What is Transfer Pricing in Malaysia?
Transfer Pricing is the pricing of goods, services, and intangibles between related parties.
The arm’s length principle should be adopted for transfer pricing between related parties.
Taxpayers should prepare and keep contemporaneous transfer pricing documentation to show that their related party transactions are conducted at arm’s length.
When is Transfer Pricing Documentation Essential?
The compliance burden targets taxpayers to prepare “contemporaneous” transfer pricing documentation annually under the Malaysian Transfer Pricing Guidelines.
Taxpayers are required to prepare transfer pricing documentation if they have:
- 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).
Related read: Transfer Pricing Guideline Malaysia
Transfer Pricing Services We Provide
Transfer Pricing Documentation
Preparation and advice on Master File, Local File, Country-by-Country Report to ensure compliance with local regulations.
Price-setting Analysis (benchmarking analysis)
Undertake benchmarking analysis to recommend arm’s length pricing. We support multiple databases including – Osiris/ Orbis/ RoyaltyStat/ Bloomberg.
Intra-group Services Documentation
Analyse and advise the most appropriate methodology for charging the related entities, allocation methodology and supporting documentation to be maintained.
Realignment of taxing rights with the economic substance is the norm. The value-chain analysis aids in such realignment keeping in view the intensity of functions and capacity to assume risks.
Intellectual Property (IP) Valuation
Valuation of intellectual property for the purpose of migration between related entities, determining the terms & conditions and pricing of licensing arrangements.
Operational Transfer Pricing
Analysis of the proposed/ existing related party transactions and preparing the Transfer Pricing Policy Document covering the pricing, data input, documentation and reporting of the transaction for review by stakeholders.
Drafting of Inter-company Agreements
Drafting inter-company agreements covering the intention of the parties at the time in relation to the division of responsibilities, obligations and rights, assumption of identified risks and pricing arrangements.
Tax Authority Audit Defence
Assist in preparation of appropriate response to defend the outcome of related party transactions and discuss the response with the Tax Authorities.
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Other Related Services in Malaysia
- Statutory audit for companies incorporated in Malaysia
- Financial due diligence
- Review of financial statements