On February 24, 2023 (Friday), Normative Ruling (“IN”) No. 2,132 was published, through which the Federal Revenue Service of Brazil (“RFB”) regulates the taxpayer’s option for applying the rules of transfer price provided for in Provisional Measure (“MP”) No. 1,152/2022 to controlled transactions carried out in the calendar year of 2023.
We point out, right now, that the option is irreversible for the entire year of 2023, and must occur upon signature of the option term, which is nothing more than a declaration, by the taxpayer, through which he informs that he will adopt the new rules of the MP No. 1,152/2022 in 2023.
According to the IN, the option must be carried out in September 2023, with the presentation of the term via e-CAC.
If the taxpayer started his activities after September 2023, he must make the option in the first month of activity. The same applies to legal entities resulting from a corporate merger or spin-off after September 2023.
With regard to legal entities extinct between January and August, they must make the option in the month of extinction.
For the purposes of compensatory adjustments, which must be carried out by the end of the calendar year 2023, the IN provides that they must be included in the accounting records of the legal entity and the other parties of the controlled transaction. In addition, such adjustments must be substantiated through the issuance of debit and credit notes, as well as fiscal and commercial documentation capable of proving the nature and amount of the adjustment.
Also, the adjustment must be ratified by a statement from the legal representative of the other parties to the controlled transaction that all made adjustments of the same amount in their calculations.
IN also dedicates a chapter focused on the deductibility rules for royalties remitted abroad as technical, scientific, administrative or similar assistance.
Pursuant to the provisions, the option to add the new transfer pricing rules in 2023 subject the deductibility of royalty expenses to the new rules from January 1, 2023. However, if the taxpayer adopts the new rules and does not submit the option in a timely manner, rectification of the calculations of previous months will be allowed so that the limits provided for in the legislation prior to MP No. 1,152/2022 are applied.
Finally, the IN points out that the adjustments provided for therein do not automatically imply adjustments in the calculation basis of other taxes, including those levied on the importation of goods and services, which must be determined in compliance with the applicable legislation.
On this point, the use of the term “automatically” in the IN can be understood as an indication that, depending on the case, the adjustments indicated in MP No. 1,152/2022 may influence the calculation of other taxes.
Learn more about transfer pricing rules