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Transfer Pricing In Malaysia

Updated: Dec 3, 2022

What exactly is meant by "Transfer Pricing"?

The price of international and domestic intragroup transactions between connected parties that involve the transfer of goods, services, or intangibles is referred to as "Transfer Pricing."

Therefore, "Transfer Pricing" is an umbrella word for pricing these types of transactions.


关联方之间涉及货物、服务或无形资产转让的国际和国内集团内交易的价格被称为 "转让定价"。


Manipulation of transfer pricing, often known as "mispricing," "incorrect pricing," "unjustified pricing," or "non-length arm's pricing," can lead to tax avoidance or evasion.

对转让定价的操纵,通常被称为 "错误定价"、"不正确定价"、"不合理定价 "或 "非长度臂定价",可导致避税或逃税。


In order to particularly address transfer pricing issues, Section 140A of the Income Tax Act 1967 (the "ITA") was amended in 2009 to include a provision that required taxpayers to determine and apply the price that would have been charged to controlled transactions.

The DGIR is authorised to make adjustments on controlled transactions of goods, services, or financial assistance based on the arm's length principle owing to Section 140A of the ITA.

The Administrative Requirements of the Application of Section 140A of the ITA and the Income Tax (Transfer Pricing) Rules 2012 are explained by the Transfer Pricing Guidelines 2012, which was released in July 2012 by the Malaysian Inland Revenue Board (MIRB). The OECD Guidelines are followed closely and used as a basis for these guidelines.



由于《1967年所得税法令》第140A条的规定,内陆税收局总监 (“DGIR") 被授权,按照公平交易原则对货物、服务或财务援助的受控交易进行调整。



To put it more succinctly, taxpayers are expected to demonstrate that the transactions between related parties are carried out consistently with transactions involving third parties.

This means that the transactions must be conducted at arm's length.

Therefore, the taxpayer needs to prepare transfer pricing documentation to prove this fact.




As a result, beginning with the year of assessment in 2014, it turned into a need for all companies to affirm the availability of their transfer pricing documents to support any necessarily related party transactions.

Therefore, all taxpayers with any related party transactions will have to comply with the obligation to prepare and maintain their transfer pricing documentation when filing their income tax returns each year.



With effect from 1 January 2019

Under Section 140A (5A) of the ITA, “control” refers to persons one of whom owns shares of the other person or a third person who owns shares of both persons, where the percentage of the share capital held in either situation is 20% [Before - 50%] or more and—"

  1. the business operations of that person depending on the proprietary rights, such as patents, non-patented technological know-how, trademarks, or copyrights, provided by the other person or a third person;

  2. the business activities, such as purchases, sales, receipt of services, and provision of services, of that person are specified by the other person, and the prices and other conditions relating to the supply are influenced by such other person or a third person; or

  3. where one or more of the directors or members of the board of directors of a person are appointed by the other person or a third person.


根据《1967年所得税法令》第140A(5A)条,"控制 "是指其中一方拥有另一方的股份,或第三方拥有两方的股份,在任何一种情况下持有的股本20% [之前 - 50%] 或以上,并且-"

  1. 该方的业务活动依赖于专利、非专利技术知识、商标或版权等所有权,这些权利是由对方或第三方提供的。

  2. 该方的商业活动,如采购、销售、服务的接受或服务的提供,是由该方指定的,而且与供应有关的价格和其他条件是由该方或第三方影响的;或

  3. 一方的一名或多名董事或董事会成员是由另一方或第三方任命的。

Examples of control and associated persons

In this example, Company A controls Company B and Company C through share ownership.

As Company A controls both Company B and Company C, Companies B and C are associated enterprises.

Therefore, transfer pricing laws apply to transactions between the two.




Company A controls Company B, which in turn controls Company C.

Company A thus indirectly controls Company C, and transfer pricing laws thus apply to transactions between them.



The Act provides that transactions between Company A and Company B are deemed controlled transactions due to the relationship between Mr. X and Mrs. X.


Tax Audit Frameworks

On 15 December 2019, the Malaysian Inland Revenue Board (“IRB”) issued the updated Tax Audit Frameworks, which includes the Transfer Pricing Audit Framework 2019.