Transfer Pricing Documentation And Compliance

In Malaysia, the requirement for companies to prepare their transfer pricing documentation became mandatory from the 2014 year of assessment. From the year of assessment 2014, the tax returns of companies (form C) require taxpayers to mark off a box which states "Yes" or "No" to whether the taxpayer has prepared the transfer pricing documentation. If the answer is negative, the chances of a taxpayer being subjected to a tax audit increases.

Tax Offices worldwide are focusing on transfer pricing and many businesses are found to have insufficient support for their cross-border prices. The absence of transfer pricing documentation provides the Malaysian Inland Revenue Board (MIRB) with a strong case to adjust a taxpayer’s transfer pricing arrangements. Without such documentation, it is more difficult to argue against any Tax Office adjustment and, where there is an adjustment, penalties will not be reduced.

Many countries throughout the world, including Malaysia have detailed transfer pricing documentation requirements. Whatever size business, taxpayers must be able to document and justify the arm’s length nature of their related party transactions.

We will team with you to document your company’s business and international related party transactions and the economic analysis of transactions through benchmarking and other analysis. Having contemporaneous transfer pricing documentation assists in proactively defending your transfer pricing position and to reduce penalties in the event of an adjustment.