Transfer Pricing – Brazilian style

In April 2017, Theo Elshof, Managing Director of Quantera Global, met up with Andre Gomes de Oliveira and Francisco Moreira of CBSG, our alliance partner in Rio de Janeiro and Sao Paulo for a trip around Brazil. Here is his story.

“It’s a privilege for me to be working in this beautiful country, exchanging ideas and visions about transfer pricing subjects with the people we meet. I had a great time with our Brazilian partners Francisco Moreira and Andre Gomes de Oliveira of CBSG. We worked very well together and had a great number of meetings with interesting MNEs in both Sao Paulo and Rio de Janeiro, making this trip a highly enervating experience.

We went into the well-known Brazilian tax law on Preço de revenda menos lucro, or resale price method,  and covered topics such as intentional set-up, service charges and MAPs

Another topic was the manner in which corporates cope with the OECD principles in combination with the existing Brazilian fixed margin methods and the challenges this poses to corporates. BEPS is very much alive in Brazil. In this post-BEPS world, transfer pricing discussions and adjustments are expected to increase here as well. Brazil has adopted CbCr and is training BEPS specialists to be able to analyse and respond to this additional flow of information.

We had some interesting discussions during the meetings on how to effectively manage the compliance burden and at the same time mitigate the transfer pricing risks. In order to be compliant outside Brazil, corporates are currently drafting Master Files and are looking into the highly enhanced burden of being compliant in all the local countries. Furthermore, it will be interesting to see if an instrument such as the Mutual Agreement Procedure will surface in Brazil.

One of the corporates we visited has already asked us to support them on the TP position in Brazil, regarding the Brazilian tax and TP rules in combination with the OECD guidelines and compliance requirements. We are very pleased with this result and look forward to assisting them on this topic.

Obviously Brazil is far more than tax and transfer pricing. It’s a real privilege to meet the very kind Brazilian people, a melting pot of all kinds of backgrounds which seem to go well together. Of course, I also enjoy the friendly culture, the beautiful surroundings and the wonderful weather. I hope to be back very soon!”