Malaysia’s transfer pricing rules have taken an important step forward with the release of the 2024 Transfer Pricing Guidelines and the Transfer Pricing Tax Audit Framework by the Inland Revenue Board. These updates aim to enhance compliance for multinationals while easing the burden on smaller businesses. Effective from the 2023 assessment year, the guidelines revise thresholds for preparing full documentation—RM30 million in business income and RM10 million in cross-border transactions, or RM50 million for financial transactions. Those below the threshold may prepare a simplified version. Exemptions apply to domestic and low-risk transactions, though all taxpayers must follow the arm’s length principle. A 5% safe harbor mark-up is allowed for low-value intragroup services, without requiring a benchmarking study. Penalties for not preparing or submitting contemporaneous documentation range from RM20,000 to RM100,000, and delays are penalized based on duration. The audit framework applies to companies with financial years ending on or after May 31, 2024.
To access the Guidelines, click here.