Transfer pricing meaning refers to the practice of setting prices for goods, services, or intellectual property exchanged between related entities within a multinational enterprise.
Malaysia has well-defined CTPD requirements. Preparing contemporaneous transfer pricing documentation by companies with controlled transactions is required by S140A and S139 of Income Tax Act 1967. These requirements are explained in detail in the Malaysia Transfer Pricing Guidelines 2012. The new Malaysia Income Tax (Transfer Pricing) Rules 2023 (which revoked Transfer Pricing Rule 2012)
requires that contemporaneous TPD must be prepared prior to the date for filing tax return and the date of preparation must be stated on the CTPD. Failure to comply these requirements attract penalty ranging between RM20,000 to RM100,000 per company for each year of assessment and imprisonment of directors for a term not exceeding six months.
Understanding transfer pricing meaning is crucial for businesses operating across borders to ensure compliance with tax regulations and avoid potential disputes with tax authorities.
Ensuring compliance with transfer pricing regulations requires the preparation of contemporaneous transfer pricing documentation.
Gather data through digital communication, meetings and a field visit at the client’s business premises. Clients will be guided to provide us with the relevant information which are essential in producing a quality CTPD.
Upon identifying the key issues, we will conduct an analysis and recommend solutions to minimise your TP risk. Are you having the relevant documents to support your arguments scripted in the CTPD?
We will evaluate comparables to your controlled transactions and produce a benchmarking analysis to assist in your arm’s length price.
A draft is produced for you to confirm the factual information.
Upon your confirmation of the draft, a final report is produced for your retention which can be forwarded to IRBM upon request.
encompasses the methods and principles used to determine fair market prices for intercompany transactions, helping to prevent artificial profit shifting and ensure appropriate tax allocation between jurisdictions.