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Brazil and OECD launched a cooperation project to improve country tax legislation

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According to the law firm Tozzini Freire Advogados, Law No. 16,497, published in July 2017, amended points of Tax (ICMS) legislation in the state of Sao Paulo, including promoting reductions of some fines. This Law was regulated by Decrees 62,761 / 2017 and 63,098 / 2017 (which reflected these changes in the RICMS/SP).

In an event organized by the National Confederation of Industry (CNI) on February 28, the Organization for Economic Co-operation and Development (OECD) and the Brazilian Government launched a cooperation project to improve Brazilian tax legislation, which has, among other in order to seek convergence between the Brazilian approach and international transfer pricing guidelines.

The initial 15-month cooperation project is part of Brazil’s accession process to the OECD, which began in May 2017. The idea is that during this period members of the Brazilian Government and the OECD discuss potential changes in the Brazilian model, as well as such as improvements to existing rules.

At the moment, the Federal Revenue Service of Brazil has not manifested itself in relation to the devices that could be altered as a result of the task force. One of the possible solutions discussed during the event is the maintenance of the Brazilian system based on fixed margins (contrary to OECD guidelines, but with a low compliance cost), allowing greater flexibility for the adoption of economic studies that allow the use of other margins, more appropriate to the value chain of each taxpayer.

Another point discussed during the event is the possibility of creating specific rules for transactions involving services and intangibles, whose regulation is scarce in the current rules.

Given the Brazilian economic potential, there is considerable interest from other OECD member nations in the issue. As an example, the United Kingdom reported that it highlighted an investment of £ 80 million in a fund to encourage convergence between the Brazilian and OECD rules, both in the tax area and in other sectors.

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