Tag Archives: Malaysia

Malaysian Transfer Pricing Guidelines 2012

The Malaysian Transfer Pricing Guidelines 2012 mainly governs the standard of transfer pricing which is supported by the rationale of arm’s length principle as set out under the Organisation for Economic Co-operation and Development (OECD) Transfer Pricing Guidelines.

Despite some of the main criteria under the Malaysian Transfer Pricing Guidelines 2012 were adopted from the OECD Transfer Pricing Guidelines, however there may be some areas that also adheres to the Income Tax Act 1967 and the Malaysian Inland Revenue Board of Malaysia procedures.

The guidelines however may be reviewed occasionally for further improvisation.

The following is an overview of the Malaysian Transfer Pricing Guidelines 2012 contents:

Part I – Preliminary

  • Introduction
  • Objective
  • Scope
  • Relevant Provisions

Part II – The Arm’s Length Principle

  • Meaning of Arm’s Length Principle
  • Determination of Arm’s Length Principle
  • Comparability Analysis
  • Factors Determining Comparability
  • Comparability Adjustments

Part III – Comparability Analysis

  • Comparable Period
  • Multiple Year Data
  • Arm’s Length Range
  • Separate and Combined Transactions
  • Re-characterization of Transactions
  • Transfer Pricing Adjustment
  • Losses

Part V – Business Restructuring

  • Business Restructuring

Part VI – Specific Transactions

  • Intragroup Services
  • Cost Contribution Arrangement
  • Intangible Properties
  • Intragroup Financing

Part VII – Documentation

  • Retention of records
  • Transfer Pricing Documentation
  • Penalty

Appendix A: Documentation on specific transactions

Appendix B : Comparability Analysis

Glossary

Source: LHDN – Transfer Pricing Guidelines 2012