by John Bodur, MBAOctober 27, 2023

Breaking Down Brazil's New Transfer Pricing Rules

On September 29, 2023, the Brazilian Federal Revenue (RFB) published Normative Instruction 2,161 (NI 2,161/23), introducing new transfer pricing rules that align the country with international standards. This is a significant development that will reshape the corporate landscape in Brazil.

The Option to Adopt
Taxpayers have the option to adopt the new system in 2023 or opt for a phased approach that becomes mandatory by January 1, 2024. This flexibility aims to ease the transition for companies and ensure compliance with the new rules.

Categorizing Taxpayers
Under the new regulations, taxpayers fall into one of three categories, depending on the value of their intercompany transactions:

Category 1: Taxpayers with intercompany transactions exceeding BRL 500 million must provide a comprehensive Master and Local File.
Category 2: Taxpayers with intercompany transactions exceeding BRL 15 million but below BRL 500 million must provide a simplified Local File Light.
Category 3: Taxpayers with intercompany transactions below BRL 15 million are exempt from providing transfer price documentation but must adhere to the arm’s-length principle.

Document Filing Deadlines
For early adopters, transfer price documentation for 2023 and 2024 must be submitted by December 31, 2024, while regular adopters have until December 31, 2025.

Comparable Benchmarks
The RFB’s expectations for comparable company/transaction benchmarks are now more transparent. If less than four comparable data points are found from a reliable database, a more flexible independence filter may be used. While local comparables are preferred, non-domestic comparables are allowed, with provisions accounting for potential differences in comparability.

Methodology Alignment
The RFB’s interpretation of transfer pricing methods closely aligns with the OECD Guidelines. While the use of other methods is allowed, there’s an emphasis on valuation techniques commonly used for intangible assets.

The Arm’s-Length Principle
A shift towards a holistic, substance-over-form approach in interpreting the arm’s-length principle has been introduced. This means recurring losses in an otherwise profitable group might signal non-compliance with the arm’s-length principle.

Compensatory Adjustments
The new rules introduce uncertainty regarding the impact of compensatory adjustments on other taxes. A compensatory adjustment is made to adjust the value of a controlled transaction to achieve results in line with the arm’s-length principle. While the initial text left room for interpretation, the final version clarifies that a compensatory adjustment does not automatically trigger an adjustment of other taxes. This change introduces uncertainty for taxpayers who rely on imports and apply a transactional net margin method logic.

Action Items for Taxpayers

  1. Review your transfer pricing documentation. Ensure your transfer pricing documentation is up-to-date and meets the new requirements.
  2. Update your transfer pricing processes. Ensure that your transfer pricing processes are aligned with the new rules.


The introduction of NI 2,161/23 has set a new course for transfer pricing in Brazil. These updated regulations align the country with international standards and provide taxpayers with an array of options and requirements. While it brings clarity and consistency in many areas, it also introduces some uncertainty, particularly regarding compensatory adjustments and their impact on other taxes. As companies navigate this new landscape, a proactive approach to compliance and understanding the intricacies of these regulations will be essential for success.

For questions about transfer pricing or other international tax matters, contact our Global Business Services team.

John Bodur, MBA is a Senior Tax Consultant in the firm’s Global Business Services practice and is responsible for assisting clients and adding depth in all areas of the firm’s international tax consulting services including transfer pricing, and the firm’s compliance expertise.

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