Cecilia Yokoyama and Juliana Mari Tanaka of Machado Associados discuss the legal definition of praça that sets the taxable basis for excise tax in transactions carried out between interdependent companies.
The Brazilian excise tax (IPI) legislation determines that the current price in the ‘praça’ (‘trading area’) of the sender’s wholesale market must be used as the minimum amount of the IPI taxable basis in transactions between interdependent companies.
The lack of a legal definition of praça started a discussion regarding the geographic definition of the sender’s praça, including questions such as “would it correspond to the city where the sender’s establishment is located or to the state of the sender’s establishment?”
