Malaysia’s Inland Revenue Board (IRB) has updated transfer pricing guidelines and transfer pricing audit framework.
The transfer pricing guidelines have been updated in accordance with the amendments made to section 140A, the introduction of section 113B of the Income Tax Act (ITA), and the amendments made to the Income Tax (Transfer Pricing) Rules 2023 [P.U.(A) 165/2023]. These Guidelines have effect from the year of assessment 2023 and subsequent years.
The guidelines are concerned with the application of the law on controlled transactions. They provide guidance for persons involved in transfer pricing arrangements to operate in accordance with the methods and manner as provided in the Income Tax (Transfer Pricing) Rules 2023, as well as to comply with the IRBM’s administrative requirements on the types of records and documentation to prepare and maintain.
The transfer pricing audit framework aims to introduce a fair, transparent and equitable administration of the tax system which will enhance the public’s confidence in the tax system.
Under the Self-Assessment System (SAS), tax audit is the main activity of IRB to enhance voluntary tax compliance. A taxpayer may be selected for an audit at any time. However, if a taxpayer has been selected for an audit it does not mean that the taxpayer has committed an offence.
