Brazilian Congress approves the new TP rules, pending sanction by the President 28 jun 2023

Brazilian Congress approves the new TP rules, pending sanction by the President

New rules effective as of 2024 by with an early adoption in 2023

 

On Wednesday, May 10th, the Brazilian Congress approved Provisional Measure (MP) No. 1152/22 which establishes a new legal framework of the transfer pricing rules aligned with the APL and standards set out by the OECD. This concludes the legislative process of converting the Provisional Measure into Law, pending only the sanction by the President.

The approved final draft by the Senate, which had been previously approved by the House of Representatives, has been left unchanged, and the new rules will be in effect as of January 1, 2024, but with the option of an early adoption for 2023.

The early adoption may be advantageous, for example, to companies currently facing double taxation as a result of the application of the current fixed-margin based methods, companies that wish to pay royalties without the obligation to register the intellectual property with the patents Office (INPI) and to limit the deduction to the statutory ceilings of 1% to 5%, or companies facing foreign tax credit problems in the United States in connection with income taxes paid in Brazil.

The approved Provisional Measure has now been sent to the President’s office for final sanctioning. While the formal deadline for the conversion of this Provisional Measure into law is set for June 1st, expectations are high that the President will grant approval ahead of this schedule, indicating the Executive branch support to align Brazil with international taxation standards.

For more information, please contact our Tax team:

Alex Jorge
alex.jorge@cmalaw.com

Flavia Ganzella
flavia.ganzella@cmalaw.com

Humberto Marini
humberto.marini@cmalaw.com

Leonardo Rzezinski
leonardo@cmalaw.com

Renato Lopes da Rocha
rlopes@cmalaw.com

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