Expert Transfer Pricing Advisory Services | KL | Malaysia

Ensuring Compliance & Strategic Tax Efficiency 

Transfer Pricing is a critical element of corporate taxation, governing the pricing of goods, services, and intellectual property between associated entities. In Malaysia, adherence to the arm’s length principle is mandatory under Section 140A of the Income Tax Act, 1967 and the Malaysian Transfer Pricing Rules 2012. 

With increasing scrutiny by the Inland Revenue Board of Malaysia (IRB), businesses must ensure accurate documentation and strategic planning to avoid costly penalties and tax disputes. 

At YYC, we provide comprehensive transfer pricing services to help businesses navigate complex compliance requirements, mitigate risks, and optimize their tax strategies.

What is Transfer Pricing?

Transfer pricing refers to the pricing of transactions between related entities, including: 

• Intercompany sales of goods 
• Provision of services 

• Intellectual property transfers 

• Cost-sharing arrangements 
• Financial transactions, including loans and guarantees 

These transactions must be priced at market rates (arm’s length pricing), ensuring they align with what independent parties would agree upon under similar terms.

Malaysia’s Transfer Pricing Regulations

Businesses in Malaysia are subject to stringent transfer pricing compliance obligations, including the preparation of contemporaneous documentation annually. The key requirements include:

These measures reinforce the importance of timely and accurate transfer pricing documentation to avoid unnecessary tax liabilities.

What is the Transfer Pricing landscape for the year 2021?

The Budget 2021 announcements which have gazetted the law under Finance Act 2020 which have tightened the Transfer Pricing compliance requirements in Malaysia with effective from 1 January 2021 with the introduction of the following provisions:

No.	New Law/ Revised Guidelines	Tax implications
1.	Section 113B: Failure to furnish contemporaneous TPD	A penalty of between RM20,000 and RM100,000 for failure to submit the TPD.
2.	Section 140A(3C): Surcharge on the transfer pricing adjustment	A surcharge of up to 5% of the total transfer pricing adjustment is imposed whether or not the adjustment results in additional tax payable
3.	Section 140A(3A) & (3B): Power to disregard structure in a controlled transaction	To grant the power to the IRB for making transfer pricing adjustments to reflect arm’s length economic and commercial reality

With the introduction of penalty for non-compliance of TPD, the requirement to prepare TPD is absolute and mandatory and there is no discrimination between large and small medium sized companies. 

The non-compliance for TPD penalty is hefty as it provides the IRB with the absolute power to penalise a taxpayer prior to the commencement of the audit process for not being able to furnish the TPD for the relevant year of assessment on time. Further, a 5% surcharge would be imposed on any taxpayer on transfer pricing adjustment regardless of whether the taxpayer is a loss or a tax-exempt company for non-compliance of the arm’s length principle.

How YYC Can Help

At YYC Advisors, we offer a comprehensive suite of transfer pricing services designed to ensure full compliance with Malaysian and OECD guidelines while maximizing tax efficiency.

1. Transfer Pricing Planning & Strategy
   • Development of intercompany pricing policies
   • Risk assessment for related party transactions
   • Advance Pricing Agreements (APAs) to prevent tax disputes
   • Cost allocation methods for intra-group services & intangibles
2. Transfer Pricing Documentation & Compliance
   • Preparation of Master File and Local File in accordance with Malaysian Transfer Pricing Guidelines
   • Preparation and submission of Country-by-Country Reports (CbCR)
   • Assistance with XBRL filing for transfer pricing compliance
3. Transfer Pricing Audit & Dispute Resolution
   • IRB Transfer Pricing Audit Management – Assistance in responding to tax queries and audits
   • Dispute resolution – Handling tax controversy and appeals
   • Transfer Pricing Risk Management – Strategies to minimize tax exposure

Common Transfer Pricing Mistakes to Avoid

The following pricing practices are red flags for the IRB and may trigger tax adjustments or penalties: 

• Transacting below market value 

• Providing free services to related entities 

• Non-standard pricing models 

• Interest-free intercompany loans 

• Lack of written agreements for related-party transactions 

Businesses must ensure that all related party transactions are supported by proper documentation to avoid scrutiny from tax authorities.

Why Choose YYC Advisors for Transfer Pricing in Malaysia?

• Proven Expertise – Decades of experience in tax advisory and compliance 

• Strategic Approach – Combining regulatory compliance with tax optimization 

• Custom Solutions – Tailored strategies for businesses of all sizes 

• Proactive Risk Management – Helping businesses mitigate tax exposure 

With the IRB’s heightened focus on transfer pricing, ensuring compliance and strategic tax planning is more important than ever. Let YYC's esteemed tax advisory team help you navigate the complexities of transfer pricing so you can focus on growing your business.

Our Team

Feel free to contact us to find out more.