On 28 February 2018 the OECD and Brazil began a joint project to examine the similarities and gaps in approaches to valuation of cross-border transactions. The project aims to produce an assessment of possibilities to bring the transfer pricing rules in Brazil closer to the OECD guidelines.

The programme of work is planned to last for 15 months and will look at the legal and administrative framework underlying the Brazilian transfer pricing rules and their implementation. The strengths and weaknesses of Brazil’s rules will be analyzed and the potential for greater alignment with the OECD standards will be examined. If Brazil is eventually to become a member of the OECD a greater alignment of transfer pricing rules to the OECD guidelines could be an important part of the process.

The difference currently existing between the transfer pricing rules of Brazil and the OECD guidelines can lead to greater compliance costs for business and the risk of double taxation as transactions between related parties must take into account the different sets of rules. Greater convergence between the transfer pricing rules would therefore save costs for business and improve the climate for investment in Brazil.

Brazil is a member of the G20 group of countries and has already been working with the OECD by participation in the Inclusive Framework on base erosion and profit shifting (BEPS) and by its membership of the OECD’s Global Forum on Transparency and Exchange of Information for Tax Purposes. Brazil is one of the five key partners of the OECD and contributes in a sustained way, for example by integration into OECD statistics reporting and information systems. In May 2017 Brazil formally expressed its interest in beginning the process of accession to the OECD.