Substance over form and transfer pricing rules
April 29, 2009
Exports made by a Brazilian company to offshore companies controlled by it, carried out in accordance with Brazilian transfer pricing rules, are analysed from a substance over form approach and regarded as sham transactions.
In the first case decided by the Taxpayers’ Council in 2008, but only published last month, the taxpayer assessed by the tax authorities is an international company in the automotive industry. In summary, according to the tax authorities, it exported its products to two controlled offshore companies in Uruguay and British Virgin Islands, which re-exported the products to end customers.
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