Grant Thornton is a global network of 76,000 people in member firms in 156 markets, with one common goal — to help you realise your ambitions. Our member...
Whether you’re growing in one market or many, looking to operate more effectively, managing risk and regulation, or realising stakeholder value, our firms can help.
In a world that wants more options for high quality services, we differentiate in the market to grow sustainably in today’s rapidly changing environment.
Grant Thornton International Ltd acts as the coordinating entity for member firms in the network with a focus on areas such as strategy, risk, quality monitoring and brand.
The global leadership team (GLT), chaired by the GTIL CEO is a full-time management group dedicated to leading the network in the successful execution of the...
The relationship between a company and its auditor has changed. Organisations must understand and manage risk and seek an appropriate balance between risk and opportunities.
At Grant Thornton, we have a wealth of knowledge in forensic services and can support you with issues such as dispute resolution, fraud and insurance claims.
We work with entrepreneurial businesses in the mid-market to help them assess the true commercial potential of their planned acquisition and understand how the purchase might serve their longer-term strategic goals.
We can support you throughout the transaction process – helping achieve the best possible outcome at the point of the transaction and in the longer term.
We can assist you with a variety of sustainability advice depending on your needs, ranging from initial strategy development, reporting and compliance support, through to carbon measurement and management.
Our services can strengthen your business and stakeholders' confidence. You'll receive professionally verified results and insights that help you grow.
Our global assurance technology platform provides the ability to conduct client acceptance, consultations and all assurance and other attestation engagements.
Our sustainability assurance services are based on our global network of specialists, helping you make more efficient decisions for the good of your organisation.
Through our global organisation of member firms, we support both companies and individuals, providing insightful solutions to minimise the tax burden for both parties.
Using our finely tuned local knowledge, teams from our global organisation of member firms help you understand and comply with often complex and time-consuming regulations.
The laws surrounding transfer pricing are becoming ever more complex, as tax affairs of multinational companies are facing scrutiny from media, regulators and the public
Through our sustainability tax advisory services, we can advise how environmental taxes, incentives, and obligations can impact your progress, requiring alignment with governmental and legislative pressures.
We offer an extensive range of services to automotive sector stakeholders from supply chain through to distribution, retail and usership. With a variety of...
History has something important to tell us about the difficulties of steering a business to long-term success – through seismic shifts in technology, consumer demands and product development. With that in mind it’s unsurprising that over half the world’s largest companies in the early 1900s had shut their doors by the late 1990s. Some, however, have endured.
Following world events such as the COVID-19 pandemic, Brexit, and changes to regulation and digitalisation, insurers must be alert to the challenges ahead.
We help businesses navigate today’s changing private equity landscape, ensuring that you can respond to ever-changing regulations and investor demands.
When the global COVID-19 pandemic stormed across the globe in early 2020, the private equity sector was hit hard but deals are coming back to the market.
Nervous about partnering with Private Equity? We explore some of the common myths we come across when speaking to mid-market businesses about PE investment.
Jessica Patel, Tax Partner at Grant Thornton UK speaks with tax partners and directors across the network to share their insights on the real estate market and some of the challenges.
Jessica Patel, Tax Partner at Grant Thornton UK speaks with tax partners and directors across the network to share their insights on the real estate market and some of the challenges.
The past two years saw the retail industry experience significant disruption, however there will still be opportunities to effectively reposition for future...
Businesses are seeing rising challenges, and finance heads are dealing with a range of new measures. To say the next 12 months are critical for businesses is an understatement.
In this article, we’ve summarised key elements of the global tax reform proposals, their potential impact on technology industry and advice from our digital tax specialists on what technology companies can do to prepare.
Our research revealed five key trends that resonated with Technology, Media and Telecoms (TMT) industry leaders around the world. We asked a panel of our experts from UK, US, India Ireland and Germany, to give us their reaction to the findings.
Our research revealed five key trends that resonated with Technology, Media and Telecoms (TMT) industry leaders around the world. We asked a panel of our experts from UK, US, India Ireland and Germany, to give us their reaction to the findings.
Technology companies must adopt a new approach to digital risk: those that successfully develop a reputation for digital trust by demonstrating an unwavering commitment to cyber security and data privacy will be able to carve out a competitive advantage.
Figures suggest the mobile sector is maturing. While data usage continues to soar, mobile revenues are expected to flatten out over the next few years.
The COVID-19 pandemic caused unprecedented levels of disruption to the global travel industry. As this evolves, it is unclear what recovery looks like.
Optimism among global mid-market business leaders rose to 67% in the first half of this year and they are markedly more optimistic about their prospects with global optimism having increased by 8%.
For 21 years, the Women in Business report has tracked the proportion of women in senior roles in the mid-market. Progress has been made but with gender equity over 25 years away, that isn’t soon enough.
Mid-market firms are scaling sustainability for growth, not just compliance. Grant Thornton’s International Business Report (IBR) 2025 report reveals how sustainability investments are driving profitability, resilience and global expansion — despite regulatory shifts and political uncertainty.
A shifting global trade landscape is contributing to rising uncertainty, but could it also unlock new opportunites for adaptable mid-market businesses while larger companies opt to wait and see?
Women holding the CFO role is nearing parity – reshaping finance leadership and potentially helping increase female representation across all senior roles.
With seismic shifts in the global landscape, leaders must take deliberate action to propel their businesses into a more inclusive future, foster innovation,...
Women holding the CFO role is nearing parity – reshaping finance leadership and potentially helping increase female representation across all senior roles.
We saw an increase in the percentage of senior management roles held by women, on a global level, but there are some significant regional and country variations.
Mid-market firms are scaling sustainability for growth, not just compliance. Grant Thornton’s International Business Report (IBR) 2025 report reveals how sustainability investments are driving profitability, resilience and global expansion — despite regulatory shifts and political uncertainty.
The world needs a sustainable mid-market. It’s vital to economies, societies and the
planet. Businesses, governments, and other stakeholders must work collaboratively to make
sure this vital part of the world economy succeeds.
As organisations in the private sector make commitments and plans to reach net zero, there's a growing need for stakeholders to be able to assess the credibility of their transition plans.
A shifting global trade landscape is contributing to rising uncertainty, but could it also unlock new opportunites for adaptable mid-market businesses while larger companies opt to wait and see?
Across the globe, companies’ tax affairs are facing increasing scrutiny from regulators, communities and clients. Read our latest insights ranging from BEPS to...
Growing businesses that send their greatest assets – their people – overseas to work can face certain tax burdens, our global guide highlights the common tax rates and issues.
Helping you easily find everything you need to know about the rules and regulations regarding transfer pricing and Country by Country reporting for every country you do business with.
Global transfer pricing guide
Transfer pricing - Malaysia
01 Jan 20257 min read
This publication provides a high-level overview of Malaysia's transfer pricing rules and outlines who to contact for expert guidance in this area.
Contents
Introduction to transfer pricing in Malaysia
The local Malaysia transfer pricing (“TP”) laws are contained in Section 140A of the Malaysia Income Tax Act 1967 and Malaysia TP Rules 2023.
Malaysia also has a TP Guidelines 2024 that explains on the TP principles and documentation requirements. The Guidelines were issued with effect from 24 December 2024 and applicable for 2023 onward, incorporating the principles of BEPS Actions and OECD TPG Version 2022.
The TP Rules are applicable to transactions between controlled entities for the supply and acquisition of goods or services include financial aspect. The TP Guidelines further mentioned that controlled transactions include both domestic and overseas transactions.
A contemporaneous TP documentation is required to state the completion date prior or on the due date of the annual Corporate Income Tax return. It shall be furnished to the Inland Revenue Board of Malaysia (“IRBM”) within 14 days upon its request.
Malaysia has implemented CbCR (Country by Country Reporting) since 2017 for larger groups with consolidated revenue of more than RM3 billion. The OECD’s Master File concept is applied accordingly for groups subject to CbCR requirements.
The Malaysia TP Guidelines 2024 refers to the OECD TPG version 2022 in line with the BEPS initiatives, but not completely. OECD guidelines are considered as a source of reference only.
Malaysia applies the best method as same OECD TPG.
With the Malaysia TP Guidelines 2024, TP analysis and the selection of TP methodology should be on a transaction-by-transaction basis.
Other methodologies can be used, but with strong justifications.
Malaysia applies the self-assessment regime. In the annual Corporate Tax Return form, a tax payer is required to disclose the details of its related party transaction and ‘tick box’ to indicate its conformation to the TP and CbCR requirements.
Transfer pricing documentation
A TP document is to be prepared on a contemporaneous basis: (i) state the completion date prior or on the due date of the annual Corporate Income Tax return; (ii) disclose all required information as per Malaysia TP Rules 2023 and Malaysia TP Guidelines 2024. It can be in Bahasa Malaysia (official language of Malaysia) or English.
A full version of contemporaneous TP document is required if (i) generates gross business income of more than RM30 million in total and engages in cross-border controlled transactions totalling RM10 million or more annually; or (ii) receives or provides controlled financial assistance of more than RM50 million annually.
A simplified version of the contemporaneous TP document can be prepared if the taxpayer’s revenue or total related party transactions fall below the above threshold.
A full contemporaneous TP document shall contain the information of the Group (as per Schedule 1 of Malaysia TP Rules 2023) in which similar to Master File information under CbCR. Master File can be considered as a replacement for Schedule 1.
A full contemporaneous TP document shall contain the information and documents regarding a cost contribution arrangement (as per Schedule 3 of Malaysia TP Rules 2023) if any and applicable.
Intangible property is required to disclose with DEMPE analysis (Development, Enhancement, Maintenance, Protection, and Exploitation) as per OECD TP Guidelines if any and applicable.
In the selection of tested party, the IRBM gives priority to the availability of sufficient and verifiable information on both tested party and comparables. Therefore, the tested party preferably should be a Malaysian entity. Should the foreign entity be used as the tested party, its financial data must be verifiable.
Comparable data shall be from the same fiscal year. Latest available data is acceptable for complying with the contemporaneous requirement. However, the same fiscal year data is strictly required at the time of audit. Multiple year data is only to assess whether the outcome of a particular year is influenced by abnormal factors, however the use of multiple year data does not imply the use of multiple year average.
The comparable search in the databases supporting part of the TP documentation should be updated every three years provided that there is no significant change in the taxpayer’s business operation, functions and risks. However, financial data and suitability of the comparable should be reviewed and updated every year in order to apply the arm's length principle reliably.
Malaysia TP Rules 2023 defines the arm’s length range is a range of figures or a single figure falling between the value of 37.5 percentile to 62.5 percentile.
For a MNE Group, Malaysia accepts the Master File prepared by the ultimate holding company or Reporting Entity.
The Master File is only applicable to the taxpayer based on the CbCR requirement. It is only required to be submitted to the IRBM upon its request. Generally, the Master File is requested together with the Local File.
Loss making entities, in particular a service company and toll manufacturer;
Consecutive losses for many years;
Fluctuated profit margins;
High percentage or amount of overseas transactions with related parties;
Transactions in relation to intangible properties, e.g. royalties; financial assistance (loan, guarantee, debt, advance, amount due, etc.).
Failure to submit the TP documentation to IRBM within 14 days upon request can result in penalty of between RM20,000 to RM100,000, or jail term of up to 6 month for each year of requested TP documentations.
A surcharge of not more than 5% may be imposed on the TP adjustment made by the IRBM that results in increase in income or reduction in expense or loss.
Correspondent adjustment is not automatic. Application has to be made to the IRBM.
Economic analysis and how to demonstrate an arm’s length result
The IRBM prefers local comparable with financial data from the same fiscal year. Overseas comparable is acceptable only if the financial data is available for the IRBM’s verification.
The IRBM generally applies the median to the upper percentile as the arm’s length range.
Minimum or no adjustment to the profit level indicators is preferred.
Advance Pricing Agreements (APAs), dispute avoidance and resolution
Unilateral, bilateral and multilateral APAs are available. Pre-filing meetings can be organized with the IRBM to discuss the case before a formal APA application is made.
A non-refundable fee of RM5,000 per application.
The IRBM prefers unilateral APAs.
Exemptions
The exemption of TP document is applicable to:
individuals not carrying on a business;
individuals carrying on a business (including partnerships) who only engage in domestic controlled transactions;
person who entered into controlled transactions with a total amounting to not more than RM1 million; or
person who entered solely into domestic controlled transactions with another person where both parties:
do not enjoy tax incentives;
are taxed at the same headline tax rate; or
do not suffer losses for two consecutive years prior to the controlled transactions.
It is mentioned in the Malaysia TP Guidelines that tax payers under this exemption must still comply with the arm’s length principle for all controlled transactions entered into and must ensure to keep all relevant documents that are related to the controlled transactions, including documentation to support and prove the determination of the arms’ length price.
Related developments
Not Applicable.
Effective 1 January 2020, digital services provided by foreign service providers (“FSP”) may be subject to a 6% service tax.
FSP who provides digital services to consumers in Malaysia where the value of the digital services for a period of twelve months exceeds the threshold of RM500,000 is required to be registered.
The list of digital services (not exhaustive) is as follows:
Software, application & video games;
Music, e-book and film;
Advertisement and online platform;
Search engines and social networks;
Database and hosting;
Internet Based Telecommunication;
Online training.
The IRBM has their own TP risk assessment to plan for its audit works. Audit cases mainly focus on taxpayers with significant related party transactions and/or consecutive years of losses, or low/declining profits.
Taxpayers have started to recognise the need to prepare TP documentation as part of tax compliance. However, for other TP services, e.g. preparation of pricing policy, it is still at the acceptance stage.
The IRBM has reiterate the importance of preparing TP documentation to justify on the impact of Covid-19 to the taxpayer’s business and changes to its related party transactions.
Contact us
For further information on transfer pricing in Malaysia please contact:
