Updated: 1 day ago
Many countries' legislation regarding transfer pricing uses the concept of contemporaneous documentation as a critical component.
Rule 4(1) of the Income Tax (Transfer Pricing) Rules 2012 stipulates that a person who enters into a controlled transaction shall prepare a contemporaneous transfer pricing documentation.
The expression "Contemporaneous Transfer Pricing Documentation" refers to transfer price documentation that is established—
when a person plans or executes a controlled transaction; and
where a controlled transaction is examined during a basis period for a year of assessment, and there are material changes, the documentation must be updated prior to the due date for filing a return for that basis period for that year of assessment .
所谓 "同期转让定价文件 "是指在以下情况下建立的转让定价文件：
When there is a related party transaction in Malaysia, the regulations state that even though contemporaneous transfer pricing documents are not required to be filed, the taxpayer must declare, when filing their income tax return, whether or not contemporaneous transfer pricing documents have been prepared.
The term "contemporaneous documentation" refers to any information, records, or other documents that already exist or are made when the Taxpayer is establishing or implementing any arrangement that has the potential to bring up transfer pricing concerns.
It is crucial that the documentation on which the taxpayer relies to determine the arm's length price should be available when the transaction is entered into between the parties or at the latest when the analysis is carried out and not produced after establishing the price.
 - Illustration:
In the financial year 2021, Super VIP Holdings will lend RM5 million to its subsidiary, VIP Enterprises.
Both companies are considered to have their tax residency in Malaysia.
Benchmarking Analysis and transfer pricing documentation are prepared to determine the terms and conditions of the loan transaction, including the determination of interest rates independently of each other, i.e. based on the principle of arm’s length.
The loan transaction is concluded in accordance with the transfer pricing documentation, and its execution will be included in the financial statements of both companies for the financial year 2021.
The entities are expected to file their corporation tax returns for the Year of Assessment 2021 in 2022.
In preparing their tax returns, the entities mentioned above need to go through the terms and conditions of the loans to see if they still meet the requirements of the arm's length principle.
(1) - 说明
在2021财年，超级 VIP 控股公司将借贷500万马币给其子公司 VIP 企业。
基准定位分析 (Benchmarking Analysis) 和转让定价文件的准备是为了确定这项贷款交易的条款和条件，这也包括利率的确定彼此独立，也就是说建立在独立交易原则上。
In practice, preparing and updating Contemporaneous Transfer Pricing Documentation is not an easy task, and issues beyond the taxpayer's control often arise.
There is a possibility that the relevant information and data about comparable uncontrolled transactions will not be available in the public domain until the particular date that has been established by law.
However, such information would be accessible to the tax authorities when transfer pricing assessment or audit procedures are carried out a few years later.
When the taxpayers are faced with circumstances such as these, it may be difficult for them to meet the statutory obligation of preparing contemporaneous documentation by the indicated date.
Consequently, the Inland Revenue Board of Malaysia ought to provide guideline on the circumstances under which the criteria for preparing and maintaining contemporaneous transfer pricing documentation can be relieved a little bit.