In a recent Bloomberg Tax article, Baker McKenzie partners Carlos Linares‑García, Imke Gerdes, and Gustavo Sánchez‑González, together with Luciana Nobrega e Silva Loureiro* and Clarissa Machado* of Trench Rossi Watanabe, examine how global audit experience may shape transfer pricing audits in Brazil as the country transitions to OECD‑aligned rules.
The authors explain that Brazil’s mandatory adoption of the arm’s‑length principle represents a significant shift away from fixed margins and safe harbors, placing greater emphasis on functional analysis, business substance, and robust transfer pricing documentation. Drawing on audit practices from more mature jurisdictions, they highlight how Brazilian tax authorities are likely to scrutinize alignment between contractual arrangements, actual conduct, and profitability, particularly for transactions involving intangibles and complex value chains.
The article outlines practical lessons from international audits that Brazilian taxpayers can apply now, including ensuring consistency between transfer pricing policies and business models, strengthening documentation, and preparing for more principles‑based challenges as audit activity increases. For multinational groups operating in Brazil, the authors note that understanding how global tax authorities approach transfer pricing disputes can be critical to managing risk and avoiding double taxation.
Read the full article here.
*Baker McKenzie and Trench Rossi Watanabe have executed a strategic cooperation agreement to consult on foreign law.