The new Brazilian transfer pricing rules align with the OECD standard and are a radical change to the analysis of intra-group transactions, and offer several implementational challenges.
Besides, the tax reform (PEC 45/2019) is being discussed in the Comissão de Constituição e Justiça (CCJ). In its validation, the text may still be subject to alterations, and there may be a possible increase in the tax burden on the service sector. Then, the normal process of discussions will continue in the Chamber of Deputies.
For this amendment proposal to be approved, the support of 3/5 of the composition of each House is necessary in two voting turns in each Plenary. In the Senate, the votes of, no minimum, 49 senators are necessary. The text is only approved if there is complete agreement between the Chamber of Deputies and the Senate.
This tax reform has been desired for a long time. Brazil is a candidate to enter the OECD and must meet certain requirements. Among them is adapting its transfer pricing rules to international standards, which has already been done and is in the implementation phase, and establishing a value-added tax (VAT).
This represents a great challenge and a fundamental change in the Brazilian tax system.
Brazil also has achievements and many challenges in respect to the implementation and enforcement of the OECD Anti-Bribery Convention, having recently passed Phase 4 of evaluation made by the OECD Working Group on Bribery on implementation of the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.