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TP FAQs 2: What is the purpose of Contemporaneous TP Documentation?

Updated: Sep 14, 2022

Photo: 張靜靜
For the Inland Revenue | 对内陆税收局而言

To obtain information on related party transactions and comparability information through Contemporaneous TP Documentation provided by the company:-

  • To serve as a reference for the selection of investigation subjects

  • To assess and check the possibility of tax irregularities in transfer pricing, to test whether the taxpayer has engaged in transfer pricing practices and as a preliminary basis for tax adjustments.

通过企业提供的转让定价同期资料,获取关联交易 [Related Party Transactions] 的信息及可比 [Comparability] 信息

  • 作为选择调查对象的参考

  • 评估和检查纳税人在转让定价中存在税务违规的可能性,检验纳税人是否存在转让定价行为并可作为是否应进行纳税调整的初步依据。

For The Taxpayers | 对纳税人而言

Meeting compliance requirements (for those businesses that meet the threshold for the preparation of Contemporaneous Transfer Pricing Documentation)

  • Avoid penalties for failure to prepare Contemporaneous Transfer Pricing Documentation under section 113B of the Income Tax Act 1967

    • [Penalty: from a minimum of not less than RM20,000 to a maximum of RM100,000]

  • This will demonstrate a willingness to develop and implement transfer pricing that is consistent with the principle of independent trading and ensure that its transfer pricing is tested, particularly those taxpayers that have been making marginal profits and losses [even though without a profit, but continue to operate anyway] or are suspected of transfer pricing avoidance.

  • Internal business management needs, including group restructuring, assessment of the performance of entities within the group

满足合规性要求 (对于那些达到需要准备转让定价同期资料门槛的企业)

  • 避开1967年所得税法令第113B条文下,没有准备转让定同期资料的罚款

    • [罚款额:从最低不少于20千令吉,到最高不超过100千令吉]

  • 可以显示其制定和执行符合独立交易原则的转让定价的意愿,确保其转让定价是经得起检验的,也规范了纳税人税务行为及实务操作,特别是那些常年微利 [赚很少]、亏损 [没有赚过钱,但是还是继续营业] 或有转让定价避税嫌疑的企业

  • 企业内部经营管理需要,包括:集团结构重组、集团内各实体业绩评估

Best Practices For Contemporaneous Documentation | 同期文档的最佳实践

1. Get familiar with the Transfer Pricing Regulations

Tax law can be difficult to understand, particularly when comparing the laws of different jurisdictions.

The rules that govern transfer pricing are known to undergo periodic revisions in the modern era.

For instance, new rules were implemented not too long ago in Malaysia, and they came into operation effectively from January 1, 2021.

It is essential to maintain a current knowledge base on the timing of the submission of documentation (Currently, in Malaysia, all documentation should be made available within 14 days upon request by IRB) and the question of whether or not countries have made particular changes to their policy.


Photo: 葉峻豪





2. Review your Documentation each year

It is a smart practice to examine and update all relevant documents annually. This will help to guarantee that your business does not incur any fines as a result of inaccurate documentation.

These mistakes arise when businesses prepare their documentation for the year but then neglect to keep it updated as the year progresses.




3. Keep up with the legal contracts between Companies

Making sure that your Intra-Group Legal Agreements are up to date will guarantee that the audit goes as smoothly as possible.



4. Be consistent with your Customs and Duty Declarations

It is of the utmost importance to guarantee that your in-house customs department operates effectively to guarantee that all international transactions are free of errors and contain information that is consistent throughout.



5. Maintain a dependable Point of Contact at all times

The point of Contact is the person who represents an organisation for a specific task.

It's possible for there to be inconsistencies in your documentation if you prepare it utilising numerous tax or legal consultants located in different countries.

To ensure that your documentation is correct everywhere it is used, you should make every effort to keep a single point of contact centralised inside your firm and with the service provider you use.





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