Ministry of Treasury Ruling No. 427/13 (“Ruling 427”) has been recently published, defining the spread margins for the purposes of controlling transfer prices in financial transactions with related parties or with parties that reside in low tax jurisdictions or benefit from a privileged tax regime.
Notwithstanding the new wording of Section 22 of Law No. 9,430/96 (“Law 9430”) having been in force since January 1st, 2013, the definition of a spread margin had still to be provided by the Ministry of Treasury.


For the purposes of deduction of financial expenses, Ruling 427 provides for a maximum spread margin of 3.5% to agreements in which the legal entity is the debtor. If the legal entity is the credit holder, the minimum spread margin for the purpose of revenue recognition is of 2.5%.
As provided by Ruling 427, the spread margin of 3.5% to the debtor is valid as of January 1st, 2013. For the credit holder, the spread margin is valid as of the publication of Ruling 427, and this is equal to zero during the period between January 1st, 2013, and the day Ruling 427 was published.

MINISTRY OF TREASURY

RULING No. 427, OF JULY 30, 2013

Rules the deduction and recognition of financial interest revenue, in transactions between related parties, for the purposes of assessing real profit in accordance with transfer pricing rules.


The MINISTER OF TREASURY, using his powers granted by Section 87, sole paragraph, II and IV, and considering the provision of Sections 22 and 28 of Law No. 9,430, of December 27, 1996, and of Section 5 of Law No. 12,766, of December 27, 2012, enacts the following rules:


Section 1. As of January 1st., 2013, the spread margin percentage to be added to the interest rates for the purposes of deduction of financial expenses upon computation of the real profit and CSLL taxable basis, on transactions with related parties or with parties that reside in a low tax jurisdiction, is of 3.5%.


Section 2. The spread margin percentage to be added to the interest rate to recognize minimum financial revenue, upon computation of the real profit and CSLL taxable basis, on transactions with related parties or with parties that reside in a low tax jurisdiction, is of 2.5%, regardless of the nature of the transaction.


Sole Paragraph. The spread margins provided by this Section are of zero percent for operations performed between January 1st, 2013, and the day this Ruling is published.

Section 3. This Ruling is enforceable as of its publication.