28 April 26

Shah Alam, Selangor Arena

Applying Transfer Pricing Compliance to Business Decision

Transfer Pricing has evolved into a specialised discipline, requiring both technical and commercial understanding. With increasing regulatory scrutiny and the use of digital data analytics by the Inland Revenue Board of Malaysia (LHDN), transfer pricing is now a key focus area during tax audits. While Transfer Pricing Documentation (TPD) provides the required compliance framework which serves as first line of defence, organisations often face challenges in interpreting and applying these principles to real business decisions, including pricing and profit allocation, particularly across different functions, to ensure alignment with the arm’s length principle. Transfer Pricing Documentation (TPD) is structured into distinct sections, each designed to meet specific requirements of the Inland Revenue Board of Malaysia (LHDN). It provides LHDN with a comprehensive view of both the Group and the taxpayer (i.e. the entity preparing the TPD), particularly in demonstrating how value is created and supported across the group through the functional, asset, and risk (FAR) analysis, how transfer pricing is determined, and whether the policies are aligned with the arm’s length principle.