The English Version of IRB Tax Audit Framework 2013

TRANSFER PRICING
INLAND REVENUE BOARD
AUDIT FRAMEWORK
MALAYSIA Effective Date: 01 April 2013
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1. PURPOSE
1.1. The transfer pricing audit framework issued by the IRBM aims to ensure
that cross-border and local transfer pricing audits are carried out in a fair
and transparent manner, in accordance with the provisions of the Income
Tax Act 1967 (ITA). This framework outlines the rights and responsibilities
of audit officers, taxpayers and tax agents in respect of a tax audit.
Generally, this framework aims to:
1.1.1. Assist audit officers to carry out their tasks efficiently and
effectively; and
1.1.2. Assist taxpayers in fulfilling their obligations.
2. OBJECTIVE OF TRANSFER PRICING AUDIT
2.1. The main objective of a transfer pricing audit is to ensure that controlled
transactions comply with the arm’s length principle, the Malaysian tax laws
as well as administrative requirements of the IRBM. In addition, transfer
pricing audits also fulfill the normal audit objectives that serve to
encourage voluntary compliance and ensure that a higher tax compliance
rate is achieved under the Self-Assessment System. In this regard, the
audit officer is required to make certain that a taxpayer pays his fair share
of tax in accordance with the tax laws and regulations.
3. STATUTORY PROVISIONS AND REFERENCES
3.1. Apart from provisions stated in paragraph 2.1 of the Tax Audit Framework,
other provisions relevant in a transfer pricing audit include:
3.1.1. Section 132: Double taxation arrangements
3.1.2. Section 139: Controlled companies
3.1.3. Section 140A: Power to substitute the price and disallowance of
interest on certain transactions
3.2. Income Tax (Transfer Pricing ) Rules 2012; and
3.3. Transfer Pricing Guidelines 2012.
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