The House of Representatives approved, on March 30, Executive Order 1,152/22, which amends the legislation of the Corporate Income Tax (IRPJ) and the Social Contribution on Net Profits (CSLL) to provide for transfer pricing rules. The approval tally was 369 votes in favor of the final wording and 10 against.

In the Joint Committee's opinion delivered en banc by the rapporteur, Representative Da Vitória (PP-ES), 15 of the 107 amendments presented were approved, summarized below:

Amendment Description
2 Includes paragraphs in article 13 of the MP to set limits on the use of quoted prices, especially in cases where the information so obtained is not reliable or appropriate.
4 Amends paragraph 1 of article 13 of the MP to depart from the presumption that the PIC method will be the most appropriate for commodities in cases where the magnitude of the comparability adjustments requested affects the reliability of that method itself.
5

Amends the wording of the head paragraph of article 13 of the MP to clarify that:

(i)     even in cases where there is a quotation, internal comparable prices, arising from transactions with unrelated parties, continue to be reliable for application of the PIC method, even with greater reliability than the quoted prices; and

(ii)    in defining the most appropriate method of transfer pricing control, it is relevant to examine the entire value chain of the commodities and the other elements of paragraph 1 of article 11.
11 Deletes subsection I of article 45 of the MP was amended to allow deductibility of royalty payments for entities resident or domiciled in a country or territory with favored taxation or which are beneficiaries of a privileged tax system.
13 Deletes subsection IV of article 17 and article 19 of the MP to eliminate the secondary adjustment mechanism for the calculation basis.
22 Identical to Amendment 11
32 Identical to Amendment 13.
36 Identical to Amendment 11.
42 Deletes article 45 of the MP to eliminate the new rules for deductibility of royalty payments.
45 Gives new wording to articles 17, 18, and 19 of the MP to change the mechanisms of spontaneous, compensatory, and secondary adjustments to the calculation basis.
47 Identical to Amendment 42.
48 Amends article 45 of the MP was amended to allow deductibility of royalty payments for entities resident or domiciled in a country or territory with favored taxation or which are beneficiaries of a privileged tax system in cases where it is known that there will be no double non-taxation.
58 Identical to Amendment 11.
77 Identical to Amendment 42.
88 Identical to Amendment 13.

The matter will now go to the Federal Senate as a Conversion Bill.

We will continue to monitor its progress and will publish updates on developments.