Decision on basket approach creates unfavourable Brazilian precedent
December 16, 2008
One of the several controversial aspects of Brazil's transfer pricing legislation is the possibility for taxpayers to take into account the “basket approach” criterion to calculate the parameter price. Henrique de Freitas Munia e Erbolato of Machado Associados explains.
Taxpayers and scholars claim that law 9430/96 is not restrictive, and that it allows the adoption of the basket approach. On the other hand, tax authorities understand that normative ruling 243/02 (IN243/02) does not mention the possibility of using the basket approach and, therefore, the application of the product to product criterion is mandatory.
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