2017-05-17
The workshop, which is part of the activities supported by the IV phase of the EU-Brazil Sector Dialogues Support Facility as a top-down modality, is part of the strategic partnership between Brazil and the European Union. It was attended by public servants, OECD representatives and embassies of EU member states.
According to the International Relations General Coordinator of the Federal Revenue, Flavio Araujo, the seminar was an opportunity to cover the main issues, differences and characteristics of transfer pricing. “The OECD specialists brought us technical, profound and detailed views on transfer pricing. We also talked about the context of Brazilian legislation and showed our relationship between the tax authorities and the taxpayer. After all, the interest to increase the understanding between the two parties is reciprocal, such as its characteristics, limitations and the positive aspects, to reach an environment in which the systems coexist and in which more investments, businesses and jobs are created. Something that is beneficial for all of us”, he said.
Brazil has its own legislation, with specific methods that are far from the international models defended and recommended by the OECD. The Brazilian Law on Transfer Pricing is recent, from 1996. "In Brazil, the rules are the same for goods and services and are more limited when compared to the OECD guidelines. When drafting the law, the legislator opted for an accurate mathematical approach, and took into account the peculiarities of the national market", said Araujo.
OECD specialist Maya Lucas praised the five-day workshop. "These days we had different groups and we were able to discuss various subjects and get an overview of both systems. The debate has contributed a lot to both sides".
According to the First Counsellor, Head of the Trade Section of the Delegation of the European Union to Brazil, Nicola Ardito, the discussions were very useful to both sides. "The result is that we will better understand the two systems and will be a very important basis for future developments and also for specific cases that may arise in this area".
During the workshop, other topics were also discussed, such as the minimum transfer pricing standards of the "Base Erosion Profit Shifitng" (BEPS) project. There are two: the documentation to establish the “country by country report” and the friendly transfer pricing procedures.
Transfer pricing - the term is used to identify the controls to which the related commercial or financial transactions are subject, located in different tax jurisdictions. When a company imports from an outside unit of the group a necessary component to the final product in Brazil, it can artificially register the operation with a different price from that practiced in the market. In this hypothesis, a higher import cost could be interpreted by the Treasury as an illegal remittance of profit abroad - because, in theory, it would be possible to find the same component in Brazil at a lower price. In addition, higher expenses decrease the basis of tax calculation.
The Law 12.715 /2012 determines that every company that imports and exports products, inputs and services from other companies of the same group in other countries (the so-called intercompany operations) or from tax havens, must prove to the tax authorities that the value of the transaction is equivalent to the prices practiced in the Brazilian market. As a result, the Federal Revenue ensures that the transactions are similar to those practiced in the market by independent companies, avoiding irregular remittances from Brazil.
Sector Dialogues - They are a strategic instrument for strengthening cooperation between the EU and Brazil. Currently, there are about 30 dialogues mapped between Brazil and the EU on the most diverse themes, which are based on principles of reciprocity and complementarity and aim at the exchange of knowledge and experiences in areas of mutual interest. The Initiative is jointly managed by the Ministry of Planning (MP), through the National Directorate (DN), the Delegation of European Union to Brazil (DELBRA) and the Ministry of Foreign Affairs (MRE).
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