Brazil’s Federal Senate approved the country’s new transfer pricing regime, which includes the arm’s-length principle, on May 10.
The regulation will go to President Luiz Inácio Lula da Silva for sign-off by May 31. These new rules will be effective from January 1 2024, but taxpayers can choose to apply them from 2023.
A proposed amendment to delay the regime until 2025 was rejected.
It means Brazil will “comply with international commitments more effectively, with special attention to double taxation agreements”, according to Allan Fallet, partner at Mauger Muniz in Sao Paulo.
“This alignment will be important for the prevention of potential disputes with other tax administrations,” Fallet added.
A former director at the OECD in Paris said that the new legislation is a “major achievement” for Brazil.
“This will ultimately reduce double taxation, increase foreign investment, facilitate Brazil’s integration into global value chains, increase Brazil’s revenues and provide greater tax certainty”, Grace Perez-Navarro added.
Fonte: ITR