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Malaysia: Revisions, updates to APA rules and MAP guidelines

Malaysia: Updates to APA rules and MAP guidelines

The Malaysia Inland Revenue Board amended the rules that apply with respect to the advance pricing arrangement (APA) regime, and revised the mutual agreement procedure (MAP) guidelines.

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The amendment to the APA rules—referred to as the Income Tax (Advance Pricing Arrangement) (Amendment) Rules 2017—was released in December 2017, and allows the tax authority to charge the taxpayer an application fee and for any expenses during the course of the APA application. 

The update to the MAP guidelines is intended to align the MAP guidelines in Malaysia with the base erosion and profit shifting (BEPS) Action 14 minimum standards. In part, this would allow the Malaysian Competent Authority (CA) to interact with CAs of treaty-partner countries with the intent to resolve certain tax issues. The updated MAP guidelines include measures concerning pre-filling meetings, the submission of a formal request, a CA proposal for unilateral agreement with the taxpayer, confirmation by the taxpayer prior to the agreement, implementation of the agreement, and interaction between domestic appeal processes and the MAP.

Background

The APA rules in Malaysia—the Income Tax (Advance Pricing Arrangement) Rules 2012—were published in the official gazette in May 2012, but applied retroactively from 1 January 2009. For these purposes, an APA refers to an arrangement that determines, in advance, the appropriate set of criteria to ascertain the arm’s length transfer prices of covered transactions. A taxpayer that conducts a cross-border transaction may apply to the tax authority for an APA in relation to a covered transaction, subject to meeting certain terms and conditions.

 

Read a February 2018 report [PDF 334 KB] prepared by the KPMG member firm in Malaysia 

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