New legislation on transfer pricing published in Brazil

On June 15, 2023, Law No. 14,596/2023 was published, amending the rules on transfer pricing related to Corporate Income Tax and the Social Contribution on Net Income (CSLL) in Brazil.

This law is applicable in determining the tax base for Corporate Income Tax and CSLL for Brazilian resident entities engaged in controlled transactions with related parties abroad and is based on the OECD Transfer Pricing Guidelines, including the application of the Arm's Length principle.

The convergence of Brazilian legislation with the OECD standard through the adoption of a new transfer pricing system addresses the negative effects of gaps in the previous system. The new framework seeks to improve the collection of tax revenues in the area of transfer pricing and reduce the risk of double taxation, while encouraging trade and investment in Brazil.

Law No. 14,596/2023 will come into effect on January 1, 2024.