Transfer Pricing: Rules and Practice in Selected Countries (A-B) (Portfolio 6940)

Tax Management Portfolio, Transfer Pricing: Rules and Practice in Selected Countries (A–B), No. 6940, presents the rules and practice related to transfer pricing in Australia, Belgium, and Brazil.

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Chapter 10, “Transfer Pricing Rules and Practice in Australia,” describes the transfer pricing rules in Australia and discusses the way in which those rules are applied by the Australian tax authorities. The chapter addresses the expectations of taxpayers with respect to the documentation of transfer pricing arrangements, the manner in which taxpayers are selected for examination, the penalty regime, and defenses against transfer pricing adjustments. The treatment of tax losses, reliance on experts, Competent Authority processes, the relationship between transfer pricing and customs issues, and the limited case history in Australia are also discussed.

Chapter 20, “Transfer Pricing Rules and Practice in Belgium,” analyzes the main Belgian provision for transfer pricing adjustments (Article 26 of the Belgian Income Tax Code, dealing with the so-called abnormal or benevolent advantages) as well as the provisions to challenge tax avoidance through “tax havens” (Articles 54 and 344 paragraph 2 ITC). The chapter also discusses in detail the guidance provided by the Belgian tax authorities and summarizes the ruling practices and ruling procedure. The first part includes the application of the different transfer pricing provisions to specific intragroup transactions, such as the transfer of (in)tangible assets, waiver of a debt claim, financing agreements, and intragroup services. The second and third parts describe the audit practice from a transfer pricing perspective and give a brief overview of the compatibility of the Belgian domestic transfer pricing provisions with double tax treaties. The final part discusses procedures for preventing the double taxation that can result from transfer pricing adjustments, with special attention to the EU Arbitration Convention as well as to the relevant Belgian materials.

Chapter 25, “Transfer Pricing Rules and Practice in Brazil,” describes the transfer pricing rules in Brazil, their practical application to Brazilian taxpayers, and the effect of those rules in competent authority proceedings. The chapter places particular emphasis on a comparison of those rules with the OECD transfer pricing guidelines and discusses in some detail the likely legality of the rules as currently written under the Brazilian Federal Constitution.


The Transfer Pricing: Rules and Practice in Selected Countries (A–B) Portfolio was authored by the following experts.
Peter Blackwood, retired tax partner and director of Deloitte Touche Tohmatsu's specialist Transfer Pricing Group in the Asia-Pacific region; former senior ATO officer; Chartered Accountant; Fellow of Taxation Institute of Australia.

David Lewis, senior consultant to Deloitte Touche Tohmatsu's specialist Transfer Pricing group in Australia; former ATO Assistant Commissioner and Competent Authority.

Patrick Cauwenbergh is an International Tax Partner with Deloitte & Touche Brussels and is the head of the transfer pricing and tax effective supply chain group within Deloitte. He has participated in transfer pricing assignments for Europe-based companies (including many of the largest Belgian controlled groups) regarding their relations with other EU-countries, Eastern Europe countries, the United States, Japan, etc. He obtained a Ph.D. in law on “international transfer pricing” at the University of Antwerp, where he is a Professor of International Tax Law, and obtained a Master in International and European Taxation at the Ecole Supérieure des Sciences Fiscales in Brussels. In addition, he has prior experience in the corporate tax aspects of the financial industry (hybrid financing, global trading, cash pooling, charge out of corporate fees, cost sharing, leasing transactions, etc.). He has published two monographs and authored several articles on international transfer pricing and is Guest Professor at the Universities of Gent and Leuven and a regular speaker at seminars on related topics.

Bart Van Honsté is a former manager for the Brussels transfer pricing group of Deloitte & Touche where he worked on transfer pricing issues, including those related to reorganizations, permanent establishments, and e-commerce. He has been involved in several arbitration procedures under the EU Arbitration Convention. Mr. Van Honsté obtained a degree in Economic Sciences at the University of Leuven (1993), a degree in Law at the University of Antwerp (1997), and a Master in Taxation at the University of Brussels (Solvay). While in private practice, he was a regular speaker at transfer pricing seminars, and he is the author of several publications with respect to transfer pricing in international and Belgian tax journals.

Lionel Bonner Nobre, Latin America Tax Director, Dell, Inc.; former Director of Latin American Tax Services of BDO Seidman LLP and Director of the Brazilian Advisory Portal for Grant Thornton LLP in Miami; Pontifical University of São Paulo, Brazil (JD, 1992 and LLM, 2000); University of Miami (LLM, 2004), Member, Brazilian Bar, Brazilian Institute of Certified Financial Planners (“Instituto Brasiliro de Certificação de Planejadores Financeiros – IBCPF”), Brazilian Association of Tax Consultants (“Associação Brasileira de Consultores Tributários – ABCT”), Academy of Brazilian Tax Law (Academia Brasileira de Direito Tributário – ABDT”), and the Brazilian Tax Planning Institute (“Instituto Brasileiro de Planejamento Fiscal – IBPT”).


Portfolio 6940-1st: Transfer Pricing: Rules and Practice in Selected Countries (A-B)

Portfolio Description


Technical Advisors


Significant Developments

Significant Developments



Enacted Legislation

Tax Laws Amendment (Cross-Border Transfer Pricing) Bill (No. 1) 2012 Enacted


Tax Laws Amendment (Countering Tax Avoidance and Multinational Profit Shifting) Bill 2013 Enacted

Administrative Developments

ATO Releases International Dealings Schedule 2012

ATO Releases Reportable Tax Positions Schedule for 2011-12

Inspector General of Taxation Launches Review into ATO Handling of Transfer Pricing Matters

Board of Taxation To Study Adopting OECD Approach to Attributing Profits to Permanent Establishments


Enacted Legislation

Measure Imposing Withholding Tax on Certain Income Attributed to Non-Residents

Belgian Legislation Amends Thin Capitalization Rules


Court Decision on a Company's Minimum Taxable Base

Administrative Developments

Belgium's Tax Administration Increases Transfer Pricing Audits


Enacted Legislation

Brazil Amends Transfer Pricing Rules For Intercompany Loans

Brazil Amends Transfer Pricing Rules For Financial Transactions

Administrative Developments

Brazil's Ministry of Finance Issues Interest Rate Spreads for Cross-Border Loans

Brazil Revenue Authority Issues Transfer Pricing Regulations

Brazil Revenue Authority Issues Transition Rules for Transfer Pricing Regulations

Brazil Revenue Authority Publishes Reporting Requirements

U.S.-Brazil TIEA In Force

Detailed Analysis

CHAPTER 10: TRANSFER PRICING RULES AND PRACTICE IN AUSTRALIAÂ by Peter Blackwood and David Lewis Deloitte Touche Tohmatsu Sydney, Australia

10:I. Overview of Australian Tax System and Administration

Introductory Material

A. Income Over Which Australia Asserts Taxing Jurisdiction

1. Income Derived by Australian-Based Entities from Transactions Involving Foreign Activities or Payments

2. Income Derived by U.S.-Based Entities from Transactions Involving Australian Activities or Payments

B. Assessment of Income Tax — Self-Assessment

C. Consolidation

D. Audit Procedure

1. Forward Audits

2. Post-Filing Audits

E. Administrative Appeals of Disputed Audit Findings

F. Judicial Appeals of Disputed Audit Findings

10:II. Basic Australian Transfer Pricing Rules

A. Overview of Legislative Framework

1. Division 13 of Part III of Income Tax Assessment Act 1936

a. Interpretation of the Term “Taxpayer”

b. Interpretation of the Term “International Agreement”

c. Interpretation of the Term “Property”

d. The Arm's-Length Principle — Section 136AD

(1) Overview

(2) Meaning of Arm's Length

(3) Discretion To Deem an Amount To Be the Arm's-Length Consideration — Subsection 136AD(4)

(4) Source of Income &Â Profit Allocation Within Same Legal Entity — Section 136AE

(5) Consequential Adjustments — Section 136AF

(6) Denial of Franking Credits for Additional Tax Paid Pursuant to a Transfer Pricing Adjustment — Subsection 160APAAA(2)

2. Double Tax Agreements (Treaty Provisions)

3. Part IVA of Income Tax Assessment Act 1936

4. Part X of Income Tax Assessment Act 1936

5. Subdivision C of Division 2, Part III of Income Tax Assessment Act 1936

B. Transactions Subject to Rules

1. Overview

2. Intra-Company Transactions

3. Transfers or Licensing of Intangible Property

4. Loans and Other Financing Arrangements

5. Performance of Services

C. Definition of Related Parties Subject to Transfer Pricing Rules

1. Overview

2. Relevance of Related Party Status

a. Domestic Law Provisions

b. Treaty Provisions

c. Interaction of Domestic Law and Treaty Provisions

3. Dealings Between Unrelated Parties

4. Dealings Between Related Parties

D. Transfer Pricing Standards

1. ATO Discretion to Apply Transfer Pricing Rules

2. Self-Assessment of Transfer Pricing Adjustments

3. Consequential Adjustments

4. No Statute of Limitations for Transfer Pricing Adjustments

5. Denial of Franking Credits for Additional Tax Paid on a Transfer Pricing Adjustment

E. Administrative Interpretations and Practice

1. Taxation Rulings

a. TR 94/14 — Basic Concepts

b. TR 97/20 — Methodologies

(1) Overview

(2) Interaction with the OECD Guidelines

(3) Use of Indirect and Hybrid Methodologies

(4) Approach to Comparability

(a) Standard of Comparability

(b) Factors Affecting Comparability

(c) Business Sense

(d) Use of Related Party Data

(e) Market Indices

(f) Reliability of Potentially Comparable Data

(5) Segregation Versus Aggregation of Transaction Groups

(6) Construction of an Arm's Length Range

(7) Priority of Methods

(8) Multiple Year Data

(9) Applications of Transaction-Based Methods, i.e., CUP, RP and CP Methods

(a) CUP

(b) RP Method

(c) CP Method

(10) Application of Entity-Based Methods, i.e., Profit Split

(11) Transactional Net Margin Method (TNMM)

c. TR 98/11 — Documentation, Audit Risk Assessment, Access to Information, etc.

d. TR 92/11 — Loan Arrangements and Credit Balances

e. TR 1999/1 — Intra-Group Services

f. TR 98/16 — Penalties

g. PS LA 2011/1 — Advance Pricing Arrangements (“APA”)

h. TR 1999/8 — The Effects of Determinations Made Under Division 13 of Part III, Including Consequential Adjustments Under § 136AF

i. TR 2000/16 — Transfer Pricing and Profit Reallocation Adjustments, Relief from Double Taxation and the Mutual Agreement Procedure

j. TR 2001/11 Operation of Australia's Permanent Establishment Attribution Rules

k. TR 2004/1 — Cost Contribution Arrangements

l. TR 2005/11 — Branch Funding for Multinational Banks

m. TR 2011/1 — Application of Transfer Pricing Provisions to Business Restructuring

2. Use of Experts or Industry Evidence to Establish “Correct” Transfer Prices

a. Use of Experts

b. Industry Evidence

3. Marketing Intangibles

4. Attributing Profits to a Dependent Agent Permanent Establishment

5. Defenses to Transfer Price Adjustments

a. Business Behavior

b. Market Share Strategies

c. Setoffs

6. Treatment of Tax Losses from Prior Years or Losses Within the Company Group

F. Australian Transfer Pricing Case Law

10:III. Transfer Pricing Reporting and Documentation Requirements

Introductory Material

A. Reasons for Keeping Documentation

1. The Risk of Audits and Adjustments

2. Contemporaneous Documentation

3. How Much Documentation Is Enough?

4. Documentation Relevant to the Application of Particular Pricing Methodologies

a. CUP Method

b. Resale Price Method (“RP Method”)

c. Cost Plus Method (“CP Method”)

d. Profit Split Method (“PS Method”)

e. Transactional Net Margin Method (“TNMM”)

5. Documentation for Certain Business Strategies

6. Sustained Losses

7. Market Penetration

8. Documentation Issues for Small Business Taxpayers/Low Levels of Dealings

9. Penalties

B. Coordination with U.S. Documentation Requirements

1. U.S. Documentation Requirements

2. Alignment of U.S. Documentation with Australian Requirements

10:IV. Penalties, Tax Amnesty, and Interest on Additional Income Taxes Based on Transfer Pricing Income Reallocations (Including Taxation Ruling TR 98/16)

A. Overview

B. Penalties

C. Interest

10:V. Dealing with Australian Tax Authorities on Transfer Pricing Issues

A. Advance Rulings

1. Advance Pricing Arrangements

a. APA Process Overview

b. “Pre-Lodgment” Meeting

c. “Simplified” APA Process

d. “Standard” and “Complex” APA Process

e. APA Renewals and Extensions

f. APA Administration

g. APAs and Active Compliance

2. Extent to Which Rulings Bind the Taxpayer or the Australian Tax Authorities

B. Australian Government Participation in the U.S. APA Process

C. Transfer Pricing Audits

1. ATO Audit Teams — Structure, Authority, Scope of Industry Coverage

2. Guidelines Used by ATO Audit Teams

3. Information Normally Required to Be Presented by a Taxpayer to an ATO Audit Team

4. Requirements for Creation of Documents

D. Refund Claims Following U.S.-Initiated Allocations of Income from Australian Entities to U.S. Entities

E. Negotiated Settlements of Australian-Initiated Adjustments

10:VI. Practical Aspects of the Competent Authority Process

A. Application for Australian Competent Authority Assistance

1. Mechanics of Application

2. When Assistance Can Be Requested

B. Degree of Foreign Taxpayer Involvement with Australian Competent Authority

C. Australian Competent Authority's Willingness to Deviate from Australian Transfer Pricing Rules

D. Australian Competent Authority's Willingness to Deviate from Australian Penalty and Interest (Including Refund Interest) Rules

E. Arbitration

10:VII. Information Disclosure

A. Practical Application of Exchange of Information Agreements

B. The Existence and Effect of Australian Secrecy Rules

C. Defenses to Information Requests by Foreign Governments

10:VIII. Interaction of Transfer Pricing, Customs Valuation, and Anti-Dumping Rules

Introductory Material

A. Customs Value

B. Anti-Dumping

C. Service Charges and Intangibles

D. Rebates

E. Collaboration

F. The Human Factor

CHAPTER 20: TRANSFER PRICING RULES AND PRACTICE IN BELGIUM by Patrick Cauwenbergh and Bart Van Honsté Deloitte & Touche Brussels

20:I. Introduction

20:II. Basic Belgian Transfer Pricing Rules

A. Overview of the Belgian Tax System

B. General Transfer Pricing Rules

C. The Key Article: Article 26 ITC

1. Scope of Article 26 ITC

a. In General

b. Article 26 Versus 49 ITC

(1) Escape Clause

(2) Burden of Proof

c. Article 26 Versus 55 and 56 ITC

2. Conditions of Application

a. Abnormal or Benevolent Advantages

(1) In General

(2) Before the TP Circular

(a) “Advantage”

(b) “Abnormal” and “Benevolent”

(i) “Abnormal”

(ii) “Benevolent”

(3) After the TP Circular

(a) Transactional Analysis

(b) Functional Analysis

(i) Structure and Activities of Group

(ii) Identification of Intercompany Transactions and Contractual Relationships

(iii) Functions Performed and Risks Assumed

(iv) Ownership and Development of Intangibles

(c) Characterization of Contracting Parties

(d) Analysis of Economic Circumstances

(e) Analysis of Business Strategies

(f) Search for Reliable Comparables

(g) Conclusion

(i) Liège, May 21, 1997: Indirect Set-offs

(ii) Gent, April 29, 1999: Quantity and Quality Discounts

b. Quality of Foreign Beneficiaries

(1) Abnormal or Benevolent Advantages Granted to Foreign Beneficiaries

(2) Abnormal or Benevolent Advantages Granted to Nonresident Interdependents

(a) Nonresident

(b) “Relationship of Mutual Interdependency”

(3) Abnormal or Benevolent Advantages Granted to Nonresidents in a “Tax Haven”

(a) Concepts of “Nonresident” and “Foreign Establishment”

(b) “Tax Haven” Concept

(4) Abnormal or Benevolent Advantages Granted to Other Nonresidents

c. Capacity of the Grantor of the Advantages

3. Burden of Proof

a. Before the TP Circular

b. After the TP Circular

(1) General

(2) Accessibility to Information

(3) Documentation Requirements

4. Use of Transfer Pricing Methods in Practice

a. Transfer Pricing Methods

(1) Attitude of the Belgian Tax Authorities

(2) Attitude of the Belgian Courts

b. Set-Offs

c. Cost Sharing Agreements

5. Method of Income Adjustment

6. Periodical Corrections

D. Articles 54 and 344 Paragraph 2 ITC: Two Provisions to Challenge Tax Avoidance Through “Tax Havens”

1. Expenses of Article 54 ITC

a. Scope of Article 54 ITC

(1) In General

(2) Article 54 Versus Article 26 ITC

(3) Article 54 Versus Article 49 ITC

b. Conditions of Application

(1) Payments to Which Article 54 ITC Applies

(2) Capacity of the Beneficiary of the Payments

(3) Capacity of the Debtor of the Payments

c. Burden of Proof

d. Method of Income Adjustment

2. Article 344, Paragraph 2 ITC: Transfer of Specific Assets to “Tax Havens”

a. Scope of Article 344, Paragraph 2 ITC

(1) In General

(2) Article 344, Paragraph 2 and Article 26, Paragraph 2, 2° ITC Compared

b. Scope of Application

(1) Contracts to Which Article 344, Paragraph 2 ITC Applies

(2) Capacity of the Transferor

(3) Capacity of the Foreign “Beneficiary”

c. Burden of Proof

(1) Legitimate Financial or Economic Needs

(2) Real Counter-Value

d. Method of “Income Adjustment”

E. Ruling Practices

1. In General

2. Types of Rulings

a. Advance Rulings with Respect to the Applicability of Articles 26, 54 And 344, Paragraph 2 ITC

(1) Background

(a) Before July 20, 1991: Informal Ruling Procedure

(b) From July 20, 1991 to May 3, 1999: Formal Ruling Procedure

(c) From May 3, 1999 to December 31, 2002: Royal Decree of May 3, 1999

(d) From January 1, 2003: Generalized Ruling System

(2) Generalized Ruling System

(a) Scope of an Advance Ruling

(b) The Notion of “Advance Ruling”

(c) Explicit Recognition of Bilateral/Multilateral APAs

(3) Application of the Generalized Ruling Regime

(a) Procedure

(b) Reply Timeframe

(c) Outcome

(d) Publication

b. Advance Pricing Agreements

(1) Introduction

(2) Definition

(3) Legal Basis

(a) Legal Basis for Bilateral APAs

(b) Belgian Legal Basis

(4) Time Limit

(a) Domestic Procedure

(b) Mutual Agreement Procedure

(5) Required Documentation and Information

(6) Advantages

(a) Avoidance of Double Taxation

(b) Domestic Legal Certainty

(c) Risk and Cost Reduction

(d) Constructive Relationship with Tax Authorities

(7) Disadvantages

(a) Disclosure of Information

(b) Preparation and Compliance Costs

(c) Limited Application

(8) Feasibility

F. Application of the Articles 26, 49, 54 and 344, Paragraph 2 ITC to Specific Intragroup Transactions

1. Use and Transfer of Fixed Tangible Assets

2. Transfer of Financial Fixed Assets

a. Articles 26, 49, 54 ITC

b. Article 344, Paragraph 2 ITC

3. Transfer of (Commercial) Goods

a. Price Determination of Goods

b. Other “Transfer Pricing” Issues with Respect to the Sale and Purchase of (Commercial) Goods

4. Use and Transfer of Intangible Fixed Assets

a. Transfer or Use of Foreign Intangible Assets

b. Transfer or Use of Belgian Intangible Assets

5. Waiver of a Debt Claim

a. Pure Waiver of a Debt Claim

b. Waiver of a Claim Until “Beneficiary” Better Off

6. Financing Agreements

a. Interest-Free and Low-Interest Loans

b. High-Interest Loans

7. Intragroup Services

a. Acts of Control and Management

b. Actual Services

20:III. Overview of Compliance and Litigation from a Transfer Pricing Perspective

A. Organization of the Belgian Tax Administration with Respect to Transfer Pricing

B. Tax Audit

1. Investigative Powers of the Belgian Tax Authorities in International Situations

a. Limitations: Principles of Sovereignty and Legality

b. Sources of Law

c. International Cooperation Between Tax Authorities

(1) Exchange of Information

(a) Exchange on Request

(b) Automatic Exchange

(c) Spontaneous Exchange

(2) Investigations on Foreign Territories

(3) Simultaneous Tax Examinations

(4) Pooling of Experience Between Tax Authorities

(5) Feedback with Respect to Conflicting Information

2. Belgian Audit Practice with Respect to Transfer Pricing

a. In General

b. Who Can Exercise Control?

c. Investigation Powers

(1) Requests for Information

(2) Cooperation Between Tax Administrations

d. Means of Evidence

(1) Factual Presumptions

(2) Special Means of Evidence

e. Audit Practice

(1) Transfer Pricing Audit

(2) Red Flags

20:IV. Compatibility of Belgian Domestic Transfer Pricing Provisions with Double Tax Treaties

A. General Rule: Priority of Double Tax Treaties over Domestic Rules

B. Article 26 ITC Versus Double Tax Treaty

1. Position of Majority of Belgian Case Law and Legal Authors

2. Under the TP Circular

C. Articles 54 and 344, Paragraph 2 ITC Versus Double Tax Treaty

1. Article 54 ITC

2. Article 344, Paragraph 2 ITC

20:V. Procedures for Preventing Double Taxation Resulting from Transfer Pricing Adjustments

A. Introduction

B. Competent Authority Procedure

1. Introduction

2. Scope of the Competent Authority Procedure

a. Specific Case Mutual Agreement

b. General Mutual Agreement

3. Conditions of Application

a. In General

b. Specific Case Mutual Agreement

(1) Time Limit

(2) Formalities

(3) Competent Authority

4. Course of the Procedure

a. First Phase: Treatment of Request in the Approached Member State

b. Second Phase: Mutual Agreement Between Tax Authorities of Both Contracting States

c. Third Phase: Execution of Agreement

5. Mutual Agreement and Internal Law

6. Mutual Agreement and Economic Double Taxation

C. Arbitration Convention

1. Introduction

2. Arbitration Convention Circular

a. Introduction

b. Scope of the Arbitration Convention

(1) Contracting States (Article 16 of the Arbitration Convention)

(2) Arm's Length Principle (Article 4 of the Arbitration Convention)

(a) Principles

(b) Belgian Legislation

(3) Personal Application (Articles 1 and 4 of the Arbitration Convention)

(a) Associated Enterprises

(b) Permanent Establishments

(4) Taxes Covered (Article 2 of the Arbitration Convention)

(5) Application Period (Article 20 of the Arbitration Convention)

(6) Definitions

c. Procedure

(1) Notification (Article 5 of the Arbitration Convention)

(2) Mutual Agreement Procedure (Article 6 of the Arbitration Convention)

(a) Initiation of the Procedure

(b) Statute of Limitations

(c) Formalities

(d) Competent Authority

(e) Well-Founded Complaint (Article 6(2) of the Arbitration Convention)

(f) Serious Penalty Clause (Article 8 of the Arbitration Convention)

(g) Term To Eliminate Double Taxation (Article 7(1) And (4) of the Arbitration Convention)

(3) Arbitration Procedure (Articles 9, 10 and 11 of the Arbitration Convention)

d. Details Specific to Belgium

(1) Interaction with Domestic Legal Remedies

(a) In General

(b) Concrete Application

(i) An Administrative Appeal May Have Been Filed

(ii) A Juridical Appeal May Have Been Filed

(2) Moratorium Interest


25:I. Introduction

25:II. Overview of the Brazilian Tax System and Administration

A. History of the Brazilian Tax System

1. The National Tax Code

2. Tax Reform Under the 1988 Constitution

B. Income Over Which Brazil Asserts Taxing Jurisdiction

1. Brazilian Tax Residents

2. Foreign Tax Residents

25:III. Basic Brazilian Transfer Pricing Rules

A. Background to Brazilian Transfer Pricing Control Rules

B. Legislative History of Law nr. 9.430/96 and the Supporting Regulations

C. Definition of a Controlled/Related Party Subject to Transfer Pricing Control Rules

D. Transfer Pricing Control of Transactions with Tax Haven Residents

E. Transfer Pricing Methods for Imports

F. Transfer Pricing Methods for Exports

G. Transfer Pricing Methods for Loans and Financial Transactions

H. Transfer Pricing Methods for Intangibles and Non-Traditional Assets

25:IV. Other Important Pricing Control Rules

A. Average Price Calculation

B. Divergence Margin Safe Harbor

C. Best Method Rule

D. Documentation

E. Advance Pricing Agreements

F. Special Situations Regarding Market Penetration

G. Tax Treaties, Competent Authority, and Secondary Adjustments

25:V. Enforcement of Transfer Pricing Control by the Tax Authorities and Transfer Pricing Audits

A. Enforcement Agency

B. Audits, Secret Comparables and Penalties

C. Administrative Jurisprudence on Transfer Pricing Control in Brazil

D. Important Accounting Aspects Regarding Transfer Pricing Control in Brazil

25:VI. Other Rules Relating to Transfer Pricing

A. The Application of the Arm's Length Principle in Brazil

1. Introduction

2. The Arm's Length Principle in Current Transfer Pricing Control Rules

3. The Arm's Length Principle as a Constitutional Tax Principle

B. Transfer Pricing Control and Brazil's DDL Regime

1. The Concept of Related Party for DDL Purposes

2. Instances of DDL

3. The Concept of Market Value

4. Flexibility in the Measurement of Market Price and Proof of DDL

C. Transfer Pricing Control and Tax Arbitration

D. Transfer Pricing and Customs Valuation in Brazil

1. Customs Valuation Methodology

2. Resolving the Conflict Between Brazil's Customs Valuation and Transfer Pricing Control

25:VII. The OECD's Comments on the Brazilian Transfer Pricing Control Rules

25:VIII. Controversial Legal Aspects of Brazil's Transfer Pricing Control

Introductory Material

A. Creation of a Fictitious Taxable Event (Juridical Fiction) and an Absolute Legal Presumption

B. Reversal of the Burden of Proof

C. Freedom of Enterprise and Freedom of Competition

D. Non-Compliance with Tax Treaties

25:IX. Suggested Applicability of the Transfer Pricing Control Rules in Brazil

Introductory Material

A. Practical Considerations: Preliminary Transfer Pricing Verification Questions

B. Preparing the Annual Income Tax Return, Transfer Pricing Adjustments, and Related Party Transaction Disclosure

C. Attempts to Amend Law nr. 9.430/96


Working Papers

Table of Worksheets


Worksheet 31 Transfer Pricing Circular of June 28, 1999 (Unofficial Translation)

Worksheet 41 Excerpts of Law nr. 9.430 of December 16, 1996, Applicable to Transfer Pricing Control in Brazil

Worksheet 42 Finance Ministry Ordinance nr. 95, of April 30, 1997 (Published May 5, 1997)

Worksheet 43 Normative Instruction 243 of November 11, 2002

Worksheet 44 Normative Instruction 321 of April 14, 2003

Worksheet 45 Normative Instruction 382 of December 30, 2003






Legislative Materials

Administrative Pronouncements

ATO Booklets




Contributions in Journals