New Transfer Pricing regulations in Brazil

February 7, 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, with the primary objective of strengthening 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, without adhering to the arm’s length principle. However, following the approval of Provisional Measure No. 1,152 in 2022, which outlined the new transfer pricing provisions, Brazil aligned itself with 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.

Towards a Global Transfer Pricing Model

The purpose of this article is to examine the evolution of Brazilian transfer pricing regulations, highlighting their most significant changes and their implications for commercial transactions between domestic firms and their international related 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 operations. However, these methods were not aligned with the OECD’s arm’s length principle.

Regulatory Improvements and Scope

Due to the deficiencies identified in the 1996 legislation in relation  to transfer pricing, new rules were introduced that gave rise to Provisional Measure No. 1,152 of December 28, 2022. This measure adjusted Brazilian transfer pricing rules to align with OECD standards, specifically adopting the arm’s length principle (ALP) for transactions between related parties abroad and unrelated parties in tax havens or with preferential tax regimes that result in a total corporate income tax burden of less than 17%.

The regulatory evolution continued with the enactment of Law No. 14,596 of June 14, 2023, which establishes transfer pricing rules  related to Corporate Income Tax (IRPJ) and the Social Contribution on Net Income (CSLL). These provisions are applied to determine the basis for calculating the IRPJ and CSLL of legal entities domiciled in Brazil that carry out controlled transactions with related parties abroad.

Definition and Application of the Arm’s Length Principle

In line with these developments, the arm’s length principle is defined in article 2 of the Act. This article establishes that, for the purpose of determining the basis for calculating the tax referred to in the single paragraph of article 1 of this Law, the terms and conditions of a related-party transaction shall be established in accordance with those that would be established between unrelated parties in comparable transactions.

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

New Regulation and Implementation

Finally, in September 2023, Brazil’s Federal Revenue Secretariat (RFB) 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 that will be applied to demonstrate whether or not the transaction complies with the arm’s length principle.

  • Comparable Independent Price (PIC)
  • Resale Price minus Profit (PRL)
  • Cost Plus Benefit (MCL)
  • Net Transaction Margin (MLT)
  • Profit Division (CDM)
  • Other methods,

Which entities are obligated?

Articles 56 and 57 of RFB Normative Instruction No. 2161 establish that taxpayers are required to file the following returns:

Country-by-country declaration

Any entity with tax residence in Brazil that acts as the ultimate controlling shareholder of a multinational group is required to file the Country-by-Country Declaration.

Limit: Total income of less than R$ 2,260,000,000 if the final controller is a tax resident in Brazil, or 750,000,000 euros (or equivalent converted at the exchange rate of January 31, 2015) if the final responsible party resides in another jurisdiction for tax purposes.

Global Archive

If the company does not comply with the obligation of the Local Archive (total value of operations less than R$ 15 million), it should not submit the Global Archive.

Local Archive

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 submitting documentation

Country-by-country declaration

The country-by-country return must be submitted annually together with the Tax Accounting (ECF) to the Public Digital Accounting System (SPED), without exempting the declarants from keeping the original documents.

Global and local archives

The local file and the global file must be filed within three months of the deadline for filing the Annual Corporate Income Tax Return (ECF) for the corresponding calendar year. For the year 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 submission of documentation.

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

Penalties for non-compliance

The penalties for non-compliance with transfer pricing are set forth in Article 66 of Regulatory Instruction RFB No. 2161.

Global & Local Archive

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

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

Global Archive

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 Brazilian Transfer Pricing regulation represents a crucial milestone in the search for consistency and compliance with international standards. As a result of 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 returns, global and local files, with clear deadlines and limits. The preservation and submission of supporting documents is emphasized as an essential requirement for continued compliance with transfer pricing regulations. This advanced regulatory framework reflects Brazil’s commitment to transparency, fairness, and alignment with international best practices in the field of taxation.