The Malaysian transfer pricing rules imposing the arm’s length principle are contained in section 140A of the Income Tax Act. The Inland Revenue Board has been increasing its scrutiny of the transfer pricing issues of large taxpayers and is sending the annual transfer pricing information form (Form MNE) to three times as many taxpayers as was previously the case.
Malaysia has now included a new box, box R4, in its annual tax return form. Taxpayers are required to check this box to indicate that they have prepared transfer pricing documentation. This may be a first step towards the introduction of an annual transfer pricing return in the future giving more detailed information about the taxpayer’s transfer pricing in the year. This could be used as a guide to the tax administration in selecting taxpayers for audit.
