A significant issue under dispute between taxpayers and the tax authorities in Brazil relates to the formula for calculating the resale price method (Preço de Revenda Menos Lucros) (PRL) of 60%.
The Normative Ruling (NR) No. 243 issued in 2002 introduced significant changes to the calculation of the PRL method, creating controversy as to whether it had expanded beyond the scope of what the law intended.
In the case against Pfizer Ltda the tax authorities found that, when determining an arm’s length price on imports, costs related to freight, insurance, and customs, must be added when borne by the importer.
The Court ruled in favor favor of the tax authorities.Brazil vs Pfizer Ltda 17 October 2018 CARF Case no 1201-002-628