Malaysia: Transfer pricing measures enacted

Malaysia: Transfer pricing measures enacted

The Finance Act 2020 was published in the official gazette on 31 December 2020, and has an effective date of 1 January 2021.


There are no material differences of the transfer pricing provisions in the final version of the legislation from those that were proposed in the Finance Bill 2020. Read TaxNewsFlash

The transfer pricing changes effective 1 January 2021 concern:

  • Imposition of penalties for a failure to furnish contemporaneous transfer pricing documentation (within 30 days of a written request from the tax authorities)
  • Authority granted to the tax authorities to disregard a structure in a controlled transaction and to recharacterise any structure adopted by a person in a controlled transaction if the economic substance of the transaction differs from its form, or the form and substance are the same but the arrangement when viewed in totality differs from that which would have been adopted by independent persons behaving in a commercially rational manner and the actual structure impedes the tax authorities from determining an appropriate transfer price
  • A “surcharge” of not more than 5% to be imposed for transfer pricing adjustments even in instances when the transfer pricing adjustment does not result in an additional tax liability

Read a January 2021 report [PDF 112 KB] prepared by the KPMG member firm in Malaysia 

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