On 30 July 2020 the OECD and Brazil jointly launched a survey looking for comments on the development of safe harbours and other simplification measures.

OECD and Brazil

The survey is part of a project begun in February 2018 to review the differences between the transfer pricing regimes of Brazil and the OECD. The results of the analysis of the regimes were published in a report on 18 December 2019 which identified two options for adapting the Brazilian transfer pricing regime to align it with the OECD standard while enhancing the positive attributes of its existing transfer pricing framework. Both options contemplate full adherence to the arm’s length principle, while also enhancing the positive features of the Brazilian transfer pricing rules. One option is to immediately align the Brazilian transfer pricing rules with the OECD guidelines; and the other possibility is to gradually align the two systems. These paths would both lead to full alignment with the OECD guidelines.

Safe Harbours

A safe harbour in a transfer pricing regime is a provision that applies to a clearly defined category of taxpayers or transactions and relieves those taxpayers from certain obligations otherwise imposed by a country’s general transfer pricing rules. The objective of safe harbours is to make available simplified approaches for determining or approximating the arm’s length price.

The OECD Guidelines consider that safe harbours should be adopted only under appropriate circumstances, to relieve some compliance burdens and in relation to less complex transactions. They can also provide greater certainty for smaller taxpayers. The use of a safe harbour can reduce the need to search for comparable data and perform a benchmarking study. Safe harbours are therefore useful where there is little available comparable data.

Survey Document

The survey document invites taxpayers with business interests in Brazil, businesses interested in investing in Brazil and other interested parties to provide comments based on their experience or their views on issues relevant to the development of safe harbours. A regime can then be developed taking into account the specific needs of taxpayers and situations that may arise where safe harbours are needed.

The survey contains questions relating to the Identification of situations where the taxpayer may require a safe harbour regime; the use of the comparables data that may be available; the use of advance pricing arrangements (APAs); and other simplification measures.