Transfer Pricing refers to “pricing” for the transfer of goods, services and intangibles between related parties. Related parties mean entities having equity control (more than 50% direct and indirect shareholdings) or management control over the other party. The transfer price should not differ from the prevailing market price reflected by the transaction between independent persons also known as “arm’s length price”. Like other countries in the region, Malaysia’s Inland Revenue Board (“IRB”) is actively enforcing the arm’s length principle.
Malaysia is a particular case as in practice transfer pricing applies to both cross-border and domestic related party transactions. Therefore, Companies with domestic-related party transactions within Malaysia are not safe from having to comply with transfer pricing regulations.
Transfer Pricing Documentation
Contemporaneous transfer pricing documentation should be prepared when a taxpayer is developing or implementing any controlled transaction or at the latest by the time that a company lodges its tax return under the Malaysian Transfer Pricing Guidelines, when the following threshold is met:
- Gross income exceeding RM25 million; and
- The total amount of related party transactions exceeding RM15 million or
- Provision of financial assistance exceeding RM50 million (not applicable for financial institutions).
Otherwise, taxpayers are allowed to prepare documentation that is less extensive, such as:
- Local file
- Master file
- Country-by-Country report
- Regional transfer pricing documentation
- Intra-group financing comparability analysis
- Intangible property comparability analysis and DEMPE analysis
AdrianYeo tax team offers a full range of transfer pricing services. We will ensure that you receive the highest level of support in managing your transfer pricing affairs.
Managing a business can be challenging enough without having to wonder if the tax planning process is on track. All businesses should work with a firm that can provide reassurance that they are in the best tax position possible. If you are looking for assistance tax planning and compliance, AdrianYeo can help. For additional information call us at +60 3-7802 3333 or request for a callback to speak to one of our audit managers.