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October 28, 2021

OECD releases Brazil Stage 2 peer review report on implementation of Action 14 minimum standard

Executive summary

On 26 July 2021, the Organisation for Economic Co-operation and Development (OECD) released the Stage 2 peer review reports of Brazil relating to the outcome of the peer monitoring of the implementation of the Base Erosion and Profit Shifting (BEPS) minimum standard on dispute resolution under Action 14 of the BEPS project. Stage 2 focuses on the progress made by Brazil in addressing any of the recommendations resulting from the Stage 1 peer review report.1

Overall, the report concludes that Brazil addressed some of the shortcomings identified in its Stage 1 peer review report. In short, the Stage 2 peer review mainly identified that the Brazilian network of tax treaties should be updated in specific areas for greater alignment with Action 14 minimum standard. It also indicated that Brazil should implement more detailed processes and more efficient resources for handling the mutual agreement procedure (MAP). The Stage 2 peer review report pointed out that Brazil has partially implemented some of the improvement suggestions, but it has not initiated other recommendations.

Detailed discussion


In October 2016, the OECD released the peer review documents (i.e., the Terms of Reference and Assessment Methodology) on Action 14, which form the basis of the MAP peer review and monitoring process under BEPS Action 14.2

The Terms of Reference translate the minimum standard approved into a basis for peer review, consisting of 21 elements complemented by 12 best practices. The Terms of Reference assess a Member’s legal and administrative framework, including the practical implementation of this framework to determine how its MAP regime performs relative to the 21 elements in four key areas: (i) preventing disputes; (ii) availability and access to MAP; (iii) resolution of MAP cases; and (iv) implementation of MAP agreements.

The Assessment Methodology establishes detailed procedures and guidelines for a two-stage approach to the peer review and monitoring process. Stage 1 involves the review of a Member’s implementation of the minimum standard based on its legal framework for MAP and the application of this framework in practice. Stage 2 involves the review of the measures taken by the Member to address any shortcomings identified in its Stage 1 peer review. In light of the above, the OECD has also released a schedule for Stage 1 of the peer review and a questionnaire for taxpayers. The schedule catalogues the assessed jurisdictions into 10 batches for review.

Both of these stages are desk-based and are coordinated by the Secretariat of the Forum on Tax Administration’s (FTA) MAP Forum.3 In summary, Stage 1 consists of three steps or phases:

  • Obtaining inputs for the Stage 1 peer review

  • Drafting and approval of a Stage 1 peer review report

  • Publishing Stage 1 peer review reports

Input is provided through questionnaires completed by the assessed jurisdiction, peers (i.e., other members of the FTA MAP Forum) and taxpayers. Once the input has been gathered, the Secretariat prepares a draft Stage 1 peer review report of the assessed jurisdiction and sends it to the assessed jurisdiction for its written comments on the draft report. When a peer review report is finalized, it is sent for approval of the FTA MAP Forum and later to the OECD Committee on Fiscal Affairs (CFA)’ to adopt the report for publication.

For Stage 2, there are two steps or phases: (i) approval of Stage 2 peer monitoring report of an assessed jurisdiction and (ii) publication of Stage 2 peer review reports. More specifically, an assessed jurisdiction should within one year of the adoption of its Stage 1 peer review report by the CFA submit a detailed written report (Update Report) to the FTA MAP Forum. The Update Report should contain (i) the steps that the assessed jurisdiction has taken or is taking to address any shortcomings identified in its peer review report; and (ii) any plans or changes to its legislative or procedural framework relating to the implementation of the minimum standard. Members of the FTA MAP Forum should also provide their comments on the Update Report provided by the assessed jurisdiction. Based on the Update Report submitted by the assessed jurisdiction and the input from the peers, the Secretariat will revise the Stage 1 peer review report of the assessed jurisdiction with a view to incorporate these updates in the Stage 2 peer monitoring report of the assessed jurisdiction. After adoption from the CFA, the Stage 2 peer monitoring report will be published.

Minimum standard peer review reports

The report is divided into four parts, namely:

  • Preventing disputes

  • Availability and access to MAP

  • Resolution of MAP cases

  • Implementation of MAP agreements

Each part addresses a different component of the minimum standard.

Overall, Brazil addressed some of the shortcomings identified in its Stage 1 peer review report.

Preventing disputes

In relation to this part of the review, peers indicated that few of the tax treaties maintained by Brazil do not properly address the requirement for competent authorities to resolve any issues related to the applicability or interpretation of the treaties (as set forth in OECD Model Convention Article 25(3)). As such, the report recommends that Brazil update its treaty network to provide that competent authorities must resolve any issues related to the applicability or interpretation of the treaties. Competent authorities indicated that Brazil is currently working on this recommendation.

In addition, Brazil does not have an advance pricing arrangement (APA) program and has not reported that it is developing one. Therefore, peer review did not evaluate the request to roll-back bilateral APAs to MAP cases.

Availability and access to MAP

With respect to availability and access to MAP, the peer review specified certain aspects of Brazil’s tax treaties that Brazil must amend for further alignment with Action 14 minimum requirements. Specifically, Brazil must: (i) establish clear provisions for making MAP widely accessible, including in cases involving transfer pricing, audit settlements and anti-abuse rules; (ii) align tax treaties to the most recently defined standards related to MAP, including providing a clearer timeframe and joint consultations with other Member states; and (iii) increase transparency of MAP-related notification processes, especially in cases considered not to be justified – an area that is not currently covered by the published guidelines.

Most of the improvements suggested by peers in the review are reported as being already in progress, which usually includes bilateral negotiation with other countries to amend the treaties network accordingly. Overall, the Stage 2 peer review reinforced the fact that Brazil has met almost all the minimum requirements related to availability and access to MAP procedures, but still has to work on procedures for the practical resolution of cases.

Resolution of MAP cases

As previously mentioned, while the Stage 2 peer review praises Brazil for its mostly compliant position in relation to allowing wide availability and access to MAP procedures, the report also indicates that the country is below expectations when it comes to the resolution of MAP cases. Brazil’s inventory of open MAP cases doubled from 2016 to 2019, with the most significant increase seen in attribution/allocation (such as transfer pricing) cases. In the same period, the average time for resolving a MAP case was, on average, 43.63 months – far above the 24-month period established as a goal under Action 14.

Brazil reportedly is making progress in improving its framework for dealing with MAP cases. Brazil’s tax authorities, however, recognize that their current resources offer a limited amount of experience on MAP cases. Under Action 14 standards, Brazil must provide more resources, so that MAP cases are treated timely and effectively.

Implementation of MAP agreements

The main challenges indicated in the report are related to the domestic legislation. Brazil’s legal framework may hinder the actual implementation of MAP because the equivalent of the first sentence of Article 25(2) of the OECD Model Tax Convention (OECD, 2017) is missing from nearly all of Brazil’s bilateral tax treaties.4 This issue may be corrected with ongoing bilateral negotiations with treaty partners. Additionally, Brazilian Competent Authorities believe that MAP regulations implemented in 2016 may reduce potential negative consequences of the application of limitations contained in local legislation, such as the five-year statute of limitations. In this sense, three peers had reported, during the Stage 1 peer review, that MAP cases had not arrived at satisfactory solutions, due to Brazilian authorities’ application of local statute of limitation rules. No such cases were reported during the Stage 2 peer review.

Best practice peer review reports

Brazil has not requested feedback from the OECD in relation to the adoption of Action 14 best practices.


In a post-BEPS world, where multinational enterprises (MNEs) face tremendous pressure and scrutiny from tax authorities, the release of Brazil’s Stage 2 peer review report represents the continued recognition and importance of the need to achieve tax certainty for cross-border transactions of MNEs. While increased scrutiny is expected to significantly increase the risk of double taxation, the fact that tax authorities may be subject to review by their peers should be seen by MNEs as a positive step to best ensure access to an effective and timely mutual agreement process.


For additional information with respect to this Alert, please contact the following:

EY Assessoria Empresarial Ltda, International Tax and Transaction Services



  1. Making Dispute Resolution More Effective – MAP Peer Review Report, Brazil (Stage 1): Inclusive Framework on BEPS: Action 14 | READ online (
  2. See EY Global Tax Alert, OECD releases BEPS Action 14 on More Effective Dispute Resolution Mechanisms, Peer Review, dated 31 October 2016.
  4. It is worth mentioning that Brazil did not sign the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS (MLI).