What is comparability analysis for transfer pricing in Malaysia?
Knowledge • What is comparability analysis for transfer pricing in Malaysia?
Knowledge • What is comparability analysis for transfer pricing in Malaysia?
The Inland Revenue Board of Malaysia (“IRBM”) adopts the arm’s length principle as a basis to determine the transfer price of a transaction between associated entities. Arm’s length price is the price which would have been determined if such transactions were entered between independent entities under the same or similar circumstances.
The application of the arm's length principle is based on a comparison of conditions in a controlled transaction (associated entities) with those in an uncontrolled transaction (independent entities) under comparable circumstances. This is known as the comparability analysis.
A comparability analysis requires the selection of reliable comparables and it could be either internal or external comparables:
Internal comparables |
External comparables |
Transactions carried out by the tested party and independent entities in comparable circumstances |
Transactions between independent entities which is comparable to the tested party |
An uncontrolled transaction is deemed comparable if the following five comparability factors are sufficiently similar with the controlled transaction:
Transfer Pricing Solutions Malaysia can assist with the preparation of TP documentation locally and regionally, Master File and Local File
to comply with the OECD and also local legislation.
From 1 January 2025 to 31 December 2034, companies operating in qualifying sectors can apply to the Malaysian Investment Development Authority (MIDA) for the various tax incentive schemes under the JS-SEZ Tax Incentives Package.
The Johor-Special Economic Zone (JS-SEZ) is a strategic initiative between Singapore and Malaysia aimed at fostering cross-border economic growth.