THE OECD and Brazil have launched a joint project to examine the similarities and gaps between the Brazilian and OECD approaches to valuing cross-border transactions between associated firms for tax purposes. The project will also assess the potential for Brazil to move closer to the OECD’s transfer pricing rules, which are a critical benchmark for OECD member countries and followed by countries around the world.

The 15-month work programme will analyse the legal and administrative framework behind the Brazilian transfer pricing system, as well as its implementation. It will examine strengths and weaknesses in the Brazilian approach while exploring options for greater alignment with the OECD’s internationally accepted standard, the OECD Transfer Pricing Guidelines, which would be an important element of any future process of accession to the Organisation.

The OECD has long been at the forefront of efforts to develop common approaches to transfer pricing. Building on the 1979 report, Transfer Pricing and Multinational Enterprises, the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations – produced in 1995 and updated in 2017 to incorporate the results of OECD work to counter Base Erosion and Profit Shifting (BEPS) – are followed by countries worldwide. They reflect a common understanding of how to apply the arm’s length principle, which is embedded in both the OECD Model Tax Convention and the UN Model Tax Convention.

As a G20 member, Brazil has worked closely with the OECD on international tax policy issues for many years, and is a member of the OECD’s Global Forum on Transparency and Exchange of Information for Tax Purposes and the Inclusive Framework on BEPS.