In February 24th of 2023 it was published the new Legal Instruction nº 2.132/2023, regulating the procedure that shall be followed by the taxpayers that intend to adopt the new rules over transfer pricing, according to the Provisional Measure nº 1.152/2022 (Medida Provisória nº 1.152/2022), for the operations done during the year of 2023.
The taxpayers may choose their option by the E-CAC Portal, in date between September 1st – 30th of 2023. This option will be unchangeable. It is important to notice that the option to use the new rules will be valid for all the 2023-time limit, and not only the operations done after the choosing. Once elected the new methods, the spontaneous or compensatory adjustments shall be done by accountability for the taxpayers until the end 2023 calendar-year.
Notwithstanding, the Legal Instruction establishes new procedures about tax deductibility, income Tax and Social Contribution calculation, concerning to amounts paid, cashed, presented, utilized or sent as royalties and technical, scientifical or managing assistance or resembling, which will not be discountable when paid to:
(i) Resident entities or domiciled in country or region of favorable taxation or that may be benefited by low-tax country rules; or
(ii) Parties related when the value of the deduction my cause double no-taxation.
The latter rules apply as much to private companies submitted to transfer pricing rules as to those that may hire these rights/services from abroad.
Still, further than to indicate the Brazil’s safeguard relation about the Arm’s Length Rules, as provided by OECD, it may indicate that Federal Revenue trusts in the sanction of the Provisional Measure 1.1552/2022, still going through the Brazilian Congress.
The Brazilian Tax-Payers surrogated to these rules must pay attention to follow up the subject closely, in order to take advantage of benefits of the new legislation.