Under Malaysia tax rules, transactions between related companies must follow the arm’s length principle. This means that the pricing must reflect what would have been charged between independent parties under similar circumstances.  

To meet this requirement, many companies prepare Transfer Pricing documentation. But here’s the common mistake:  assuming that once the documentation is “done”, you are fully compliant and protected. 

❌Having Transfer Pricing documentation  

does NOT automatically mean you are compliant. 

⚠️During IRBM audit, we often see cases where: 

• Benchmarking is not properly done 
• Transactions are not supported with clear justification 
• TP policy exists, but not consistently applied

👉 And the result? 

• Transfer Pricing adjustments 
• Additional tax payable 
• Penalties up to RM100,000  

So the real question is:  

Is your TP documentation actually “defensible”, 

or is it just “prepared”?