The Malaysian transfer pricing conundrum: Fact or myth?

In this first issue of the year, several topics of interest are featured. The first being an article on transfer pricing, something Malaysian taxpayers are quite familiar since the introduction of the Malaysian Transfer Pricing Guidelines. The guidelines were updated in 2017 and closely modelled after the OECD Guidelines.

A key area of challenge for taxpayers remains the delicate balance between ensuring compliance with all applicable transfer pricing requirements outlined in the TP Rules and revised Malaysian Guidelines while ensuring efficient use of internal resources and funds.

The preparation of transfer pricing documentation can be costly and time-consuming, particularly for global multinationals in multiple locations. Furthermore, each tax jurisdiction is unique and has its own set of challenges in terms of compliance requirements. Multinationals must be meticulous about assessing their tax risks as well as transfer pricing risks in each location.

Malaysia’s corporate taxation rate is one of the highest in the Southeast Asian region. Hence, this increases the pressure on the Malaysian tax authorities to scrutinise controlled transactions of these multinationals.

This article explores if the current transfer pricing legislation and guidelines in Malaysia are comprehensive enough to guide taxpayers in complying with the transfer pricing requirements relevant to their business in Malaysia. Read more inside.

With recent global and local events, the Malaysian marketplace has become cautionary. The escalated US-China trade war has added more risks to the Malaysian economy. Also, the outcome of the 2018 general election which brought about policy changes has brought some changes to the Malaysian economy. Among other things, the postponement and cancellation of a number of large infrastructure projects in Malaysia have impacted the performance of certain large industry players. This has certainly resulted in a domino effect on numerous other parties including contractors, suppliers and employees.

In recent years, we have seen several multinational companies offloading their assets and subsidiaries in Malaysia as part of a strategic change in direction. As a result, investors and businesses exploring M&A opportunities have turned to the Malaysian market to do so. Read the article inside to discover more about it.

The final feature of the issue looks at how climate change and population growth can affect agricultural markets. For more information, read the article inside.

Source: The Malaysian Accountant

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