Transfer Price – Obligation and Clarifications
Normative Instruction RFB n° 1.312 of December 28, 2012, updated by Normative Instruction RFB n° 1.870, provides for the prices to be applied in the purchase and sale of goods, services or rights carried out by an individual or legal entity resident or domiciled in Brazil, with an individual or legal entity resident or domiciled abroad, considered by law to be linked.
In this context, Brazilian companies that have import or export operations with related parties or with companies located in countries with favorable taxation, are subject to proof of transfer price. Such proof aims to show that the prices practiced in these operations are in accordance with the established rules.
According to Brazilian law, the following are subject to the transfer pricing calculation:
- Imports of goods, services and rights;
- Exports of goods, services and rights;
- Interest paid or credited in financial transactions; and
- Interest earned on financial transactions.
The calculations must be demonstrated in the Tax Accounting Bookkeeping (ECF) whose delivery deadline is July 31 of the following year, regardless of whether or not there are adjustments to the calculation of taxable income, however any adjustments should be reflected in the calculation of Income Tax and Social Contribution in December 2020.
It is also worth mentioning that companies opting for Presumed Profit must also present the calculation of the Transfer Price in operations for the export of goods, services and rights carried out with affiliates or with favored tax countries.
We have a specialized team that can help you with this requirement, contact your Relationship contact at HLB for further clarification. firstname.lastname@example.org