As of 2013, some new tax provisions became effective, on which we briefly comment.
Firstly, Law n. 12,715/12 and Normative Ruling RFB n. 1,312/12 addressed new provisions on the Brazilian Transfer Pricing Rules. Some of these provisions are the following:
- Different profit margins (40%, 30% or 20%) apply to the Resale Price Profit Method (PRL), depending on the business activity of the taxpayer and regardless of being subject to a production process;
- New methods of determining the parameter prices came into effect: the Import Quoted Price (PCI) and the Export Quoted Price (PECEX), applicable to commodities;
- Deductibility of interest rates regarding lease agreement between related parties is limited to the six-month London Interbank Offered Rate (LIBOR), plus a 3% spread.
Further, Senate Ruling n. 13 provided for a standard 4% ICMS (State VAT) rate, levying on transfers of imported goods between the States. In order to be granted this rate, the imported goods shall not be subject to an industrial process in Brazil or, if so, the foreign manufacture ratio must exceed 40%. However, according to the Ordinance CAT n. 174, taxpayers shall fill in the Import Content Report Form (FCI), in which the import cost must be disclosed.
Such requirements were considered as adverse trade practices by several taxpayers. So far, over 200 preliminary injunctions1 were issued by the State Courts of Paraná, Espírito Santo, Minas Gerais and Santa Catarina for the purposes of waiving the disclosure of such data.
Notes
- “Jornal Valor Econômico”, Jan. 30th 201
Melissa Tseng was an associate at Pacheco Neto Sanden Teisseire Law Firm.
