Brazil’s Transfer Pricing Law Raises Business Fears of Disputes

Brazilian companies say the country’s new transfer pricing law may expose them to costly disputes with the tax authority over how to calculate transaction prices between related entities.

The new law, signed in June, aligns Brazil with international norms that dictate how companies value transactions between related entities. Companies will now be required to adhere to the arms-length standard, under which related entities must do business as if they’re unrelated.

The concern from businesses revolves around a technical provision of the law.

The Brazilian government has specified a preferred price calculation method. But tax practitioners say there’s ...