• Service: Tax, Global Transfer Pricing Services, International Tax
  • Type: Regulatory update
  • Date: 1/8/2014

Malaysia - Framework for transfer pricing audits 

January 8: Malaysia’s tax authority, the Inland Revenue Board, released the framework for transfer pricing audits (effective 1 April 2013).

Under prior guidance, transfer pricing audits have been conducted without the guidance of any formal framework. A 2009 tax audit framework stated that it did not apply to audit cases involving transfer pricing, thin capitalization, and advance pricing arrangement issues.

The new transfer pricing audit framework is substantially similar to the tax audit framework, in terms of processes and procedures; however, there are some differences. In general, the transfer pricing audit framework:

  • Covers three to six years of assessment (YAs)
  • Allows selection of a taxpayer for a transfer pricing audit mainly based on the significance of its controlled transactions, before any other risk analyses are undertaken
  • Provides a field audit time frame is four to five days
  • Introduces a new penalty regime

Read a 2013 report [PDF 292 KB] prepared by the KPMG member firm in Malaysia: Malaysian Inland Revenue Board’s Frameworks on Tax Audits

Contact a tax professional with KPMG's Global Transfer Pricing Services.

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