Review of transfer pricing regulation


It was published Ordinance No. 268/2021, of November 26th (only in Portuguese), which introduced changes to the transfer pricing regulation over transactions carried out by PIT and/or CIT taxpayers with related parties, pursuant to article 63.º of the CIT Code.

This Ordinance, in essence, revoked Ordinance No. 1446-C/2001, of December, 21st.

The changes introduced follow the ones already made in previous years to the article 63 of the CIT Code, with regard, in particular, to the scope of application of arm’s length the principle and the adoption of the most appropriate method in determining transfer prices, but also welcomes the latest developments resulting from the work carried out by OECD on transfer pricing issues.

Among the significant changes introduced by Ordinance No. 268/2021, of November 26th, the following ones must be highlighted:

  • It restructures the organization of the documentation process, with the express provision of a double structure translated into the preparation and maintenance of a Main File (Master File) and a Specific File (Local File);

  • It increases the threshold limit, above  which taxpayers are obliged to organize and keep updated the transfer pricing documentation process, which now meet two fundamental criteria: the annual amount of income (entities with total income above 10 million in the fiscal year) and the value of the controlled operations made with related parties(in order to determine on which operations an economic analysis should be carried out);

  • Simplifies the transfer pricing documentation process for small and medium-sized entities;

  • At the level of the correlative adjustment procedure, changes are introduced in case of correction of profits between related entities resident in different jurisdictions;

  • It is reinforced the commitment to adopt the best international practices, recommending that the guidelines contained in the OECD reports over transfer pricing matters be followed;

It should be noted that this Ordinance enters into force on the day following its publication, with the exception of chapter IV, which takes effect in fiscal periods that begin on or after 1 January 2021.

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