Transfer Pricing Solutions and Rules - Malaysia
The introduction of the Malaysian Transfer Pricing Guidelines in July 2003 added a new dimension to the country’s taxation system in as much as it emphasized on the arm’s length principle as the favoured approach for pricing transactions carried out between related parties. In May 2012, prior to the release of the revised Malaysian Transfer Pricing Guidelines in July 2012, the Malaysia Inland Revenue Board released the Malaysian Transfer Pricing Rules 2012, both of which have retrospective effect to 1 January 2009.
Based on the Malaysian Transfer Pricing Rules 2012 and the Malaysian Transfer Pricing Guidelines 2012, it is a requirement for companies that are engaged in a controlled transaction (i.e. transactions between related parties) to prepare transfer pricing documentation on a contemporaneous basis.
On 15 July 2017, several chapters of the Malaysian Transfer Pricing Guidelines 2012 were updated. Among others, an additional chapter on commodities was introduced. The updated chapters are Chapter II (the Arm’s Length Principle), Chapter VIII (Intangibles), and Chapter XI (Documentations). Most of the updates are reflective of the changes adopted in the 2017 OECD Guidelines.
The Income Tax (Advance Pricing Agreement) Rules 2012 were gazetted on 11 May 2012 and are deemed to have come into operation on 1 January 2009