Commodities in transfer pricing:
the CUP method and the date that decides the assessment.

What a commodity is (for TP)

Law 14,596/2023 (art. 12, I) does not bring a closed list of products: it defines commodity by a functional test. It is the physical product — regardless of the production stage — and its derivatives for which quoted prices are used as a reference by unrelated parties to set prices in comparable transactions. In other words: if the market gives a public price for the product, it is a commodity for transfer pricing purposes.

That public price is also defined in the law (art. 12, II): the quotations or indices obtained on commodity and futures exchanges, from research agencies (the price reporting agencies) or from government agencies, recognized and reliable, used as a reference by independent parties. The RFB may regulate the selection of those sources and admit others that are equally reliable (art. 13, paras 7 and 8).

The reason a dedicated rule exists is precisely this public, liquid price: when the market already gives an observable price, there is little sense in searching for margins — the comparable is on the screen. That is why the commodity has a preferred method, and the discussion shifts from "which method" to "which quoted price, on what date, with which adjustments — and all of it proven".

Where the rule comes from: the OECD standard

The Brazilian rule was not invented here. It internalizes the OECD commodities guidance, incorporated into the 2017 Transfer Pricing Guidelines as a result of BEPS Actions 8-10 ("Aligning Transfer Pricing Outcomes with Value Creation", 2015). The project aimed to close the base-erosion window opened by manipulating the date and the quotation in intragroup commodity transactions — exactly the point the Brazilian law now pursues.

Under the OECD standard (ch. II, para 2.18), the CUP method — the Comparable Uncontrolled Price, equivalent to our PIC — anchored in the quoted price is generally the most appropriate for commodities. The concept of the pricing date (para 2.22) is the heart of the rule: the date agreed by the parties prevails where there is reliable, contemporaneous evidence consistent with the actual conduct; absent that, the administration may deem the date — typically the shipment date, evidenced by the bill of lading. And the comparability adjustments (paras 2.19-2.21) cover quality, contractual terms and Incoterms, freight and insurance, payment terms and currency.

By adopting that standard, Law 14,596/2023 abandoned the fixed margins of the old Law 9,430/1996 — including that regime's specific commodity methods (PCI on import and Pecex on export) — and embraced the full arm's length principle (art. 2). Brazil began to speak the same language as more than 140 countries; the trade-off is that, without the ready-made statutory margin, pricing now demands method, comparables and — above all — proof.

For the Brazilian group, the practical reading is direct: what used to be an almost automatic calculation (apply the PCI or Pecex margin) became an exercise in proof. The price still exists in the market — but demonstrating that the intragroup transaction respected it, on the right date and with the right adjustments, became the taxpayer's documented responsibility. It is a change of culture as much as of rule: the tax team needs to talk to the trading desk and to logistics, because the defense is born in the contract and at shipment, not when the return is filed.

The CUP method and the quoted price

Where reliable information on comparable independent prices exists for the commodity — including quoted prices or prices charged to unrelated parties (internal comparables) — the CUP method (Comparable Uncontrolled Price, one of the methods listed in art. 11) is deemed the most appropriate (Law 14,596/2023, art. 13, caput; OECD ch. II). It is a rebuttable preference, not an absolute imposition: the law allows it to be set aside where the taxpayer demonstrates, by the facts and circumstances and by the functional profile of the parties (functions, assets and risks along the chain), that another method better captures the economic reality of the transaction.

In practice, the quoted price on the relevant date is the starting point, adjusted for comparability differences. It is the method the tax authority expects to see justified first in a commodity transaction — and displacing it requires a robust demonstration, documented in the local file. For most intragroup exports and imports of grain, ore, metals or energy, the CUP will be the path.

The quotation date decides the assessment

The quoted price varies day by day — so the reference date is decisive. The rule in art. 13, para 3 is precise: the date or period of dates agreed by the parties to price the transaction prevails, provided that, cumulatively: (I) the taxpayer supplies timely and reliable documentation proving the agreed date — including how it was determined in sales to unrelated end customers — and carries out the registration of the transaction (the RTC, under art. 14); and (II) the documented date is consistent with the actual conduct of the parties and with the facts and circumstances of the case.

If any of those conditions fails — the date is not proven, the documentation is inconsistent, or the RTC was not filed — the fallback of para 4 kicks in: the tax authority sets the value by the quotation referring (I) to the date consistent with the facts and with what unrelated parties would establish; or, where that is not possible, (II) to the average quoted price on the shipment date (on export) or on the registration of the import declaration. This is the "deemed date" — and, in a rising market, it almost always works against the exporter.

This is where most commodity assessments are decided: not on the method, but on the date and its documentation. The gap between the quotation on the agreed date and on the fallback date, times the volume, is exactly the adjustment the authority pursues — even where the price charged was a genuine market price.

What counts as proof? Contemporaneous documentation, produced around execution — proposals and acceptances, the dated intercompany contract, registered contracts, trading confirmations — that establishes the agreed date or period and is consistent with the actual conduct of the parties, including how the price is set in sales to unrelated end customers. Proof produced afterwards, or that contradicts the real behavior (dates that move with the market), does not sustain the agreed date — and opens the door to para 4.

The RTC: the filing that locks the date

The piece that materializes this proof is the RTC — Commodity Transactions Registration, a dedicated ancillary obligation filed in the e-CAC. Its basis is the law itself (art. 14) and art. 38 of IN RFB 2,161/2023, and its scope changed with IN RFB 2,246/2024 (dated 30/12/2024, with effects from 1 January 2025): the RTC became mandatory for all controlled commodity export and import transactions subject to transfer pricing, even where the CUP method is not used — previously, it was limited to those pricing by quotation.

Two practical points changed and require attention. The deadline became the 10th day of the month following execution of the contract (no longer tied to the transaction or shipment date). And the content expanded: the parties, the commodity, the price and the date, the reference quotation source and the transfer pricing method adopted are all identified. The registration even reaches contracts executed before 2025 whose performance occurs from January 2025; the supporting documents stay in the local file.

The RTC is, in practice, what "locks" the pricing date before the tax authority: filing it on time, consistent with the contract and the quotation source, is the defense that blocks the shipment-date fallback. Missing the deadline or filing it inconsistently hands the RFB the argument to deem the date — and also exposes the taxpayer to the penalties specific to the ancillary obligation, which we address below.

In day-to-day practice, the RTC is best treated as part of closing the transaction, not as later paperwork: the agreed pricing date is defined and captured at the moment of the contract, and the registration is done within the following month, consistent with the contract and the chosen quotation source. Companies with many shipments gain by keeping an internal control that links contract, RTC and quotation per transaction — it is that trail which, under audit, sustains the date and fends off the para 4 presumption.

Comparability adjustments

The quoted price is a starting point, not the final price: the law requires adjusting it where there are differences between the controlled transaction and the reference that materially affect the price (Law 14,596/2023, art. 13, paras 1 and 2; OECD ch. II, paras 2.19-2.21). The typical adjustments, aligned with the international standard:

• Quality/specification — grade, content, protein, moisture, purity, origin;
• Freight and insurance — the Incoterm (FOB, CFR, CIF) changes what is embedded in the price;
• Regional premium/discount — the port basis;
• Payment term — the financial cost of the term;
• Volume, processing stage and currency.

Each adjustment must be quantified and documented. The law imposes a limit (para 2): adjustments are not made where they would compromise the reliability of the CUP — in which case another method becomes more appropriate. A generic or unsupported adjustment is disallowed, and the price reverts to the pure quoted price, almost always against the taxpayer.

A practical case: soybeans and the date that cost millions

Take an illustrative case — as if it were a client of the firm. A Brazilian soybean exporter sells a shipment of 60,000 tonnes (a Panamax vessel) to the group's affiliated trading company in the Netherlands. On 12 March, the parties fix the price (the pricing date) based on that day's quotation — equivalent to USD 420/tonne FOB Paranagua. The vessel only sails on 28 April; in the interim, a crop failure drives the market up and the quotation on the shipment date reaches USD 470/tonne.

Scenario A — correct documentation. The company registered the contract in the RTC with the pricing date of 12 March, within the deadline, and kept the dated intercompany contract plus evidence of the quotation on that date. The RFB accepts the USD 420/tonne. No adjustment. The price charged is the benchmark price.

Scenario B — the date is not proven. The company did not register the pricing date in time (or has no robust, consistent dated contract). Para 4 applies: the RFB uses the quotation on the shipment date (28 April = USD 470). The deemed benchmark price rises to 60,000 t × USD 470 = USD 28.2 million, against the USD 25.2 million charged. The difference — USD 3 million (USD 50/t × 60,000 t), about BRL 16.5 million at an illustrative rate of BRL 5.50 — becomes a primary adjustment to the IRPJ and CSLL base.

The point that defines the case: the USD 420 price was a genuine market price on 12 March. What was missing was not the price — it was the proof of the date. It is the most common and most expensive mistake in commodities.

On the import side, the mirror runs the opposite way: the related importer tends to want a higher cost (which reduces taxable profit in Brazil), and the RFB, without proof of the date, uses the quotation on the registration of the import declaration. The risk mechanism is the same — only the side the presumption favors changes. In both flows, the documented date and the RTC are what separate the accepted price from the deemed price.

The cost of the error: adjustment, penalty and the RTC penalties

It is worth sizing the cost of Scenario B. On the primary adjustment of ~BRL 16.5 million, IRPJ and CSLL apply (combined rate of 34% under the actual-profit regime) = ~BRL 5.6 million; the ex officio penalty of 75% on the tax (art. 44 of Law 9,430/96) = ~BRL 4.2 million; plus accrued Selic interest — an exposure that easily exceeds BRL 11 million. The penalty may be aggravated (150%) where willful misconduct/simulation is proven, although Law 14,689/2023 made that aggravation more restrictive.

Before reaching an audit, the law provides three types of adjustment (Law 14,596/2023, art. 17): the spontaneous one (the taxpayer itself adds the difference to the IRPJ/CSLL base in its return); the compensating one (made by the parties by the end of the calendar year of the transaction); and the primary one (imposed by the RFB under audit, with the ex officio penalty). Correcting spontaneously or in a compensating manner, when the failure is noticed, avoids the ex officio penalty of the primary adjustment — and that is why monitoring throughout the year is worth so much.

There are also the penalties specific to the ancillary obligation (art. 35), which accumulate with the adjustment: registration after the deadline, 0.2% per month on gross revenue; omission or inaccuracy, 3%; obstruction of the audit, 5% on the transaction value — with a floor of BRL 20 thousand and a cap of BRL 5 million per penalty. In short: getting the date wrong can add up three bills — the primary adjustment, the ex officio penalty on it and the standalone RTC penalty.

The trading company abroad: substance, not just price

A good share of commodity transactions passes through a group trading company abroad — not rarely in a low-tax jurisdiction. Transfer pricing does not ignore that link: the question is not only "what is the quotation price", but "how much of the chain's margin legitimately belongs to the trading company". And the answer depends on substance.

If the related trading company actually performs functions — negotiation, price and currency risk management, logistics, the relationship with the end customer —, holds assets and assumes real risks, it is entitled to commensurate remuneration. But if it is a shell, with no people, no decisions and no real risk, the margin allocated to it is artificial, and the result tends to be reallocated to the Brazilian end. That was exactly the target of BEPS Actions 8-10: to align the transfer pricing outcome with value creation, not with mere contractual ownership.

The CUP on the quotation, by itself, reduces the room for an artificial margin in the intermediary: if the export price must reflect the adjusted public quotation, there is little left to "store" in the trading company. But the substance analysis remains decisive for its remuneration and for the risk of the structure being recharacterized. In practice, the defense combines both fronts — price anchored in the quotation (with a proven date and RTC) and the trading company's functional profile documented and consistent with reality.

A recurring red flag: the trading company that shows up with a high margin and a minimal headcount, with no trading desk and no risk management of its own. Under audit, the question is simple — who, in fact, decided the purchase, the sale and the hedge? If the answer points to Brazil, the margin returns to Brazil. Documenting substance (org chart, minutes, risk policy, employment contracts) is as much part of the defense as the comparables study.

The file that sustains the CUP

Pulling it all together, what protects commodity pricing is a coherent file, in which the intercompany contract, the RTC and the quotation source tell the same story. A divergence of dates among those documents is the first audit trigger and what most weakens the defense. In recurring or long-term contracts (off-take), one documents the price-formation mechanism (the formula, the averages, the premiums) and proves that it respects arm's length with the market information available on the date of execution — the relevant "date" becomes that of the agreed mechanism, not that of each shipment.