Transfer Pricing, Tax Audits and Investigations

Transfer pricing

Transfer pricing (TP) is a term used to describe inter-company pricing arrangements relating to transactions between related entities. These can include transfers of intellectual property, tangible goods, services, and loans or other financing transactions.

Such inter-company transactions, domestically and across borders, are growing rapidly and are becoming much more complex. Compliance with the differing requirements of multiple overlapping tax jurisdictions is a complicated and time-consuming task.

At the same time, tax authorities both local and regional, are imposing stricter penalties, mandatory documentation requirements, increased information exchange and carrying out intensive audits. In Malaysia, increased compliance obligations mean companies need to keep abreast with Transfer Pricing developments.

Do you…

  • need to better understand TP compliance requirements and the expectations of the tax authorities?
  • need to respond to a tax authority transfer pricing audit / enquiry?
  • require a more in-depth understanding of what happens during TP audits?
  • want reasonable assurance that your internal controls over transfer pricing are sufficient?
  • want to know what are the "best practices" for managing your transfer pricing policies and practices?
  • want to understand your options available for resolving disputes involving two or more territories?

How we can help you

Whatever your transfer pricing needs, our dedicated Transfer Pricing professionals are ready to work with you.

With the ever-increasing scrutiny of transfer pricing activity by tax authorities worldwide, we can assist you in the development of tax-efficient structures that help increase compliance with local country requirements, prepare for audit response, resolve transfer pricing disputes and decrease transfer pricing exposure in future periods.

Tax audits & investigation

Tax audits and investigations are the primary activities being undertaken by the Malaysian Inland Revenue Board (“MIRB”) in ensuring a high level of compliance under the Self - Assessment System.

What is a Tax Audit?

A tax audit is an examination performed by the MIRB on a taxpayer’s business records and financial affairs to ascertain that the right amount of income is declared and the right amount of tax is calculated and paid in accordance with tax laws and regulations.

Generally, there are two types of tax audit being performed by the MIRB, namely the desk audit and the field audit.

What is a Tax Investigation?

Tax investigation on the other hand is a more severe enforcement measure undertaken by the MIRB.

Generally, the objective of a tax investigation is similar to a tax audit but is carried out should there be a suspicion by the MIRB based on any precise and definite evidence to show that the taxpayer has deliberately avoided taxes or committed an act of willful evasion under the tax laws. As tax audit or investigation is an intensive process which is time consuming and may require additional resources, it is important that this process is handled with great care to ensure a desirable outcome is achieved.

Do you …

  • wish to identify the potential risk regarding various tax positions taken?
  • want reasonable assurance that internal controls over tax management are sufficient?
  • ensure that tax positions are taken with strategic and long term view?
  • require a more in-depth understanding of tax investigation and field audit components from common irregularities to documentation requirement?
  • know the appeal process and procedures in dealing with the tax authorities?
  • wish to explore alternative avenues for resolving complex tax disputes?

How we can help you

The assessment of the potential tax exposure, development of defence strategies and the negotiation process are critical factors influencing the direction and outcome of the tax field audit or investigation.

Failure to deal with the tax field audit or investigation could result in unexpected and excessive liabilities and not to mention, a diversion of company's resources.

So why not plan for this and act now for a favourable outcome?

Our services include the following:

  • Planning ahead through a risk assessment review
  • Addressing potential tax issues with specifically tailored solutions
  • Coordinating with the tax authorities and provision of the necessary documents and information to the tax authorities
  • Be present during the tax field audit visit to assist the Company in liaising with the MIRB officers
  • Providing tax advice to the Company in dealing with the MIRB’s queries during the tax field audit visit
  • Outlining optimal defence strategies with the aim of finalising the audit favourably
  • Supporting the Company’s management in liaising and negotiating with the MIRB
  • Managing the tax investigation process through a pro-active role to mitigate tax risks
  • Assessing the scope of the investigation and provide specifically tailored solutions to address the tax issues
  • Assisting the Company in outlining the optimal defence strategies with the aim of finalising the tax investigation favourably
  • Coordinating with the tax authorities and providing necessary documents and information to the tax authorities
  • Shortening the investigation period through satisfactory resolution of issues

In addition to our tax audit and investigation assistance services, our team also provides tax litigation defence support:-

  • Reviewing the tax related documentation relating to the case
  • Commenting on the adequacy of defence, probability of success and prevention of occurrence
  • Assisting your legal counsel in preparing for the appeal
  • Exploring and using alternative tax dispute resolution avenues
  • Discussing and meeting with your legal counsel or the Company, as and when necessary