Transfer pricing
If your company buys, sells, lends or provides services to a company in the same group abroad, the Brazilian tax authority (Receita Federal) wants to know whether the agreed price is what independent parties would agree on in the market. That is what transfer pricing means. Since January 1, 2024, Law 14,596/2023 has brought the OECD's international standard to Brazil. This service helps the company build its pricing policy and documentation, in clear language and before any assessment.
Who it is for
For Brazilian companies that do business with a head office, branches, subsidiaries or other related companies outside the country, and for foreign groups operating in Brazil.
Looking at transfer pricing is usually worth it if you:
- import from or export to a company in the same group abroad;
- pay or receive services, royalties or cost sharing within the group;
- borrow from a related company abroad or offer it a surety or guarantee;
- report recurring losses while the group abroad is profitable;
- do not yet know whether your volume of transactions requires you to file documentation.
The work is technical and tax-focused. The company's accountant stays responsible for filing the ECF and other obligations. Any formal challenges or legal acts are hired directly by you, from qualified professionals of your choice.
What transfer pricing is, in plain language
When two companies of the same group trade with each other, the price may be set by the group's interest rather than by the market. That makes it possible, for example, to shift profit from one country to another. To prevent this, the law requires these transactions to follow the arm's length principle: the terms must be those that unrelated parties would adopt in comparable transactions.
In Brazil, Law 14,596/2023 applies this rule to the corporate income tax (IRPJ) and the social contribution on net profit (CSLL) of companies domiciled in the country that carry out controlled transactions with related parties abroad. A controlled transaction is any commercial or financial relationship between related parties, direct or indirect, including contracts and series of transactions.
Who counts as a related party
The law treats as related, among others, the controlling company and the subsidiary, the head office and the branch, affiliated companies, companies of the same group, and anyone holding 25% or more of the profits or of the assets on liquidation. Even companies within Brazil itself may be treated as related for the purposes of the analysis.
There is also a separate rule for transactions with companies in low-tax countries, or benefiting from a privileged tax regime. Under the law, this includes countries that do not tax income or tax it at a maximum rate below 17%, and the rule applies even if the other company is not in the same group.
Source: Law 14,596/2023, arts. 1 to 4 and 40.
The methods for showing that the price is a market price
The law allows five methods and permits others, as long as the company documents why the five do not fit. The comparable uncontrolled price (PIC) is the starting point when reliable data exists. It is also the preferred method for commodities traded on exchanges or with public quotations.
| Method | How it compares |
|---|---|
| PIC, comparable uncontrolled price | Compares the transaction's price with that of comparable transactions between independent parties. |
| PRL, resale price minus profit | Compares the gross margin of the reseller. |
| MCL, cost plus profit method | Compares the markup applied on the supplier's cost. |
| MLT, transactional net margin | Compares net margins. |
| MDL, profit split | Splits profit or loss according to each party's contribution. |
Source: Law 14,596/2023, art. 11. When comparability is uncertain, the law uses the interquartile range of the comparables; if the result falls outside the range, the median is used (art. 16).
Transactions that usually need more attention
Some transactions have their own rules in the law. The analysis goes through those that exist in your company:
- CommoditiesPublic quotation prices serve as the reference, and the transaction must be registered as the Receita Federal requires.
- Services between group companiesThe service must bring a real benefit to the company that pays. Shareholder activities and duplicated services cannot be charged.
- Loans between group companiesInterest must reflect credit risk, and debt may be treated as equity when it does not hold up as debt.
- IntangiblesBrands, technology and know-how are remunerated according to each party's functions, risks and contribution, not just formal ownership.
Source: Law 14,596/2023, arts. 12 to 14, 19 to 24 and 27 to 32.
Documentation and deadlines
The documentation tells the story of the transaction: who the parties are, how the group is organized, which method was chosen and why. Under the tax authority's regulation (IN RFB 2,161/2023), it splits into a Master File (the group's view) and a Local File (the Brazilian company's view). What is required depends on the total value of controlled transactions in the previous year.
The Local File is due up to three months after the deadline for transmitting the ECF (the corporate tax bookkeeping return) for the corresponding year. In 2026, the ECF deadline was July 31.
| Controlled transactions in the previous year | What the regulation asks for |
|---|---|
| R$ 500 million or more | Full documentation: Master File and full Local File. |
| From R$ 15 million to under R$ 500 million | Master File and simplified Local File. |
| Under R$ 15 million | No obligation to file the files, but the arm's length principle still applies. |
Source: IN RFB 2,161/2023, arts. 56 and 57, as summarized by consultancies; we confirm the official text and any amendments during the analysis.
Fines, and the chance to correct beforehand
Filing late brings a fine of 0.2% per month on gross revenue. Filing that fails the requirements, 3% of gross revenue. Inaccurate or omitted information in parts of the documentation, 5% of the transaction value or 0.2% of the group's consolidated revenue in the previous year. The fine has a minimum of R$ 20,000 and a maximum of R$ 5 million. Failing to provide information requested during an audit costs 5% of the transaction value.
The law also provides that, when the company corrects its price adjustment on its own, no fines apply, subject to conditions such as cooperation, reasonable effort, a consistent methodology and payment of the tax with interest. That is why organizing the policy before being audited is usually cheaper.
Source: Law 14,596/2023, arts. 34 to 36.
How this shows up day to day
The examples below are illustrative: they show how the answer varies from case to case. They are not real client cases and do not indicate results.
Importing from a group company
The price of goods bought from a company in the same group must be defensible with independent prices.
Illustrative example: A manufacturer imports components from its head office abroad. The analysis gathers the price of similar components between independent parties and indicates the most suitable method, with the matching documentation.
Group services and cost sharing
Not every cost allocated by the group can be deducted: the service must bring a real benefit.
Illustrative example: The head office charges its Brazilian branch a monthly allocation for administrative services. The work checks whether there is a demonstrable benefit, whether the allocation key reflects actual use and whether services are duplicated.
A loan between group companies
The interest charged between related companies must reflect the market's risk, not just the group's convenience.
Illustrative example: The Brazilian company borrows from its parent abroad. The analysis checks whether the agreed rate is a market rate for the credit risk and whether the contract and documentation support the transaction as debt.
What we deliver
You receive a document to decide with and to keep, not a generic report. Each transaction comes with the method, the source of the data and the date.
- Controlled transactions mapThe list of the company's transactions with related parties abroad, with the value of each and how it is classified.
- Pricing policyThe method and pricing criterion chosen for each type of transaction, with the technical reasoning in writing.
- DocumentationThe organization of the information required by the tax authority's regulation, according to the size of the transactions, for the company to keep and present.
How it works
- 01
Conversation and scope. We learn the group's structure and the transactions with foreign companies. We agree on scope, timeline and price before starting.
- 02
Mapping. We gather contracts and amounts and identify which transactions are controlled and which documentation tier the company falls into.
- 03
Method and policy. We choose the most suitable method for each transaction and record the reason, with the data sources.
- 04
Documentation and follow-up. We organize the documents and let you know when a relevant rule changes. The accountant stays responsible for transmitting the ECF and other obligations.
Information based on Law 14,596/2023 (Planalto text) and, for documentation thresholds and deadlines, on consultancy summaries of IN RFB 2,161/2023 (09/29/2023). The tax authority may amend the regulation, including on commodities; we confirm the rule in force during the analysis. Updated on 11/06/2026.
Frequently asked questions
- Does my company need to worry about transfer pricing?
- If it carries out transactions with related parties abroad, or with companies in low-tax countries, yes. The rule applies to all of these transactions; what changes with value is the documentation to be filed.
- What is arm's length?
- It is the principle that the price between companies of the same group must equal what independent companies would agree in a comparable transaction.
- Since when has Law 14,596/2023 applied?
- It has been mandatory since January 1, 2024. The law allowed taxpayers to opt to apply it already in 2023, and that choice was irrevocable.
- What are the fines for not filing the documentation?
- Among others, 0.2% per month on gross revenue for lateness, with a minimum of R$ 20,000 and a maximum of R$ 5 million per fine. There is a self-correction rule, subject to conditions.
- Is there a way to consult the tax authority beforehand?
- Yes. The law provides a consultation process for future transactions, with a fee and a validity of up to four years. We assess whether it pays off in your case.
- Do you file the ECF?
- No. The company's accountant stays responsible for it. Our work is technical: defining the pricing policy and organizing the documentation.
- Do you guarantee that the tax authority will accept the price?
- We do not guarantee results. We build the policy and documentation in line with the law and regulation in force, with sources and limits explained. The price of the work is agreed before we start.
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Tell us about your group and its transactions abroad. In thirty minutes, we will tell you what the analysis needs and whether transfer pricing makes sense for your case.