According to the new manual, the turnover thus confirmed its commitment to settle the affairs in agreement with the competent authority of the other State party, in accordance with the applicable tax treaty. This new termination method allows the employer to reduce costs without harming the employee, as the agreement is mutually renewed. The Brazilian method of transfer pricing is flawed in both areas. Fixed margins, the absence of appropriate adjustments and the application of the reciprocal agreement procedure lead to situations of double taxation. Today, these characteristics are being studied by multinationals that have aggressive tax planning systems. The so-called “friendship” or mutual agreement procedure (MAP) as defined by the OECD is a provision that is usually contained in international conventions, in order to avoid double taxation, which gives the competent authorities of any contracting country the opportunity to intervene in the resolution of disputes arising from the tax deduction or non-tax issues arising from the agreement. In general, these conflicts are cases of double taxation and inconsistencies in the interpretation and application of the convention by one of the countries. According to the RFB, the amicable procedure “would provide a specific channel for consultations carried out by taxpayers in the event of measures imposed by Brazil or another signatory country that involve (or may involve) a tax that does not agree with the ADT concerned.” Below is an example of a clause of the ADT of Brazil and Germany (Decree 76.988 of 6 January 1976): transfer prices, in particular, are fertile grounds for international divergence, because the resulting adaptations intrinsically lead to double taxation. In the payment and formalization rules section, the provisions of the other terms of termination of the employment contract apply.
Compensation must be paid within 10 days of the termination of the contract. In addition, the agreement between the employee and the employer must be formalized by the employee in a handwritten document and the company must proceed with the entries in the “Employee`s Work Book” (a document containing the employee`s working life) within the time frame set by law. The termination of the contract by mutual agreement occurs when the interest is reciprocal, so that neither party can be imposed. As employment contracts are concluded at its convenience, the employer may terminate an employment contract at any time, provided that notice is granted. Some employees cannot be dismissed without reason because of the temporary stability of the job. The aim of the new law was to prevent the simulation of illegal dismissals, an illegal practice generally adopted by companies, as an “informal” agreement between the employee and the employer, which provides the employer with legal certainty and avoids future work procedures. Brazil has a very controversial tax environment. Traditionally, the approach of Brazilian tax authorities and taxpayers is mutual distrust. The rules for the legal redundancy contract are set out in s. 484-A CLT, which describes the obligations of society and worker`s rights. The most remarkable are that Brazil`s mutual consent procedures have been ineffective, and this has only worsened. In Brazil, jobs are carried out at their convenience, i.e.
each party can terminate the employment contract without reason after the compulsory notice and payment of the severance pay.