Throughout the last decade, Brazilian legislators have taken action to globalize our tax legislation. This integration trend, common to most Latin American countries, is part of a globalization process that the world has been gradually undergoing since the nineteen sixties and more acceleratedly since the nineties.
With this aim, Law No. 9.430/96, which, at the time significantly amended the IRPJ
(Corporate Income Tax) and the CSLL
(Social Contribution on Net Income), introduced Transfer Pricing into our legal scenario.
Generally speaking, these regulations impose tax controls on import and export prices for goods, services, and right transactions between parties based and domiciled in Brazil and related parties resident or domiciled overseas. They also produce specific regulations for transactions with tax havens and on interest deriving from contracts that have not been registered with the Brazilian Central Bank.
The appropriate planning of the business is essential for optimizing the tax burden in the context of Transfer Pricing. On the other side, failure to comply with these regulations results in penalties and other tax impacts, pursuant to pertinent legislation.