Malaysia: Updated form for cross-border transactions | KPMG | BE

Malaysia: Updated form for cross-border transactions, transfer pricing risk assessments

Malaysia: Updated form for cross-border transactions

The Malaysia Inland Revenue Board (MIRB) updated the form that is used by the tax authority to collect information from certain taxpayers relating to their cross-border transactions, for purposes of conducting a transfer pricing risk assessment.

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Certain taxpayers will receive a letter from the tax authority with a Form MNE [Pin 1/2017] attached, and generally will be required to complete and submit the form within 30 days from the date of the letter.

New information required

In brief, the updated Form MNE [Pin 1/2017] now requires taxpayers to disclose the following information:

  • Name of company and country if the taxpayer has any transactions in countries having a lower tax rate than Malaysia
  • Information pertaining to research and development (R&D) activities conducted by the taxpayer (if any), such as: (1) the type of R&D activity; (2) the type of processes involved with the R&D activity—such as, whether to enhance a product’s production line or engineering, enhance a current product or update a current model or create a new product; (3) whether the R&D activity is performed for the taxpayer’s own use or on behalf of related parties; (4) whether any incentives have been granted for the R&D activity; and (5) whether the R&D activity leads to the creation of intellectual property (IP)
  • If the taxpayer received any financial assistance from related parties, and details such as: (1) information about the provider of the financing (name, country, etc.); (2) the type of financial assistance; (3) whether interest (or some other payment) is remitted in exchange for the financial assistance; and (4) the frequency of the payment
  • Name of company and country if the taxpayer group (or any related party) has any trade / brand name or IP, or is conducting R&D activities
  • Particulars about transactions with related companies

Although not a new section, the updated Form MNE now requires taxpayer to list the amounts transacted with both related parties inside and outside Malaysia—as opposed to only those related parties located outside Malaysia. Also, taxpayers need to disclose the amount of the contribution if they are a party to a cost contribution arrangement.

KPMG observation

Release of the updated Form MNE signifies the MIRB’s continued effort in focusing on transfer pricing compliance. Taxpayers that are considered to be a “high risk” by the MIRB would be expected to be prioritized for a tax audit.

 

Read a March 2018 report [PDF 162 KB] prepared by the KPMG member firm in Malaysia

 

For more information, contact a tax professional with KPMG’s Global Transfer Pricing Services practice:

Bob Kee | +60 37721 7029 | bkee@kpmg.com.my

Chang Mei Seen | +60 37721 7028 | meiseenchang@kpmg.com.my

Ivan Goh | +60 37721 7012 | ivangoh@kpmg.com.my

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