OECD And Brazil Review Differences In Brazilian Cross-Border Tax Rules

The OECD and Brazil launched a joint project to examine the similarities and gaps between the Brazilian and OECD approaches to valuing cross-border transactions between associated firms for tax purposes. The project will also assess the potential for Brazil to move closer to the OECD’s transfer pricing rules.

The Programme

The programme will last fifteen months to analyse the legal and administrative framework behind the Brazilian transfer pricing system, as well as its implementation.  Strengths and weaknesses in the Brazilian approach will be reviewed in detail, based on which new options are to be explored simultaneously. This is supposed to bring the domestic system with greater alignment with the OECD’s internationally accepted standard, the OECD Transfer Pricing Guidelines. “Effective transfer pricing rules are critical for avoiding double taxation and ensuring that taxable profits are not artificially shifted away. The project we are launching today will enable us to better understand the options for improving the application of transfer pricing rules in Brazil, achieving greater convergence. This will help enhance the investment climate in Brazil by reducing the risk of double taxation,” according to Gurría, the OECD Secretary-General.

Background

In May 2017, Brazil submitted a formal letter to the OECD, expressing its interest in initiating an accession process to the Organisation. This is being considered by the OECD Council currently, and to keep domestic rules consistent with OECD standard would be an important element of any future process of accession to the Organisation.

Source: OECD