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1 Bduardo Baistrocchi asymmetric tax treaties 2 Victor Thuronyi 3 4 < > Victor Bduardo 1 Bduardo Baistrocchi, "Tax Treaties and Developing Counties," British Tax Rev. No.4 (2008), p Ibid., p.375 (fn.117). 3 Victor Thuronyi, "Tax Treaties and Developing Counties," in Michael Lang et all (eds.), Tax Treaties: Building Bridges between Law and Economics (2010), p Francisco Neves Dornelles, "The Tax Treaty Needs of Developing Countries With Special Reference to the UN Draft Model," in UN Draft Model Tax Convention IFA Congress Seminar Series, Vol.4 (1979), pp

2 * 5 ** 6 5, at as of June 19, 2011). 6, at as of June 19, 2011)

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7 As mentioned in the OECD MC commentary, in comment 1[1] of the positions of non-member countries, Brazil reserves the right not to insert paragraph 2 in its conventions. Please note that there is no clear statement from the Brazilian tax authorities on the technical or political reasons that led to this position. Nevertheless, you must bear in mind that Brazil had no specific transfer pricing rules applicable until 1997 and, most importantly, Brazil does not follow the OECD TP guidelines and the arm's length principle. We do not have such provision in our domestic legislation. It seems that Brazil does not seetransfer pricing as a double taxation issue, but rather a anti-avoidance one. I understand that Brazil doesn t apply the OCDE s transfer prices guidelines. They use other fictions in order to determinate the transfer price. That is why they don t use the art. 9.2 MCOCDE. In that way, they assume that the DTC s does not relive the economic double taxation caused by domestic transfer pricing rules. that is their opinion, and the say that transfer pricing is just a fiction, and the way to make this fiction is at the end, the same in the OECD Guidelines or in the Brazilian system. In other words, they want to say to the world that their method is as good as the OECD s. As a matter of fact, although Brazil recognizes the arm'lenght standard, Brazilian legislation adopts several peculiarities which are not usual to OECD standards. for instance, Brazil adopts predetermined margins of profit. There is a huge discussion in Brazil concerning to these margins and their application, but as a matter of fact, authorities presently insist on them, what would make a corresponding adjustment very difficult

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10 7 7 Coelho, Cristiane, "TAX SPARING AND BRAZIL'S TAX TREATIES," Tax Notes Int'l, Vol.51 (2008), p

12 Bduardo Bduardo Andolan

13 C D Andolan 9 10 According to Lord McNair 11, provided that any necessary implementation by municipal law has been carried out, there is nothing to prevent the nationals of third States, in the absence of any expressed or implied provision to the contrary, from claiming the right or becoming subject to the obligation created by a treaty Union of India v. Azadi Bachao Andolan available at See also, the Supreme Court of India, (as of June. 18, 2011) The Law of Treaties, Pg.336 (Oxford, at the Clarendan Press, 1961) 12 that any necessary implementation bymunicipal law has been carried out, there is nothing to prevent the nationals of third States, in the absence of any express or implied provision to the contrary, from claiming the rights, or becoming subject to the obligations, created by a treaty; for instance, if an Anglo-American Convention provided that professors on the staff of the universities of each country were exempt from

14 DTAC Bduardo taxation in respect of fees earned for lecturing in the other country, and any necessary changes in the tax laws were made, that privilege could be claimed by, or on behalf of, professors of those universities who were the nationals of third States

15 Victor Volvo Itochu Itochu Cop. Itochu Panama branch WH=12.5% VolvoBrazil

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