9,430 of December 27, 1996, established the methods for determining price parameters in import and export transactions. Conversely, these methods were not at the OECD’s Arm’s Length Principle.

Regulatory Improvements and Scope

Due to the deficiencies identified in the 1996 legislation regarding Transfer Pricing, new rules were introduced that gave rise to Provisional Measure No. 1,152 of December 28, 2022. This measure adjusted the Brazilian Transfer Pricing rules to be aligned with the OECD standards, specifically adopting the Arm’s Length Principle for transactions among related parties abroad and unrelated parties in tax havens or with preferential tax regimes, resulting in a total corporate income tax burden of less than 17%.

The regulatory progress continued with the enactment of Law No. 14,596 of June 14, 2023, which established the Transfer Pricing rules related to Corporate Income Tax and the Social Contribution on Net Income. These provisions apply to determine the basis for calculating the Corporate Income Tax and the Social Contribution on Net Income of legal entities domiciled in Brazil carrying controlled related party transactions abroad.

Definition and Application of the Arm’s Length Principle

According to this progress, the Arm’s Length Principle is defined in Article 2 of that Act. This article establishes that the terms and conditions of a related party transaction shall be set out as those of unrelated parties in comparable transactions to determine the basis for calculating the tax referred to in the sole paragraph of Art. 1 of this Law.

Additionally, on December 28, 2016, the Normative Instruction of RFB No. 1681 was enacted, which dictates and regulates the mandatory annual Country-by-Country Reporting, indicating the obligations, deadlines, structure, and other related aspects.

New Regulation and Implementation

Finally, in September 2023, the Secretariat of the RFB (Receita Federal do Brasil – Federal Revenue of Brazil/the Brazilian IFRS) issued Normative Instruction No. 2161, which regulates the new Transfer Pricing regime applicable to transactions between Brazilian companies and related parties abroad.

The following are the most relevant aspects of the new Brazilian Transfer Pricing regulation:

Transfer Pricing Methods in Brazil

Article 11 of Law No. 14,596 establishes the following methods to be applied to demonstrate whether or not the transaction complies with the Arm’s Length Principle.

  • Comparable Uncontrolled Price (CUP)
  • Resale Price (RP)
  • Cost Plus (CP)
  • Transaction Net Margin (TNM)
  • Profit Split (PS)
  • Other methods

Obligated Entities

Articles 56 and 57 of RFB Normative Instruction No. 2161 establish that taxpayers must file the following reporting:

Country-by-Country Report

Any entity with tax residence in Brazil performing as the ultimate controlling shareholder of a multinational group must file the Country-by-Country Report.

Limit: Total income below R$ 2,260,000,000,000 if the ultimate controller is a tax resident in Brazil, or €750,000,000 (or equivalent translated at the exchange rate of January 31, 2015) if the ultimate controller resides in another jurisdiction for tax purposes.

Global File

If the company does not comply with the obligation of the Local File (total value of transactions below R$ 15 million), it should not file the Global File.

Local Report

Companies with total value of controlled transactions before Transfer Pricing adjustments.

Limit: R$ 500,000,000 or more for full details. From R$ 15,000,000 to R$ 500,000,000 for specific but less extensive reports. Less than R$ 15,000,000 for exemption from local filing.

Due Date for Preparing and Filing Documentation

Country-by-country Report

The Country-by-Country Report must be annually filed, along with the Tax Accounting to the Public Digital Accounting System, without exempting the declarants from keeping the original documents.

Global and Local Files

The local and global files must be filed within three months of the deadline for filing the Annual Corporate Income Tax Return for the corresponding calendar year. For 2024, or following the provisions of Article 45 of Law No. 14,596 of 2023, the deadline will be the last business day of 2025 or 2024, respectively.

Preservation and Filing of the Documentation

Documents supporting compliance with the Transfer Pricing regulations must be kept contemporaneously and made available to the tax authority upon request.

Non-Compliance Penalties

The penalties for Transfer Pricing non-compliance are outlined in Article 66 of Regulatory Instruction RFB No. 2161.

Global & Local Files

A penalty of 0.2% per calendar month or a fraction of the taxpayer’s gross income for the period in case of late filing.

A penalty of 3% of the taxpayer’s gross income for the period in case of filing without meeting the requirements.

Global File

A fine of 0.2% on the consolidated revenues of the multinational group for the previous year if the data provided is inaccurate, incomplete, or omitted.


In summary, the recent transformation of the Brazilian Transfer Pricing regulation represents a crucial milestone for consistency and compliance with international standards. Due to Provisional Measure No. 1,152 in 2022 and its consolidation in Law No. 14,596 of 2023, Brazil has adopted the OECD’s Arm’s Length Principle, thus strengthening the integrity of its tax system and promoting tax justice. Normative Instruction No. 2161 of 2023 details this new regime applicable to transactions between Brazilian companies and related parties abroad. The specific methods established by Law No. 14,596 to demonstrate compliance with the Arm’s Length Principle are highlighted. In addition, it specifies the obligations to file Country-by-Country Reporting and global and local files with established deadlines and limits. The preservation and filing of supporting documentation are essential for continued compliance with the Transfer Pricing regulations. This advanced regulatory framework reflects Brazil’s commitment to transparency, fairness, and alignment with international best practices in taxation.