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Intellectual Property Rights’ Transfer Pricing Rules in Brazil

by Erica Aoki - Partner
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Brazil is now discussing some changes to its legislation related to Transfer Pricing.  The new Bill No. 4695 of May 16, 2001, proposed by Deputy Nelson Proença, was sent to the Foreign Relation and National Defense commission on May 30th for its approval. 

Transfer Pricing in Brazil is presently ruled by Law 9,430 of December 27, 1996.  Under this law, intellectual property rights are expressly excluded from the applicability of transfer pricing rules. 

The proposed Bill includes intellectual property rights as subject matter of transfer pricing rules.  However, under Section 35 of the Bill, the total payment of royalties related to intellectual property rights must be less than 5%, or less than 10% of the net sales.  Companies that are receiving incentives under the technology development program provided by Law 8,661 of 1993 are excluded from the applicability of transfer pricing. 

If this Bill is passed and enacted by the President, all companies that are presently engaged in Trademark, Patent, Copyright Licenses and Technology Transfer and Technical Assistance Agreements must review its agreements to ensure compliance with the new rules. 

This Bill, however, does not revoke all the previous laws that regulate the payment and remittances of royalties related to Intellectual Property rights, and must be one of the topics to be addressed by Congress.


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