Brazil: Provisional measure introducing new TP rules

April 5, 20230

On the 30th of March, the Chamber of Deputies passed the Provisional Measure n. 1.152 (“MP 1.152/22“), introducing the Arm’s Length principle and aligning the Brazilian transfer pricing rules to the OECD standards. 

The legislation, issued on the 29th of December 2022, proposes changes regarding new transfer pricing methods and documentation requirements, commodities, intangible assets, and tax certainty measures. For an overview of all changes, see Introducing the Arm’s Length Principle in Brazil. 

The Chamber of Deputies introduced the following changes to the original text submitted on the 29th of December 2022: 

  • when dealing with commodities, the most suitable transfer pricing method is the comparable uncontrolled price (CUP) method unless other factors such as transaction specifics, the functions performed, risks taken, and assets held by other group companies in the value chain suggest another method should be used 
  • the provisions related to the “secondary adjustment” were removed 
  • royalties to be paid to related parties in low-tax jurisdictions with special tax regimes can be deducted if they follow the arm’s length principle 
  • advanced Pricing Agreements and Mutual Agreement Procedure are becoming available
  • Hard-to-value (HTV) intangibles, as well as DEMPE functions concepts, are incorporated into the Brazilian TP system
  • Introduction of penalties for non-compliance
  • Value Chain Analysis is required, taking into account the key value drivers, as well as the ownership of the intangibles and the relevant affiliates’ risk profiles

Future Actions 

The Brazilian Federal Senate has 60 days to analyze and vote on the MP 1.152/22. It is unknown at this time whether or not the Senate will approve the legislation, but if it does, the MP 1.152/22 is still subject to changes. 

Effective date 

In the event of being accepted into law, MP 1.152/22 will be mandatory effective 1 January 2024. Nonetheless, companies do have the option of adopting the MP in already in 2023 or choosing the already existing rules. 


For further consultation on Brazil’s provisional measure 1.152/22, contact one of our professionals.

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