Right after an executive of a Brazilian top car manufacturer announced that the company would dismiss around 6,000 employees from its Brazilian units, the Brazil Federal Government released that it is considering to reduce the federal excise tax on car manufacturers to reduce losses derived from the cuts on exports as per the revaluation of the Real v. the US Dollar. The Government would seek to increase sales in the local market to offset export losses.
The Government is concerned as to whether other automotive companies in Brazil will follow a similar path
A similar currency issue is what in part lead to transfer pricing claims in Argentina (back in 1996/97) when the AR$/US$ exchange rate was 1-1. The Argentine tax authorities argued that certain Argentine car manufacturers were not deriving arm's length profits from its sales to its Brazilian counterparts.
What is very interesting there is that prices were set in accordance to a Mercosur legal regime (public policy) aimed at fostering car trading in the regional market. However, the tax authorities disregarded the Mercosur public policies, in contradiction with the OECD Guidelines.
posted by P. Sebastian Lopez-Sanson @ 9:21 AM
0 Comments:
Post a Comment
<< Home