On 30 august 2018, the Department of Federal Revenue of Brazil (RFB) published a ‘Private Ruling 95/2018’ in the Official Gazette which clarifies the calculation of price parameter on import of steel product for resale.
Under this Private Ruling the RFB approved the following reference settlement:
- The import of products for internal sale is subject to transfer pricing rules if the resident importer and the foreign exporter are affiliated persons. It is irrelevant that such products are industrialized in Brazil.
- If the products imported by the consultant are considered as commodities for the purposes of the legislation, the application of the Import Price (ICP) method is mandatory;
- If the taxpayer is allowed to opt for the Resale Price less Profit (PRL) method, the profit margin to be adopted in the calculation of the parameter price is defined according to the economic sector of the Brazilian legal entity subject to the price controls of transfer. In the case of CNAE 2599-3-99, the margin to be adopted is 20%.
