• Dr. Nuarrual Hilal Md Dahlan, Abu Tariq Jamaluddin Dr. Rohana Abdul Rahman,


Globalisation and rapid growth of international trade have made intercompany pricing a common consideration for vast majority of businesses. Transfer pricing is not in itself illegal or abusive. What is illegal or abusive is transfer mispricing, also known as transfer pricing manipulation or abusive transfer pricing. Generally, related parties are required to transact on terms which might reasonably be expected to have been made by independent parties engaged in the same or similar transaction at arm’s length. The allocation of profits among different parts of the multinational enterprise (MNE) operating in different jurisdictions is dependent on the outcome of its transfer pricing strategy. It can decide how much tax an MNE pays and to which authorities. To curb manipulation and abuse of transfer pricing, the Government of Malaysia like any other tax jurisdictions, introduced transfer pricing guidelines and law. The first guideline on transfer pricing was published in 2003 by the Inland Revenue Board of Malaysia. Consequently, in 2009, specific transfer pricing provisions were inserted into the Income Tax Act 1967 (ITA). Under the new provision, the Director-General of Inland Revenue (DGIR) is empowered to substitute the price of any transactions entered into by related persons to reflect the arm’s length price of such transaction. The objective of the research writing is to study the legal issues arising from the transfer pricing law in Malaysia. The authors find that imposition of penalty is one of the most prevalent issue resulting from transfer pricing adjustment. It is an accepted tax principle that a taxpayer is entitled to plan his affairs to pay less amount of tax as it otherwise would be. A taxpayer has always been free to mitigate his tax liability. This research writing used qualitative case study and legal research methodologies to discuss and analysis the law and the legal issues of the subject matter. For this purpose, the authors focused on two transfer pricing adjustment cases. An examination was also carried out on the notices of appeal filed by the taxpayers to the Special Commissioners of Income Tax. The ultimate goal is to minimise manipulation and abuse of transfer pricing in the related parties transaction. The research aspires to contribute towards the implementation of a  comprehensive transfer pricing law in Malaysia.

How to Cite
Dr. Nuarrual Hilal Md Dahlan, Abu Tariq Jamaluddin Dr. Rohana Abdul Rahman,. (2020). TAXATION TRANSFER PRICING LAW IN MALAYSIA: SALIENT LEGAL ISSUES . International Journal of Advanced Science and Technology, 29(6s), 1688 - 1703. Retrieved from