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March 8, 2023

Brazilís Federal Revenue Office publishes Normative Instruction on early adoption of new Brazilian transfer pricing rules

  • On 17 February 2023, the Brazilian Federal Revenue Office (RFB) published Normative Instruction (NI) nº 2,132/23 providing guidance on the taxpayers’ option for early adoption of the transfer pricing rules set forth in Provisional Measure (PM) nº 1,152, from 28 December 2022, related to controlled transactions carried out during calendar-year 2023.

  • This regulation establishes that taxpayers interested in early adopting the effects of the PM for calendar-year 2023 must do so during September 2023.

  • Among other provisions, the NI establishes criteria for carrying out transfer pricing adjustments throughout the year.

  • The NI also ratified certain regulations set forth by the PM with respect to the deductibility of royalties.


With the publication of PM nº 1,152/22, Brazil took an important step towards the adoption of the arm´s-length principle. However, as this is a new concept under the Brazilian tax framework, several aspects still required clarifications from the RFB, especially those pertaining to the transition from the current model to the one introduced by the PM.

On 17 February 2023, the RFB published NI nº 2,132/23, which governs the taxpayers’ option for the application of transfer pricing rules set forth by PM nº 1,152/22 related to the controlled transactions carried out during calendar-year 2023.

Among the provisions introduced by the NI, key measures include:

  • The option for applying the provisions of PM nº 1.152/22 to the controlled transactions that occurred in 2023 shall be digitally formalized by taxpayers during the period between 1 September 2023 and 30 September 2023 through the Virtual Center Service portal (Portal e-CAC) and attaching the term of the election published as an Appendix of the NI RFB nº 2,132/23. Once the election is made, it will be irrevocable and will apply to all transactions carried out during the calendar year.

  • Taxpayers that start their activities between the months of September and December 2023, or those whose activities cease between January and September of the same period shall observe the specific deadlines to make their election for the anticipated effects of PM nº 1,152/22.

  • The transfer pricing adjustments (exception made for compensating adjustments) cannot be carried out to reduce the calculation bases of the Corporate Income Tax (IRPJ) and of the Social Contribution on Net Profits (CSLL) nor to increase the tax losses for the period – thereby ratifying the provision set forth by PM nº 1.152/22. If the taxpayer identifies the necessity for a spontaneous adjustment throughout 2023, it shall be made on the calculation bases of IRPJ and CSLL related to 31 December, except in case of mergers, fusions, splits or closure of activities, whose adjustments shall occur at the date of the special event.

  • If the taxpayer opts for carrying out compensating adjustments throughout 2023, they must be performed by the closure of the exercise and must be supported by:

    • Registration in the accounting bookkeeping of the legal entity in the country and of the other entities abroad that take part in the controlled transaction.

    • Issuance of debit notes, credit notes or fiscal and commercial documentation adequate to prove the nature and amount of the adjustment.

    • Declaration of the representative of the other legal entities abroad involved in the controlled transaction, signed by their representatives, indicating the same amounts of the adjustment made by the Brazilian entity.

  • For spontaneous or compensating adjustments, NI nº 2,132/23 clarified that they will not automatically trigger adjustments in the calculation bases of other taxes, including taxes on imports of goods and services, which must be calculated in accordance with the applicable legislation in force.

  • With respect to royalties, the NI confirmed the non-deducibility conditions set forth in PM nº 1,152/22, resulting from the payment, credit, delivery, use or remittance to either:

    • Entities domiciled in low tax jurisdictions or benefitting from privileged tax regimes

    • Related parties, when the deduction of the amounts result in double non-taxation, in any of the following circumstances:

      • The same amount is treated as a deductible expense to the other related party

      • The amount deducted in the country is not treated as taxable income of the beneficiary, according to the legislation of its respective jurisdiction

      • The amounts are destined to finance, direct or indirectly, deductible expenses of related parties that trigger the events mentioned above

  • Still related to royalty deductibility, the NI nº 2,132/23 establishes that taxpayers that do not timely opt for the early adoption of the effects of PM 1,152/22 shall observe the deductibility limits currently in force, based on statutory percentages. Alternatively, the rules set forth by PM 1,152/22 may be adopted by any taxpayer upon the formalization of this option, even in cases where they are not subject to transfer pricing rules.

Next steps

The publication of NI nº 2,132/23 contributed to sediment the new Brazilian transfer pricing system introduced by PM nº 1,152/22. Despite the intense debates about the new rules, publishing the NI demonstrates the commitment of the RFB in governing the subject, strengthening the expectations that the current Government is intent on approving the content of PM nº 1,152/22 that was submitted to the National Congress.

By establishing a deadline for taxpayers to early adopt the NI nº 2,132/23 rules in 2023, there may be increased pressure on multinational groups. Effectively, mitigating risks and leveraging opportunities related to the new Brazilian transfer pricing system will require a detailed assessment before September including properly identifying and measuring the effects of the new rules. The preparation of an initial assessment is especially important for multinational groups with specific interest in rapidly adopting the new system.


For additional information with respect to this Alert, please contact the following:

EY Assessoria Empresarial Ltda, São Paulo

Ernst & Young LLP (United States), International Tax and Transactions Services, Transfer Pricing


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