Pricing Rules: Local Report and Penalties in Brazil

March 20, 2024

In the complex international tax landscape, Transfer Pricing plays a crucial role in ensuring tax fairness between multinational companies and the tax authorities of the countries where they operate. In this context, Brazil has recently implemented Normative Instruction N°2161, which establishes new regulations on local reporting and Transfer Pricing penalties in the country. 

Local Report: A Tool for Tax Transparency

The Local Report, as part of the Transfer Pricing legislation, is intended to provide the tax authorities with detailed information on related-party transactions within a multinational company. This report is crucial to assess the appropriateness of transfer prices and ensure they reflect market conditions.  

Regulatory Instruction N°2161 establishes specific requirements for the Local Report in Brazil, including the description of the taxpayer’s activities, the identification of related parties, detailed information on controlled transactions, and the application of the Transfer Pricing Methodologies, among other aspects. This wide range of data provides the tax authorities with a comprehensive view of the business transactions of multinational companies, allowing them to assess compliance with tax regulations. 

Local Reporting Obligation

As established in Title IV of the Brazilian Transfer Pricing legislation, taxpayers must provide documentation and information supporting the conformity of the Corporate Income Tax and Social Contribution on Net Profit calculation bases related to transactions subject to the Transfer Pricing control.  

The preparation of the Local Report follows specific criteria according to the total value of the controlled transactions carried out by the taxpayer in the previous calendar year. 

  • If the total value of the controlled transactions is equal to or greater than R$ 500,000,000.00 (five hundred million reais), the Local Report must be prepared under the provisions of Articles 59 and 60. 
  • If the total value of the controlled transactions is equal to or greater than R$ 15,000,000,000.00 (fifteen million reais) and less than R$ 500,000,000.000.00 (five hundred million reais), the Local Report must be prepared under the provisions of Article 61 
  • Finally, the Local Report will be dispensed with if the total value of the controlled transactions is less than R$ 15,000,000.00 (fifteen million reais). 

These provisions intend to ensure the proper filing of information and documentation related to controlled transactions, promoting transparency and compliance with the Transfer Pricing legislation in Brazil. 

Filing Modality

The Local Report must be filed in digital format through the service available at the e-CAC (Virtual Taxpayer Service Center) of the RFB (Receita Federal do Brasil – Internal Revenue of Brazil/Brazilian IRS) within the set term. 

Filing Deadlines

The Local Reporting deadline is up to three months after the Tax Book Deed transmittal deadline of the corresponding calendar year. In 2024 (or 2023, if elected as provided in the legislation), the deadline will be the last business day of 2025 and 2024, respectively. 

Fines and Penalties: A Regulatory Compliance Incentive

Article 66 of Regulatory Instruction No. 2161 clearly establishes the fines applicable to non-compliant companies regarding local reporting obligations. These fines can be severe and may significantly affect a company’s finances.  

For failure to timely file the Local Report, a fine equivalent to 0.2% of the taxpayer’s gross invoicing per month of delay may be imposed. On the other hand, if the Local Report is filed without complying with the established requirements, the fine may amount to 3% of the taxpayer’s gross invoicing.  

These fines have a minimum value of R$ 20,000.00 and a maximum value of R$ 5,000,000.00, which underlines the seriousness with which local reporting obligations are assumed in Brazil. 


In summary, the implementation of Normative Instruction N°2161 and the regulations related to the Local Report and penalties in Brazil demonstrate the country’s commitment to tax transparency and regulatory compliance in Transfer Pricing. These measures ensure tax fairness and promote a compliance culture among multinational companies operating in Brazil. Companies must understand and comply with these regulations to avoid penalties and maintain strong relationships with the Brazilian tax authorities.