terms of providing support for the correct price As Brazilian transfer pricing per se already has been a complex theme, this initiative of the tax administration seems to raise an unnecessary pre-programmed clash between taxpayers and tax authorities Production Cost Plus profit Method The last possible method that can be used for import transactions is the Production Cost Plus Profit Method, which considers the production costs of the imported products in the country of origin added to a fixed gross margin of 20 percent calculated on such costs before taxes in the country of origin Under the list of accepted costs are raw materials, packaging, labor, rent, maintenance, repair, depreciation, and amortization related to the fiscal year in concern, reasonable breakage, losses, and other costs incurred in Use of this method is highly restricted due to the difficulty in finding and documenting all requested information from nonresident related parties, which can not be forced to deliver it. In addition, costs data used to be very sensitive, often involving special secrecy policies within the company. Furthermore problems may increase if, e.g., the imported products are resold in the foreign country by an interposed dealer, related party or not, whose profit will have to be inside the 20 percent margin, since the method requests the use of production costs and do not accept costs paid to resellers. The costs to b proved must be those incurred by the original producer Methods for Export Transactions In general, prices involved in export transactions may suffer adjustments caused by business and products characteristics, restricted to ● payment terms ● negotiated volumes; e liability for product warranty or for the applicability of the service or 9 liability for promotion of the goods, services or rights to the public by means of advertising and publicity; o liability for quality control, service and sanitary standards o agency costs for purchase and sale transactions carried out by d parties, taken into account for the purpose of price comparisons o freight and insurance; and ● risks of credit Once adjusted, the average export price to related parties must be compared with the average price of the same product applied by the same export company to sales within the brazilian domestic market, when existent. If theterms of providing support for the correct price. As Brazilian transfer pricing per se already has been a complex theme, this initiative of the tax administration seems to raise an unnecessary pre-programmed clash between taxpayers and tax authorities. Production Cost Plus Profit Method The last possible method that can be used for import transactions is the Production Cost Plus Profit Method,17 which considers the production costs of the imported products in the country of origin added to a fixed gross margin of 20 percent calculated on such costs before taxes in the country of origin. Under the list of accepted costs are raw materials, packaging, labor, rent, maintenance, repair, depreciation, and amortization related to the fiscal year in concern, reasonable breakage, losses, and other costs incurred in production. Use of this method is highly restricted due to the difficulty in finding and documenting all requested information from nonresident related parties, which can not be forced to deliver it. In addition, costs data used to be very sensitive, often involving special secrecy policies within the company. Furthermore, problems may increase if, e.g., the imported products are resold in the foreign country by an interposed dealer, related party or not, whose profit will have to be inside the 20 percent margin, since the method requests the use of production costs and do not accept costs paid to resellers. The costs to be proved must be those incurred by the original producer. Methods for Export Transactions In general, prices involved in export transactions may suffer adjustments caused by business and products characteristics, restricted to: payment terms; negotiated volumes; liability for product warranty or for the applicability of the service or right; liability for promotion of the goods, services or rights to the public by means of advertising and publicity; liability for quality control, service and sanitary standards; agency costs for purchase and sale transactions carried out by unrelated parties, taken into account for the purpose of price comparisons; packaging; freight and insurance; and risks of credit. Once adjusted, the average export price to related parties must be compared with the average price of the same product applied by the same export company to sales within the Brazilian domestic market, when existent. If the