Transfer Pricing guide: Brazil
Read below for more detailed information on transfer pricing regulations, document requirements, and other considerations for Brazil, as well as recent industry hot topics and key developments in the country's business landscape.
Page updated 1st July 2025
Transfer Pricing regulations
Is the jurisdiction part of OECD/G20 Inclusive Framework on BEPS?
As of May 28, 2024, Brazil is listed among the participating countries in the Inclusive Framework on BEPS.
Relevant Transfer Pricing regulation
LAW 14.596/2023 and NORMATIVE INSTRUCTION 2161/2023
Is this regulation aligned with the OECD Guidelines
Yes.
Transfer Pricing documentation requirements
Documentation Threshold for Preparation of Local File/ TP Documentation
The submission of the Local File is mandatory. A simplified version applies when the total amount of the taxpayer's controlled transactions, prior to transfer pricing adjustments, in the calendar year preceding the one to which the Local File refers, is equal to or greater than BRL 15,000,000.00 (fifteen million reais) and less than BRL 500,000,000.00 (five hundred million reais).
The full version of the Local File is required when the total amount of the taxpayer's controlled transactions, before transfer pricing adjustments, in the calendar year preceding the one to which the Local File refers, exceeds BRL 500,000,000.00 (five hundred million reais).
The Brazilian Federal Revenue Service (RFB) waives the requirement to submit the Local File when the total amount of the taxpayer’s controlled transactions, before transfer pricing adjustments, in the calendar year preceding the one to which the Local File refers, is less than BRL 15,000,000.00 (fifteen million reais).
Documentation Threshold for Preparation of Master File
The submission of the Global File is mandatory. A simplified version applies when the total amount of the taxpayer's controlled transactions, prior to transfer pricing adjustments, in the calendar year preceding the one to which the Local File refers, is equal to or greater than BRL 15,000,000.00 (fifteen million reais) and less than BRL 500,000,000.00 (five hundred million reais).
The full version of the Global File is required when the total amount of the taxpayer's controlled transactions, before transfer pricing adjustments, in the calendar year preceding the one to which the Local File refers, exceeds BRL 500,000,000.00 (five hundred million reais).
The Brazilian Federal Revenue Service (RFB) waives the requirement to submit the Global File when the total amount of the taxpayer’s controlled transactions, before transfer pricing adjustments, in the calendar year preceding the one to which the Local File refers, is less than BRL 15,000,000.00 (fifteen million reais).
Documentation Threshold for Preparation of Country by Country Report
Normative Instruction No. 1681/2016 – Article 4
Entities that are members of a multinational group and are tax residents in Brazil are exempt from submitting the Country-by-Country Report if the group’s total consolidated revenue in the fiscal year preceding the reporting fiscal year, as reflected in the ultimate parent entity’s consolidated financial statements, is less than:
I – BRL 2,260,000,000.00 (two billion, two hundred and sixty million reais), if the ultimate parent entity is a tax resident in Brazil; or
II – EUR 750,000,000.00 (seven hundred and fifty million euros), or the equivalent amount converted into the local currency of the jurisdiction where the ultimate parent entity is a tax resident, using the exchange rate as of January 31, 2015.
Sole Paragraph. Entities that are tax residents in Brazil must inform the Brazilian Federal Revenue Service (RFB) that they qualify for the exemption described in this article, in accordance with the provisions of Chapter IV.
Submission of Local File, Master File, and CbC Report Required? If so, when?
The Master File and the Local File must be submitted electronically through a Digital Process, using the service available on the Brazilian Federal Revenue’s Virtual Service Center (e-CAC), within three (3) months after the deadline for submitting the ECF for the corresponding calendar year.
For the 2024 calendar year, the deadline for submitting the Master File and the Local File will be the last business day of the 2025 calendar year, respectively.
If the taxpayer opted to apply the provisions of Law No. 14,596 of 2023 early, for the 2023 calendar year, the deadline for submitting the Master File and the Local File will be the last business day of the 2024 calendar year, respectively.
The Country-by-Country Report must be submitted annually for the fiscal year immediately preceding the reporting year. It must be completed as part of the Fiscal Accounting Bookkeeping (Escrituração Contábil Fiscal – ECF) and transmitted through the Public Digital Bookkeeping System (Sistema Público de Escrituração Digital – Sped). The ECF, including the Country-by-Country Report, must be submitted by the last business day of July of the year following the relevant calendar year.
If No Submission Required, any Other Deadline?
Even in cases where the preparation of the Master File, the Local File, and the Country-by-Country Report is waived, information related to transactions with related parties, the methods adopted, and any adjustments made must still be reported in the Fiscal Accounting Bookkeeping (Escrituração Contábil Fiscal – ECF) and transmitted through the Public Digital Bookkeeping System (Sistema Público de Escrituração Digital – Sped). The ECF must be submitted by the last business day of July of the year following the relevant calendar year.
Other Documentation Requirements
None.
Does TP documentation / Local file Need to be Prepared Contemporaneously with Tax Return Filing (i.e., before filing the return)?
The Master File and the Local File must be submitted electronically through a Digital Process, using the service available on the Brazilian Federal Revenue’s Virtual Service Center (e-CAC), within three (3) months after the deadline for submitting the ECF for the corresponding calendar year, but information related to transactions with related parties, the methods adopted, and any adjustments made must still be reported in the Fiscal Accounting Bookkeeping (Escrituração Contábil Fiscal – ECF) and transmitted through the Public Digital Bookkeeping System (Sistema Público de Escrituração Digital – Sped). The ECF must be submitted by the last business day of July of the year following the relevant calendar year.
Transfer Pricing Specific Returns
Preparation of TP Return Required?
Not applicable to Brazil.
Deadline for TP Return Filing
Not applicable to Brazil.
Key information to be included in the TP Return
Not applicable to Brazil.
Benchmarking - Local Tax Authority Preferences
Local vs Regional Comparables Set
As a general rule, comparable transactions should normally be identified in the geographic market where the tested party operates (“domestic comparables”), since there may be significant differences in the economic conditions of different markets. However, if no reliable or available information exists in the geographic market where the tested party operates, non-domestic comparables must be used, provided that reasonably accurate adjustments can be made to account for any material differences.
Single-Year vs Multi-Year Analysis
The use of multi-year data on comparable transactions may be allowed when it enhances the reliability of the comparability analysis, including to improve the understanding of the facts and circumstances of the controlled transaction, particularly those that could or should have influenced the determination of the transaction value.
Public vs Private Comparables
Not applicable to Brazil.
Interquartile Range or Full Range
If there are uncertainties regarding the degree of comparability or reliability of the comparable transactions, the interquartile range will be considered the appropriate range. However, if there are no such uncertainties, the full range will be deemed appropriate.
Transaction-Based or Aggregate Approach, or Both
Not applicable to Brazil.
How Often are Benchmarking Sets Renewed (financial update versus full scope BMS preparation)
Annually.
TP Penalties
In Case of Delayed Submission of Documentation
The fines shall be subject to a minimum amount of BRL 20,000.00 (twenty thousand reais) and a maximum amount of BRL 5,000,000.00 (five million reais).
With respect to the Master File and the Local File:
a) A fine of 0.2% (two-tenths of one percent) per calendar month or fraction thereof, calculated on the taxpayer’s gross revenue for the period to which the obligation refers, in the case of failure to submit within the required deadline; and
b) A fine of 3% (three percent) calculated on the taxpayer’s gross revenue for the period to which the obligation refers, in the case of submission that does not comply with the applicable requirements;
With respect to the Master File, a fine of 0.2% (two-tenths of one percent) on the multinational group’s consolidated revenue for the year prior to the one to which the information refers, in the case of submission containing inaccurate, incomplete, or omitted information;
In case of Income Adjustments in Course of a Tax audit
In the event of failure to timely provide information or documentation required by the tax authority during a tax audit or other preliminary enforcement action, or any other conduct that hinders the audit process, a fine of 5% (five percent) of the value of the corresponding transaction, as assessed by the tax authority.
Other Considerations
APA & MAP Availability
Not applicable to Brazil.
Applicability of Safe Harbour Rules
Although Brazilian legislation does not establish formal safe harbor rules, the Federal Revenue Service (RFB) may issue specific regulations to guide the application of the arm’s length principle in certain situations. These may aim to simplify the comparability analysis, reduce or waive documentation requirements, and provide guidance for complex transactions such as those involving intangibles, cost-sharing agreements, business restructurings, centralised treasury operations, and other financial arrangements. The RFB may also define approaches for cases where information on the controlled transaction, related parties, or comparables is limited.
For controlled transactions involving low value-adding services, taxpayers may adopt a simplified approach. In such cases, a fixed gross profit markup of at least 5% applies when the service provider is domiciled in Brazil, and a maximum of 5% applies when the service provider is a related party located abroad.
Critical Transfer Pricing Issues Prevailing in the Jurisdiction, if any
In recent years, commodities have been in the spotlight. Business restructuring transactions have also been subject to increased scrutiny by tax authorities in recent years.
Criteria/ Guidelines for Transfer Pricing Audit/ Assessments by Tax Authority
Brazil is in the first year of application of the new transfer pricing rules, and the information regarding transactions, methods, and any adjustments, as well as the submission of Local and Master File documentation, has not yet been subject to review by the tax authorities. It is important to note that such review may take place within five years from the date the documentation is submitted.
Relevant Regulations and Rulings with Respect to Thin Capitalisation or Debt Capacity in the Jurisdiction
Thin capitalisation rules in Brazil are governed by specific legislation (Article 45 of Law No. 12,249 of June 11, 2010, and further regulated by Brazilian Federal Revenue Normative Instruction (IN) No. 1,154/2011) aimed at limiting the deductibility of interest expenses on loans obtained from related parties abroad, to prevent excessive interest deductions that erode the Brazilian tax base.
Key Provisions: General Debt-to-Equity Ratio Limit: Interest on loans from related parties abroad is only deductible for tax purposes if the total debt does not exceed twice the amount of the Brazilian borrower’s net equity (2:1 ratio); Stricter Limit for Low-Tax Jurisdictions: When the creditor is located in a tax haven or privileged tax regime, the acceptable debt-to-equity ratio is reduced to 1:1, meaning the debt cannot exceed the Brazilian entity’s net equity; Combined Application: If the creditor is both a related party and located in a low-tax jurisdiction, both limits apply concurrently, and the more restrictive ratio must be observed.
Brazil’s tax landscape is undergoing significant transformation, driven by efforts to modernise and align its system with international standards, enhance transparency, and improve legal certainty for taxpayers.
One of the most notable developments is the enactment of Law No. 14,596/2023, which introduced a comprehensive reform of Brazil’s transfer pricing rules, bringing them into alignment with the OECD Transfer Pricing Guidelines and the arm’s length principle. This shift represents a fundamental change in how cross-border related-party transactions are analysed and documented, and positions Brazil more closely with global best practices. The implementation began with Normative Instruction (IN) No. 2,161/2023, and further guidance is expected, particularly on complex topics such as intangibles, financial transactions, and cost-sharing agreements.
At the same time, Brazil is advancing a broader tax reform agenda aimed at simplifying the indirect tax system through the unification of federal, state, and municipal taxes into a new Value-Added Tax (VAT)-style system, which is expected to increase efficiency and reduce compliance costs. The reform also includes planned changes to corporate income taxation, including the taxation of dividends and potential adjustments to the interest on net equity (Juros sobre Capital Próprio) regime.
These reforms reflect Brazil’s commitment to improving its business environment, attracting foreign investment, and aligning with global tax trends, particularly in the context of the OECD/G20 Inclusive Framework on BEPS, of which Brazil is an active member. However, the transition brings short- and medium-term challenges, as companies must adjust their systems, documentation, and compliance strategies to align with the new requirements.
In this dynamic environment, tax planning, robust documentation, and proactive risk management are becoming increasingly critical for both domestic and multinational enterprises operating in Brazil.
Brazil is currently in the first year of implementing its new transfer pricing framework, established under Law No. 14,596/2023. While the legislation came into force in 2024 (or optionally in 2023), no actual calculations or documentation have yet been reviewed or challenged by the tax authorities. As a result, taxpayers are navigating the new rules without the benefit of precedent or clear administrative positions.
Unlike common law jurisdictions, Brazil operates under a civil law system, where tax obligations and compliance are traditionally defined through detailed, prescriptive legislation. The adoption of a more principles-based transfer pricing approach, inspired by the OECD Guidelines and centred on the arm’s length principle, marks a significant cultural and structural shift in the Brazilian legal-tax framework.
This transition introduces greater interpretative flexibility, which, while aligning Brazil with international standards, also opens space for divergent views between taxpayers and tax authorities. In the absence of established administrative or judicial guidance, these differing interpretations could give rise to a significant volume of disputes, both at the administrative and judicial levels, thereby increasing legal uncertainty—particularly in the short to medium term.
While Brazil’s new transfer pricing legislation represents a significant alignment with OECD standards, it does not currently provide for Advance Pricing Agreements (APAs) or Mutual Agreement Procedures (MAPs). These instruments, commonly used in other jurisdictions to enhance tax certainty and prevent double taxation, remain outside the formal Brazilian legal framework.
However, the new law introduces a mechanism for enhanced interaction between taxpayers and the tax authority. Under Article 38 of Law No. 14,596/2023, the Brazilian Federal Revenue (RFB) is authorized to establish a specific consultation process through which taxpayers may seek guidance on the methodology to be applied to future controlled transactions in compliance with the arm’s length principle. This process may include detailed requirements for submission and response, offering a potential path for pre-emptive clarification and risk mitigation.
While not equivalent to formal APA or MAP programs, this consultation procedure could serve as a valuable tool for fostering dialogue and predictability, particularly in the early stages of applying the new transfer pricing rules.
Alignment with OECD Guidelines
In June 2023, Brazil enacted Law No. 14,596, converting Provisional Measure No. 1,152/22 into law. This marked a significant step in aligning the country’s transfer pricing rules with the OECD Guidelines and the arm’s length principle.
The legislation is principle-based and grants the Brazilian Federal Revenue (RFB) broad authority to issue detailed regulations through Normative Instructions (INs), allowing for a more modern and flexible transfer pricing framework.
On 29 September 2023, the RFB issued IN No. 2,161/2023, the first set of regulations implementing the new law. Further guidance through additional INs is expected to address topics not covered in this initial release. Although updates were anticipated — especially regarding intangibles — no new publications have been issued so far.
Benchmarking Analyses Nuances or Preferences
Although there is no hierarchy of methods, in cases where the PIC, PRL and MCL methods and the MLT and MDL methods can be applied with an equal degree of reliability, the use of the PIC, PRL and MCL methods will be preferable.
Thin Capitalisation Considerations for Intercompany Loans
Thin capitalization rules in Brazil are governed by specific legislation aimed at limiting the deductibility of interest expenses on loans obtained from related parties abroad, to prevent excessive interest deductions that erode the Brazilian tax base.
These rules are primarily established under Article 45 of Law No. 12,249 of June 11, 2010, and further regulated by Brazilian Federal Revenue Normative Instruction (IN) No. 1,154/2011.
Key Provisions:
General Debt-to-Equity Ratio Limit:
Interest on loans from related parties abroad is only deductible for tax purposes if the total debt does not exceed twice the amount of the Brazilian borrower’s net equity (2:1 ratio).
Stricter Limit for Low-Tax Jurisdictions:
When the creditor is located in a tax haven or privileged tax regime, the acceptable debt-to-equity ratio is reduced to 1:1, meaning the debt cannot exceed the Brazilian entity’s net equity.
Combined Application:
If the creditor is both a related party and located in a low-tax jurisdiction, both limits apply concurrently, and the more restrictive ratio must be observed.
Applies to Interest Deductibility:
The rules do not prohibit the transactions themselves but rather restrict the tax deductibility of the associated interest expense for corporate income tax (IRPJ) and social contribution (CSLL) purposes.
Documentation Requirements:
Taxpayers must maintain proper documentation to support the arm’s length nature of the financing and demonstrate compliance with the debt-to-equity thresholds.
These rules are part of Brazil’s broader efforts to align with international standards on base erosion and profit shifting (BEPS), by discouraging artificial debt structuring between related entities.
