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Even though TP rules have been in place for more than 10 years in Malaysia now, there are several common mistakes made by companies when it comes to TP compliance. Given that TP is not an exact science and that TP issues are often complicated in nature, these mistakes could be costly for taxpayers if not managed properly.
However, taxpayers which take a reactive approach end up facing increased risks with the recent introduction of more onerous penalty provisions, which are aimed at increasing the level of TP compliance in Malaysia. In light of the following provisions, which were effective from January 1, 2021, taxpayers should re-evaluate their priorities when it comes to TP documentation.
The IRB is able to audit up to seven years of assessment at any point in time, and hence, penalties for failure to produce TP documentation could go up to RM140,000 in a tax audit ; and b) Functions, assets, risks profile — ensuring that the FAR profile of the taxpayer is accurately explained as the FAR profile is the basis for determining the appropriate level of returns earned by the taxpayer .