Do you know that companies are required to prepare Transfer Pricing Documentation when they enter into business transactions with their related parties?
(E.g. Company A supplies goods to Company B, Company B provides management service to Company C)
What is TRANSFER
PRICING?
Transfer pricing is the transaction price between your related companies.
❌ It cannot be TOO HIGH
❌ it cannot be TOO LOW
✅ it has to be just at the MARKET PRICE
So if you have related party transactions, you have to prove that the transaction price is at the
market price through Transfer Pricing Documentation!
Is it a MUST to prepare Transfer Pricing Documentation?
(and what is the penalty?)
It is a statutory requirement for the taxpayers to prepare a contemporaneous comprehensive set of transfer pricing
documentation (e.g. Full TPD) annually under the Malaysian Transfer Pricing Guidelines 2012.
The Income Tax Act 1967 has been amended and the new Section 113B states that if you are not able to furnish a TPD upon request by the IRB, you could face a penalty ranging RM 20,000 to RM 100,000 per year of assessment for the
years of which TPD is required 😱😱
So how should you prepare a Transfer Pricing Documentation?
You have 2 options:
1. Engage a professional to prepare it for you
2. DO IT YOURSELF!
If you feel that it is VERY EXPENSIVE for you to engage a professional to prepare the Transfer Pricing Documentation (current market price is about RM10,000 & above per engagement), but at the same time you have NO IDEA how to do it yourself, I
have a good news for you!
Do you know that you are NOT REQUIRED to prepare a “FULL TPD" IF:
💥the total annual revenue of your company < RM25 million; OR
💥total
value of related party transactions < RM15 million,
You may opt to prepare a "LIMITED SCOPE" TPD! 🤩
Join our upcoming intensive 2-day "Transfer Pricing Documentation DIY Course" to learn how to prepare your own LIMITED Scope TPD!
