On 1 February 2023, the Inland Revenue Board of Malaysia (IRBM) has issued a list of frequently asked questions (FAQs) on the mutual agreement procedure (MAP) to provide further clarification to the 2017 MAP guidelines.
In relation to the transfer pricing adjustments, the Malaysian taxpayer may submit a MAP request to the Malaysian CA to eliminate double taxation or to notify the CA of the Treaty Partner to allow a corresponding adjustment to the income of the associated person to prevent economic double taxation that may arise from the adjustments made.
For the Malaysian taxpayer who is a resident in Malaysia and has a permanent establishment (PE) in another state which was subjected to audit by the treaty partner, a MAP request can be submitted concerning the elimination of double taxation with respect to the audit adjustments on its overseas PE’s in the treaty partner jurisdiction.
The time limit for a MAP request depends on the specific period mentioned in the MAP article under a particular Tax Treaty. Generally, under Malaysia’s Tax Treaties, the time limit is three years.
