Among the developments covered in this year’s edition are:

• the Transfer Pricing Tax Audit Framework 2025, which took effect on 31 July 2025, including its recalibrated documentation penalty structure;
• the surcharge framework under section 140A(3C) of the Income Tax Act 1967;
• the 450-day transfer pricing audit timeline;
• the voluntary disclosure mechanism, with reduced surcharge rates ranging from 0% to 4%; and
• the distinct remission process applicable to a surcharge imposed under section 140A(3C).

The chapter also provides practical guidance on the broader Malaysian transfer pricing framework, including the arm’s-length principle and the role of the OECD Transfer Pricing Guidelines; transfer pricing methods; documentation and country-by-country reporting requirements; adjustments, settlements and relief from double taxation; and advance pricing agreements.

It further examines special topics such as recharacterisation, the use of comparables, secondary adjustments, non-deductible intercompany payments, anti-avoidance rules, location savings, branches and permanent establishments, exit charges, and temporary exemptions or reductions.

The Malaysia chapter was authored by Partners Jason Tan Jia Xin and Chris Toh Pei Roo, Senior Associate Jay Fong Jia Sheng, and Associate Nathaniel Jagan a/l Arul Ezhilan of our Tax, Customs & Trade Practice Group.

Click here to read the full chapter.

More recently, the IRB issued its Malaysia Transfer Pricing Guidelines – Controlled Financial Transactions: Intra-Group Loans, addressing the transfer pricing treatment of intra-group loans and the recognition of equity funding. We have separately published an alert on these guidelines — for more information, see here.

To discuss any of these developments, please contact Partners Jason Tan Jia Xin (tjx@lh-ag.com) and Chris Toh Pei Roo (tpr@lh-ag.com), Senior Associate Jay Fong Jia Sheng (fjs@lh-ag.com), or Associate Nathaniel Jagan a/l Arul Ezhilan (nje@lh-ag.com).

7 August 2026