Globalization is a defining feature of today's business environment, eliminating barriers and promoting the free flow of goods, rights, services and people.
Free trade has changed the modus operandi of corporations, promoting geographical expansion in search of new markets and competitive advantages to maximize shareholder value.
The emergence of the Organization for Economic Cooperation and Development (OECD) in 1948, initially to help manage the Marshall Plan for the reconstruction of Europe after the Second World War, plays an important role in the internationalization of corporations.
Currently made up of 36 countries, the OECD has dedicated itself to promoting convergent standards on various topics, such as economic, financial, trade, social and environmental issues.
In line with the scope of its purpose, the OECD has established a series of guidelines for the regulation of international transactions between multinational corporations, one of which is the ("Arm´s Length Principle"). The Arm's Length Principle considers that the relationship between corporations should not affect the terms of transactions and, to this end, establishes that the conditions agreed in transactions between related parties should be the same as those that would have been agreed in transactions of the same nature between unrelated corporations in similar circumstances.
In line with global trends, the Brazilian government has incorporated specific rules into Brazilian tax law to regulate the prices agreed in international transactions between companies in the same economic group.
On December 27, 1996, Law No. 9430 was enacted, which in its articles 18 to 24-B introduced the Brazilian Transfer Pricing rules.
In 2012, the calculation rules underwent important changes with the enactment of Laws 12.715 and 12.766/12 and are currently regulated by RFB Normative Instruction 1312 of December 28, 2012.
However, unlike the rules in most countries with this type of legislation (including Brazil's main trading partners), Brazil's Transfer Pricing rules diverge significantly from international guidelines and, in particular, from those established by the OECD.
Here are links to current legislation
RFB Normative Instruction 1312
RFB Normative Instruction 1870
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