performed and risks assumed, the law confines the spectrum of adjustments but without specifications regarding their applicability. Nevertheless, it remains the nearest method that in fact considers market prices on imports the internationally known CUP method; for example, often no acceptable a Applying this method can lead to the usual problems encountered by usi comparables can be found Resale price Less profit method In view of the fact that the Resale Price Less profit method is the method most often used, and somehow also the most polemic, it requires a more extensive explanation. Although the name of this method is similar to the internationally accepted resale price method, its similarity stops at the moment in which Brazilian legislators required the calculation by product and set a floor for income on imports Initially the legislation requested a general gross profit margin of 20 percent, which was later- restricted to imports to be directly resold. To items to be used in the production process in Brazil, a gross profit margin of 60 percent is Under the terms of the law this method is defined as the arithmetic mean of the resale price for the goods, services, or rights, less e unconditional discounts granted, o taxes and contributions levied on the sales e commission and brokerage fees paid; and 60 percent, calculated on resale price after deducting values referred to in items above and value added in the country, in hypothesis of goods used in oduction process 20 percent, calculated on resale price, in all other hypothe sis. ID The 60 percent margin is imposed on all kinds of industrial sector products, not taking into account different margins for different products. This must be carefully analyzed when formulating marketing and price strategies dealing with baskets of products Definitions of "resale, ""commercialization ""industrialization "and production"generated questions. An often-used example regards the import by pharmaceutical companies of concentrated chemicals, which in Brazil are solely mixed or dissolved in not active substances, or even just repacked in small portions and resold. Administrative decisions- used to consider such chemicals as production of raw-materials, falling under the 60 percent profit margin disposition Contradictory Rules A more intensive controversy arose in 2002, when a regulatory instruction of the Federal Revenue Service completely changed the application of the 60 percent margin of the resale price less method -Other than the law, which required a variable 60 percent margin over the imported items depending on how much value was added in Brazil, the new rule requires that companies engaged in the import of goods used in production processes have an actuaperformed and risks assumed, the law confines the spectrum of adjustments but without specifications regarding their applicability. Nevertheless, it remains the nearest method that in fact considers market prices on imports. Applying this method can lead to the usual problems encountered by using the internationally known CUP method; for example, often no acceptable comparables can be found. Resale Price Less Profit Method In view of the fact that the Resale Price Less Profit Method8 is the method most often used, and somehow also the most polemic, it requires a more extensive explanation. Although the name of this method is similar to the internationally accepted resale price method, its similarity stops at the moment in which Brazilian legislators required the calculation by product and set a floor for income on imports. Initially the legislation requested a general gross profit margin of 20 percent, which was later9 restricted to imports to be directly resold. To items to be used in the production process in Brazil, a gross profit margin of 60 percent is imposed. Under the terms of the law, this method is defined as the arithmetic mean of the resale price for the goods, services, or rights, less: unconditional discounts granted; taxes and contributions levied on the sales; commission and brokerage fees paid; and profit margin of: 60 percent, calculated on resale price after deducting values referred to in items above and value added in the country, in hypothesis of goods used in production process; 20 percent, calculated on resale price, in all other hypothesis.10 The 60 percent margin is imposed on all kinds of industrial sector products, not taking into account different margins for different products. This must be carefully analyzed when formulating marketing and price strategies dealing with baskets of products. Definitions of "resale," "commercialization," "industrialization," and "production" generated questions. An often-used example regards the import by pharmaceutical companies of concentrated chemicals, which in Brazil are solely mixed or dissolved in not active substances, or even just repacked in small portions and resold.11 Administrative decisions12 used to consider such chemicals as production of raw-materials, falling under the 60 percent profit margin disposition. Contradictory Rules A more intensive controversy arose in 2002, when a regulatory instruction of the Federal Revenue Service completely changed the application of the 60 percent margin of the resale price less method.13 Other than the law, which required a variable 60 percent margin over the imported items depending on how much value was added in Brazil, the new rule requires that companies engaged in the import of goods used in production processes have an actual