Recently, the MIRB (Malaysia Inland Revenue Board) has published an amendment to the APA Rules and the updated Mutual Agreement Procedure (“MAP”) Guidelines.
The APA rules referred to as the Income Tax (Advance Pricing Arrangement) Rules 2012 were published in the official gazette in May 2012, but applied retroactively from 1 January 2009.The amendment to the APA rules 2012 was released in December 2017 which allowed the tax authority to charge the taxpayer an application fee and for any expenses during the course of the APA application. An APA refers to an agreement that establishes the appropriate criteria in advance to determine the arm’s length transfer prices of covered transactions. A taxpayer carrying out a cross-border transaction may apply to the tax authority for an APA in respect of a covered transaction provided that certain conditions are met.
The update to the MAP guidelines is intended to align the MAP guidelines in line with the OECD’s BEPS action 14, which would allow the Malaysian competent authority to cooperate with CAs of treaty-partner countries with a view to solving certain tax issues. The updated MAP Guidelines include measures relating to pre-filling meetings, the submission of a formal request, a proposal for a unilateral agreement with the taxpayer, confirmation by the taxpayer prior to the agreement, implementation of the agreement, and interaction between domestic appeal processes and the MAP.
