Predetermined Margins in the Brazilian Transfer Pricing Rules and their Compatibility (or not) with the World Trade System

Abstract

This article compares the Brazilian transfer pricing rules, which are based on fixed predetermined profit margins instead of the arm’s length principle, with the multilateral trading obligations, particularly the rules on subsidies under the Subsidies and Countervailing Measure Agreement (SCM Agreement) and the national treatment principle under the General Agreement on Tariffs and Trade (GATT) as evolved through the relevant jurisprudence of the World Trade Organization.