If you are doing business in Malaysia and having controlled transactions (e.g. buying and selling of goods and providing services) with associated persons (e.g. common directors/major shareholders, partners and relatives) then you need to prepare transfer pricing documentation (TPD). The new TP Rules 2023 which was gazetted on 29 May 2023, brought a few important changes to the contemporaneous TPD requirements. The new changes pose new challenges to preparing the TPD from YA2023 onwards.
W.e.f. 1/1/2021, penalty of RM20,000-RM100,000 if you cannot provide transfer pricing documentation (any taxable period) to LHDN upon request within 14 days. However, your business is allowed to prepare Minimum TP Documentation (MTPD), if business annual gross income below RM25 million, and total related party transactions not exceeding RM15 million per annum; or provision of financial assistance not exceeding RM50 million for non-financial institutions.
Brochure
— Course Fee: RM 3,500.00 (Inclusive of 8% Service Tax) —
DAY ONE
Module 1: Duty to prepare Transfer Pricing Documentation
- Transfer pricing principles and rules 2023
- Transfer pricing guides
- Timeline to submit MTPD
Module 2: Business organization chart
- Ownership structure
- Associated persons relationship
- Stakeholders’ involvement
- Management description of the management structure
Module 3: Who are the associated persons
- Identified the associated persons who are dealing the business
- Determining their relationship
- Gathering of controlled transactions
- Practical exercise
Module 4: The types of common controlled transactions
- Sales or purchase of raw materials
- Services, rent, intangible assets and management fees
- Interest or guarantee fees
Module 5: Controlled transactions details
- Description of the controlled transactions (e.g. procurement of manufacturing products, purchase of trading goods, provision of services)
- details in contracts, agreements and purchase orders for controlled transactions
- Budget and forecast for controlled transactions
- Scope of transactions, timing and frequency
Module 6: Functional, Assets and Risk Analysis (FAR)
- Introduction of FAR
- Practical exercise to determine business’s FAR
DAY TWO
Module 7: Pricing policies
- What is the formula adopted to decide on selling price?
- Find out the business anticipated profit margin/mark up for its products/services? What is the rationale apart from directors’ discretion?
- Practical exercise
Module 8: How prescriptive should the transfer pricing policy be?
- Ready supporting documentation to support the setting of product’s pricing
- Preparation of written procedure on how to select most appropriate transfer pricing method with regard to the category of transaction
- How frequent is the review of the product pricing been conducted
Module 9: Transfer Pricing Methodologies
- Understand the TP pricing methods
- Choices available
- Which TP pricing method is suitable for your business?
- Group discussion
Module 10: Matters pertaining to intragroup services
- Analysis of document/information relating to services performed by the respective associated persons/group members. Explain how the activities are carried out
- How to determine arm’s length price for intragroup services?
- Direct charge and indirect charge method
- Other factors to be considered, e.g. proof of provision of intragroup services and the competency in providing such service.