During a 2019 Tax Executives Institute conference in Washington, D.C., the Commissioner of the U.S. Internal Revenue Service (IRS), Charles Rettig, proclaimed, “[I am] not a commissioner who believes that the IRS loses because a judge rules against us in a transfer pricing case, . . . [I am] a commissioner who thinks the IRS loses if it doesn’t keep bringing [transfer pricing] cases.” (see Lydia O’Neal, Rettig Doubles Down on Transfer Pricing Cases, Bloomberg Tax: Daily Tax Report (Apr. 1, 2019). This declaration speaks volumes to Rettig’s intention of closing down in transfer pricing cases. Specifically, the IRS under Rettig, has targeted improper transfer pricing of intellectual property (IP) royalties remitted from foreign subsidiaries to U.S.-based parent companies (for instance, Coca Cola Co. v. Comm’r, 149 T.C. 446, 446 (U.S. T.C. 2017; Medtronic, Inc. v. Comm’r, 900 F.3d 610, 610, 8th Cir. 2018). This focus is particularly alarming for international companies with subsidiaries in Brazil because Brazil’s IP royalty remittance laws directly conflict with the United State’s transfer pricing policies.

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