On 28 November 2019 the OECD published a stage 1 peer review report on Brazil’s compliance with the minimum standard on tax dispute resolution under Action 14 of the project on base erosion and profit shifting (BEPS).

The peer review report notes that Brazil has concluded 35 double tax treaties all of which contain a provision relating to the mutual agreement procedure (MAP). Brazil has a small inventory of MAP cases with 23 cases pending on 31 December 2018.

According to the report Brazil’s tax treaty network is partly consistent with the minimum standard. However around 80% of the tax treaties do not currently include a provision for the MAP to be implemented regardless of any time limits in domestic law; or set a time limit for making transfer pricing adjustments.

The report also notes that more than half the double tax treaties concluded by Brazil do not include a provision stating that the competent authorities may consult together for the elimination of double taxation for cases not provided for in the tax treaty. Also around 20% of Brazil’s tax treaties allow a deadline to file a MAP request that is shorter than the three years provided for in the OECD Model.

The report concludes that Brazil needs to amend and update a significant number of its tax treaties. Brazil has stated its intention to update all of its tax treaties to comply with the Action 14 minimum standard and will begin bilateral negotiations with treaty partners.

Brazil has issued guidance on the availability of the MAP and its application in practice. The peer review report notes that Brazil provides access to the MAP in eligible cases but some MAP cases could not be resolved in the past owing to an absence of response from Brazil and the expiration of the domestic time limit. Also there is no documented notification process for cases where the competent authority considers that the MAP request is not justified.

Implementation of measures to improve compliance with BEPS Action 14 will be examined in the stage 2 peer reviews.