The transfer pricing measures gazetted by Malaysian government on December 31 provide a five percent surcharge in case of transfer pricing adjustments.
Malaysia gazetted the 2020 Finance Act on December 31, 2020, providing for key transfer pricing measures.
For transfer pricing purposes, the Director General is empowered to disregard any structure adopted by a person in entering into a transaction if the economic substance of that transaction differs from its form.
Structures may also be disregarded if the form and substance of the transaction are the same, but the arrangement made in relation to the transaction, viewed in totality, differs from those which would have been adopted by independent persons behaving in a commercially rational manner and the actual structure impedes the Director General from determining an appropriate transfer price.
Finally, in case of transfer pricing adjustments, the Director General may require a person to pay a surcharge of five percent of the amount of increase of any income generally, or reduction of any deduction or loss, as the case may be.
The author is Alex Hunter, Editor, TP News. He oversees and updates the publication and also regularly writes news stories about transfer pricing and international tax law. Alex is reachable at email@example.com