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Brazil – Transfer Pricing (2025)

Brazil’s transfer pricing regime is primarily governed by Law 9,430/1996 and by Normative Instruction RFB 1,312/2012, supplemented by other tax regulations and relevant ordinances. Law 9,430/1996 contains provisions on methods and on the definition of related parties (Article 23), while Normative Instruction RFB 1,312/2012 sets out operational rules and formulae for method application (Articles 8-19, 22, 30-39, 48-50, 51-A, among others). Taxpayers must report transfer pricing information annually in their Corporate Income Tax Return using the ECF system, accompanied by a simplified local file and, when applicable, a Country-by-Country Report pursuant to the applicable rules (Normative Instruction RFB 1.681/2016 and related provisions in Normative Instruction RFB 1.312/2012).

Arm’s Length Principle and the role of the OECD Transfer Pricing Guidelines

The Arm’s Length Principle is not explicitly referenced in Brazil’s domestic transfer pricing legislation; the domestic framework thus does not incorporate the Arm’s Length Principle by direct legal reference. Nonetheless, the OECD Transfer Pricing Guidelines may be used as a supplementary interpretative tool provided they do not contradict domestic law. Therefore, the OECD Guidelines are not legally binding in Brazil but serve as interpretative guidance where compatible with national rules.

Brazilian law provides a comprehensive definition of related parties. Law 9,430/1996, Article 23, together with Normative Instruction RFB 1.312/2012, Article 2, encompass scenarios such as a non-resident parent company; a non-resident subsidiary or branch; non-resident individuals or legal entities considered controllers or associated shareholders under Article 243 of the Corporate Law; non-resident legal entities that, together with the Brazilian company, are under common corporate or administrative control or where at least 10% of the share capital of each belongs to the same individual or entity; non-residents who, with the Brazilian entity, own interests in a third entity that together render them controlling or associated shareholders under Article 243; joint ventures or co-ownership arrangements as defined under Brazilian law; non-resident individuals who are relatives up to the third degree, spouses or partners of directors or officers, or of the direct or indirect controlling partner or shareholder; non-resident entities that are the exclusive agent or distributor of the Brazilian entity for purchases and sales of goods, services or rights; and the reciprocal case where the Brazilian entity is the exclusive agent or distributor of a non-resident. In short, Brazilian rules combine corporate control, shareholding thresholds and personal relationships to determine related-party status.

Methods and criterion for application

Law 9,430/1996 and Normative Instruction RFB 1.312/2012 set out specific methods for pricing controlled transactions. The domestic framework provides for traditional methods: the Comparable Uncontrolled Price (CUP) method is referenced in the legislation (Law 9,430/1996, Article 18, I; Article 19, §3º, I), the Resale Price Method (Law 9,430/1996, Article 18, II; Article 19, §3º, II) and the Cost Plus Method (Law 9,430/1996, Article 18, III; Article 19, §3º, IV) for imports and exports of goods, services and rights. Normative Instruction RFB 1.312/2012 provides practical rules by dedicating Articles 8–19 to imports and Articles 30–33 to exports, and addresses intra-group loans in Articles 38, 38-A, 39 and 58. The Brazilian regime generally allows taxpayers to choose any of the applicable methods; there is no statutory hierarchy or single “most appropriate method” test applied in a mandatory manner, except where the law prescribes a specific method for particular types of transactions. Transactional methods such as TNMM and Profit Split are not part of the prescriptive set in the classical domestic framework and are not foreseen as general options under Normative Instruction 1.312/2012.

Comparability and use of ranges

Chapter III comparability guidance from the OECD Guidelines is not legally binding in Brazil and the Guidelines are only used as a supplementary interpretative source where they do not conflict with domestic legislation. There is no legislative preference for domestic comparables over foreign comparables. The tax administration does not use secret comparables for transfer pricing assessments as a known practice. The domestic rules do not formally allow or require the use of an arm’s length range or statistical measures to determine arm’s length remuneration; however, the legislation tolerates deviations from the prescribed transfer price: a general tolerated deviation of 5% and a special tolerated deviation of 3% for certain transactions established in the rules. Comparability adjustments are required but are limited: Normative Instruction RFB 1.312/2012 anticipates adjustments that consider differences in commercial conditions, physical nature and product content—examples include payment terms, negotiated quantity, climatic influences on goods, intermediation costs, packaging and transportation costs (see Articles 9, §1º, §4º, §7º; 10; 11; 16, §6º, §8º, §9º, §11º, §12º; 22, §1º, §4º, §7º, §10º; 24; 30; 31; 32; 34, §9º, §10, §12, §13; 36-A, §5º). Nevertheless, formulaic approaches embedded in the Resale Price and Cost Plus methods remove much of the comparability analysis in practice because they rely on prescribed fixed margins.

Documentation and filings

Brazil requires taxpayers to prepare transfer pricing documentation annually and to submit transfer pricing information together with the Corporate Income Tax Return through the ECF system. The documentation set includes a simplified local file detailing intercompany transactions (amounts, counterparties, jurisdictions, type of transaction—goods, services or rights—general descriptions and the transfer pricing method chosen for each transaction, and descriptions of any comparability adjustments and TP adjustments). Brazil requires a Country-by-Country Report consistent with BEPS Action 13 and adopts the EUR 750 million threshold (or equivalent in domestic currency) for determining the obligation to file the CbCR. The majority of transfer pricing information must be provided in Portuguese; for the Country-by-Country Report taxpayers may choose Portuguese, Spanish or English for free-text fields. The ECF manual contains specific guidance on completing the transfer pricing and CbCR information (detailed in the Normative Instruction RFB 1.681/2016 and related ECF instructions).

Safe harbours, exemptions and materiality

Brazilian legislation provides safe harbour simplifications for certain export transactions. Law 9,430/1996, Article 19, and Normative Instruction RFB 1.312/2012 (Articles 48–50) describe three simplification regimes: a de minimis export rule where taxpayers whose export revenues (to related and unrelated parties) represent 5% or less of total revenues are not required to apply transfer pricing methods to export transactions; a 90% test applied transaction-by-transaction where an export price equal to at least 90% of the domestic market price is deemed acceptable; and a profitability test under which, at an overall level, exporters that demonstrate that exports to related parties generate a minimum net profit margin of 10% are deemed to have acceptable transactional conditions, subject to limitations when outbound related-party revenue exceeds certain thresholds. For Country-by-Country Reporting, Brazil adopts the BEPS Action 13 threshold and exempts groups below that threshold from CbCR filing.

Advance rulings, APAs and MAPs

The Brazilian administration issues rulings and participates in Mutual Agreement Procedures. Normative Instruction RFB 1.396/2013 establishes rules for administrative rulings, and Normative Instruction RFB 1.846/2018 provides Brazil’s MAP manual. Brazil’s bilateral tax treaties all include a MAP clause. According to the information in the country profile, Brazil does not maintain a formal program of Advance Pricing Agreements (APAs), unilateral or bilateral, as a regular administrative offering in the same terms described for rulings and MAPs in the cited normative instruments.

Sanctions and other procedural considerations

There are no transfer-pricing-specific penalties distinct from the general tax penalty framework. Late filing penalties amount to BRL 1,500 per month of delay. A negligence penalty of 3% applies where taxpayers submit returns omitting or containing incomplete or inaccurate information relative to the value of the transactions omitted. If an audit results in an underpayment finding, the tax authority issues an assessment requiring payment of principal, interest and penalties. The general penalty for underpayment of federal taxes is 75% of the tax due; this may be increased to 150% in cases of fraud or sham, and both penalties may be increased by an additional half (to 112.5% or 225% respectively) if the taxpayer fails to cooperate during tax audits (Decree-Law 1,598/1977, Article 8º-A; Provisional Measure 2,158-35/2001, Article 57). Brazilian transfer pricing rules require year-end adjustments for tax purposes only; there is no requirement to reflect such adjustments automatically in financial statements. Secondary adjustments are not indicated as a practice in the profile.

Attribution to Permanent Establishments and treaty practice

Brazil does not follow the Authorised OECD Approach (AOA) for the attribution of profits to permanent establishments. Its treaty practice aligns with the 2008 OECD Model Tax Convention approach with country-specific variations; the variations mainly concern Article 7(4) and the limited adoption of Article 7(6) in a small number of treaties. All Brazilian DTAs include a Mutual Agreement Procedure.

Conclusion

Brazil’s transfer pricing regime is statutory and prescriptive, relying on Law 9,430/1996 and Normative Instruction RFB 1.312/2012, with a set of formulaic methods and fixed-margin approaches that limit application of the OECD style comparability analysis in practice. The OECD Guidelines serve as interpretative guidance only when they do not conflict with domestic law. Compliance requires annual filing of the simplified local file and CbCR where applicable, observance of the statutory tolerances and adjustments, and awareness of the general tax penalty framework that applies in case of non-compliance. Brazil participates in MAPs for dispute resolution and issues administrative rulings, but APAs are not presented as a common practice in the profile.

References

Information based on the OECD country profile: https://www.oecd.org/en/topics/sub-issues/transfer-pricing/transfer-pricing-country-profiles.html

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