On June 12, 2013, the 1st Panel of 3rd Chamber of 1st Section of Judgment of the Administrative Tax Court (CARF) issued an unfavorable decision to Nokia do Brasil Tecnologia Ltda. in another case involving the application of transfer pricing rules
. For imported products, the taxpayer computed transfer pricing adjustments based on the method of Comparable Independent Prices. However, for some goods that were resold, tax authorities used the method of Resale Price minus Profit with a 20% margin (PRL20%). CARF understood that the company had failed to add to net profit a part of the cost of imported products, which resulted in the reduction of negative basis of that year, and this triggered an undue offset of tax losses.
In its defense, Nokia argued that the transfer pricing adjustment proposed by authorities was not necessary, since credit notes received from its suppliers abroad (related parties) already led the company to perform an adjustment to the taxable income at an amount higher than the one computed by authorities. Notwithstanding that, CARF understood that Nokia should have necessarily identified each part of the adjustment with a certain good, which did not happen.
Finally, CARF also understood that freight and insurance hired from non-related parties must be comprised in the parameter price, since the cost born by Nokia was transferred to the resale price of the products.
(Decision No. 1301-001.232).