On 29 May 2023, the Malaysian Inland Revenue Board of Revenue (IRBM) published the Income Tax (Advance Pricing Arrangement) Rules 2023 (“APA Rules 2023”) in their gazette with the following key changes.
- Taxpayers engaged in cross-border transactions may to apply for an APA, provided they meet the following conditions:
- If the counterparty belongs to a country that has a double tax agreement with Malaysia under section 132 of the Income Tax Act 1967 (“the Act”), the taxpayer can only apply for a bilateral or multilateral APA.
- If the counterparty belongs to a country that does not have a double tax agreement with Malaysia, the taxpayer can only apply for a unilateral APA.
- In the case of an arrangement under section 132 of the Act, a permanent establishment can apply for a bilateral or multilateral APA, with the application made on its behalf by its head office.
- Taxpayers now have an extended period of 6 months, instead of the previous 2 months, to submit the formal application after receiving a positive notification from the DG.
- Prior to the conclusion of an advance pricing arrangement, a taxpayer has the option to withdraw their application at any time by providing written notice to the Director General. The Director General or the Competent Authority, as stated in the rules, retains the authority to cancel an advance pricing arrangement under specific circumstances.
- The fees payable for an APA application now varies based on the timeframe in which the application is submitted. For a new advance pricing arrangement application, there is a non-refundable application fee:
- RM5,000 if the application is submitted within two months after receiving the notification from the DG to proceed, or
- RM10,000 if the application is submitted between two and six months after receiving the notification from the DG.
- For a renewal application, the non-refundable application fee is RM5,000.
