[ESTABLISHING A BUSINESS ENTITY IN BRAZIL] 73
of 0.3 to 1, in case the related entity is domiciled in a blacklisted jurisdiction or is subject to a privileged taxation regime. The debt/equity ratio above must be tested every month, considering both the amount of accrued interest, as well as the net equity of the previous year or month (if available). In this sense, profits accumulated during the year may reduce the debt/equity ratio. As of 2024, new transfer pricing rules provided by Law no. 14.596/2023 came into effect. The new transfer pricing rules in Brazil aligned the national practice to the OECD guidelines. On the basis of OECD Guidelines, to calculate the transfer pricing margins of foreign loans, it is necessary to observe whether the conditions of financial transactions between associated enterprises are consistent with the arm’s length principle. The adoption of the new transfer pricing rules was optional for 2023 and is mandatory for 2024.
ILN Corporate Group – Establishing a Business Entity Series
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