New legal framework for transfer pricing in Brazil

The Brazilian Government has introduced a fresh legal framework for transfer pricing rules through Law No. 14,596/2023, effective from June 15, 2023. This move aligns Brazil’s transfer pricing (TP) rules with the Organization for Economic Cooperation and Development (OECD) standards.

Previously, Brazil’s TP rules diverged from OECD standards, often using fixed margins for TP calculations. This deviation posed challenges for multinational companies with Brazilian subsidiaries.

The updated rules apply to transactions with: (i) related parties; (ii) entities in countries that either do not tax income or tax it at a rate below 17%; and (iii) entities benefiting from a privileged tax regime.

Grounded in the arm’s length principle, for purposes of determining the Corporate Income Tax (IRPJ) and Social Contribution on Net Income (CSLL) calculation basis, the terms and conditions of a controlled transaction will be established according to those that would be established between unrelated parties in comparable transactions.

Law No. 14,596/2023 replaces the existing methods based on fixed margins with the five transfer pricing methods endorsed by the OECD Guidelines. These new methods ensure that commercial or financial relationships between related entities adhere to the arm’s length principle. They are: (i) Comparable Uncontrolled Price Method; (ii) Resale Price Method; (iii) Cost Plus Method; (iv) Transactional Net Margin Method; and (v) Profit Split Method.

Brazilian companies engaged with related parties, tax havens, or entities under privileged tax regimes should review their current agreements, such as service provisions, royalty payments, debt operations, and more.

Starting January 2024, adherence to the new TP rules is mandatory, while 2023 sees it as optional.

However, the application of these rules currently lacks comprehensive guidance. New regulations from the Federal Revenue of Brazil (RFB) are anticipated. The RFB has initiated a Public Consultation to garner feedback on the draft Normative Instruction (IN) that will guide the new TP system.


Key points from the draft IN include:

  • The OECD’s guidelines and future changes serve as supplementary resources for interpreting Brazil’s TP rules unless they conflict with Law No. 14,596/2023 or the IN under consultation.
  • The IN details comparability factors essential for delineating controlled transactions.
  • Controlled transactions that wouldn’t appeal to unrelated parties under realistic circumstances can be disregarded.
  • Domestic comparables are preferred for comparability analysis. However, if unavailable, foreign comparables can be considered with justification.
  • The IN allows international offsetting of benefits between related parties in controlled transactions.
  • Adjustments to other taxes, including those levied on importation of goods and services, aren’t necessarily impacted by spontaneous or compensatory adjustments.
  • In addition to the OECD-standard methods, the application of alternate methods is retained if the standard ones aren’t applicable reliably.
  • The Safe Harbor rules are currently restricted to “low value-added intragroup services,” necessitating a gross profit margin of 5%.
  • Opting for the 2023 rules is now possible between November 1 and 30, 2023, through the IRS’s electronic portal.


The tax effects and impacts of Law No. 14,596/2023; as well as the current text of the draft IN, including any early adherence to the new rules, must be analyzed on a case-by-case basis. FCR Law acts in an integrated manner with a multidisciplinary team of tax advisors, economists, and accountants to support clients with the analysis and impacts of the new rules. Our team is available to further discuss and assist you.


Fleury, Coimbra & Rhomberg Advogados – FCR Law
Tax team: Marcelo Coimbra / Julia Lima / Flávia Brunner / Bruna Bianchi

Rua do Rocio, n.º 350, 10.º Andar | Vila Olímpia, São Paulo/SP | CEP 04552-000 | Tel. +55 11 3294-1600