Through Decree 70/2017 of 6 December, the transfer pricing system was approved, which consists of the prices to be practiced in commercial operations involving related parties, or between sectors, or between parts of the same entity.
The CIRPC provides for the application of transfer pricing rules in the context of corrections for the purposes of determining the tax base. The proposal under analysis contains some general guidelines with a view to adopting adequate mechanisms to make adjustments to taxable profit.
The methodology to be adopted for the determination of transfer prices is of fundamental importance. It is up to the taxable person to adopt the most appropriate method for each transaction or series of transactions AND the following aspects should be taken into account:
• It is considered as the most appropriate one that is able to provide the best and most reliable estimate of the terms and conditions that would normally be agreed, accepted or practiced in a situation of full competition;
• The most appropriate method is best able to provide the highest degree of comparability between linked and non-linked operations and between the entities selected for comparison, with the best quality and the greatest amount of information;
• When there are doubts about the veracity of the values obtained by applying one method, the tax administration requests that other methods be applied;
• In the chosen case or any of its calculation criteria is disqualified by the inspection, the taxable person must be notified within 30 days to submit a new calculation in accordance with any other method included in the Regime;
• If there is no indication of another method, and the documents proving the comparable price are not presented, or if presented, they are insufficient or inadequate to assess the price, the tax administration may determine it with other documents at its disposal. applying other methods of this regime;
Thus, the methods used for the necessary corrections for the determination of taxable profit are as follows:
- Comparable Price Method;
- Minorized Resale Price Method;
- Major Cost Method;
- Profit Fractionation Method;
- Operation Net Margin Method;
- Appropriate method to the facts and circumstances;