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Malaysia: New transfer pricing audit framework (2019)

Malaysia: New transfer pricing audit framework (2019)

The Malaysian Inland Revenue Board issued a transfer pricing audit framework (2019) that replaces the transfer pricing audit framework from April 2013.

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The transfer pricing audit framework (2019) (effective from 15 December 2019) reflects the following:

  • Transfer pricing documentation is crucial to substantiate the arm’s length nature of controlled transactions. Therefore, transfer pricing documentation must be prepared accurately and in compliance with the relevant provisions of Income Tax Act, 1967, Transfer Pricing Rules 2012 and Transfer Pricing Guidelines 2012.
  • The years of assessment to be covered will be limited to up to seven years of assessment. However, this does not extend to cover audit cases that involve fraud, willful default, and negligence.
  • Taxpayers are given 14 calendar days to respond to the tax authority’s request for documents and information. For transfer pricing documentation, taxpayers are allowed 30 calendar days to submit to the documents to the tax authority.
  • Taxpayers are required to prepare presentation slides in relation to, among other items, business operations and functional analysis. The slides must be submitted to the tax authority at least seven calendar days before the audit visit.          
  • There is a shorter time frame for taxpayers to respond to the audit findings issued by the tax authority (18 calendar days instead of 21 days).                                   
  • Settled audit cases will not be selected for audit again for the same issues and years of assessment.
  • There is additional clarification on voluntary disclosure and new penalty rates are introduced.


Read a December 2019 report [PDF 170 KB] prepared by the KPMG member firm in Malaysia

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