© Copyright Acquisition International 2024 - All Rights Reserved.

Article Image - Challenges and  Alternatives for the  Brazilian Importer
Posted 27th May 2015

Challenges and Alternatives for the Brazilian Importer

We hear from Carlos Ayub as he talks us through the challenges and alternatives for the Brazilian importer under the transfer pricing regulations.

Mouse Scroll AnimationScroll to keep reading

Let us help promote your business to a wider following.

Challenges and Alternatives for the Brazilian Importer
Image

Challenges and Alternatives for the Brazilian Importer

We hear from Carlos Ayub as he talks us through the challenges and alternatives for the Brazilian importer under the transfer pricing regulations.

Since the enactment of the Brazilian transfer pricing regulations, the Resale Price Less Profit (PRL) Method has historically been the method most used by taxpayers to evidence their compliance with the pricing of import transactions, since the local law does not require the Best Method Rule (except for commodity transactions), thus allowing a taxpayer to choose the preferred method.

There are several reasons for electing mostly the PRL method. One of them is the fact that its use does not depend on information that is outside the entity’s own recordkeeping environment. Another is that the mathematics required for imports of goods used in production processes under the repealed Law 9,950/00 usually resulted in small taxable adjustments when the levels of value added to these raw materials were significant.

However, with the enactment of Law 12,715/12, a new rationale was introduced for the PRL method, which disregards the value added in Brazil and uses a formula to prorate the cost of the imported raw material to the cost of the finished product. That tweak in the formula, for most taxpayers, resulted in significant increases of the taxable adjustments, despite the reduction in the new profit margins required in a large part of the cases.

Furthermore, the PRL is more susceptible to foreign exchange effects, as the ones that the Brazilian economy has experienced in recent months, since its equation starts with a resale price in Brazilian reals and its outcome is a price that is compared to the price of the actual import in foreign currency.

Thus, importers that until then used exclusively the PRL method should now consider the possibility of using different methods, such as the Comparable Independent Prices (PIC) method and the Production Cost plus Profit (CPL) method, the supporting documentation of which, especially in the latter case, is complex, laborious, and depends on information obtained from their foreign related parties.
Therefore, even though the PRL method should continue being the starting method in most cases, we suggest that other methods are taken into consideration to be applied exclusively on imported items that are subject to taxable adjustments, as an alternative to reduce or even eliminate such adjustments.

Note that there are major complexities and challenges in this area, which tend to increase, especially if we add to them the highly computerised resources that the Brazilian Federal Revenue Service has, and continues to expand to oversee these transactions.

In this context, the assistance of specialists with practical experience on these matters, as well as the use of cutting edge, proven technology is mandatory to find new paths that result in a reduced financial burden, within legal limits.

Categories: Finance, Innovation


You Might Also Like
Read Full PostRead - Eye Icon
Unrivalled Technical And Service Support
Leadership
09/02/2021Unrivalled Technical And Service Support

Water and energy solutions provider, Davis & Shirtliff, is a well-established brand in the East Africa region and is known for providing high quality products that are readily available and at competitive prices. Recently, we caught up with the firm’s He

Read Full PostRead - Eye Icon
NLRB Micro-Union Decision Causes Untold Harm to Retail
Leadership
30/04/2015NLRB Micro-Union Decision Causes Untold Harm to Retail

The National Labor Relations Board’s decision to recognize a micro-union of workers in just a single department at a Macy’s store in Massachusetts rather than the entire store violates longstanding precedents on union organizing, said the NRF.

Read Full PostRead - Eye Icon
Offshore Wind Attracting a Variety of Investor Groups
Finance
12/10/2015Offshore Wind Attracting a Variety of Investor Groups

The wide range of investment entry points in offshore wind has attracted a diversified group of investors that span from strategic industrial players to passive financial investors. We spoke to Christine Brockwell, Managing Director and Head of Corporate Devel

Read Full PostRead - Eye Icon
Understanding the Benefits of a Business Debit Card
Finance
14/08/2023Understanding the Benefits of a Business Debit Card

In today's fast-moving business world, it's crucial to have a reliable, secure, and flexible financial tool. A business debit card fits this bill perfectly. It works like a regular debit card but caters specifically to business owners and entrepreneurs.

Read Full PostRead - Eye Icon
Welltower Completes Acquisition of Premier Seniors Housing Portfolio
Finance
14/10/2016Welltower Completes Acquisition of Premier Seniors Housing Portfolio

Welltower Inc. (NYSE: HCN) today announced it has completed the previously announced acquisition of the Vintage Senior Living portfolio for a purchase price of $1.15 billion.

Read Full PostRead - Eye Icon
Navigating International Tax Compliance: Essential Tips for Enterprises
News
09/05/2024Navigating International Tax Compliance: Essential Tips for Enterprises

Navigating international tax compliance is a formidable challenge for any enterprise operating across national borders. This article unpacks essential strategies to simplify this complex landscape, focusing on things like understanding legal obligations, lever

Read Full PostRead - Eye Icon
Turning Data into Insights
News
30/05/2023Turning Data into Insights

BI4ALL is specialised in digital transformation and data strategy, using services such as analytics, big data, and software engineering to ably assist its numerous clients.

Read Full PostRead - Eye Icon
Cyber Criminals Target M&A  Negotiations
Innovation
22/06/2015Cyber Criminals Target M&A Negotiations

We hear from Stuart Poole-Robb, Chief Executive of the security, business intelligence and cyber security adviser, the KCS Group Europe.

Read Full PostRead - Eye Icon
Intuitive iKomet Initiates Innovations
Innovation
23/02/2020Intuitive iKomet Initiates Innovations

When it comes to offering simplified software services, iKomet Technology Solutions Pvt Ltd is gradually and consistently making a mark. Helping clients for past 5 years, this innovative company makes a point of being able to create bespoke and niche yet simpl



Our Trusted Brands

Acquisition International is a flagship brand of AI Global Media. AI Global Media is a B2B enterprise and are committed to creating engaging content allowing businesses to market their services to a larger global audience. We have 14 unique brands, each of which serves a specific industry or region. Each brand covers the latest news in its sector and publishes a digital magazine and newsletter which is read by a global audience.

Arrow