Malta: Draft transfer pricing rules issued for public consultation

Draft transfer pricing rules include a requirement for application of arm’s length principle with regard to pricing of cross-border transactions

Draft transfer pricing rules issued for public consultation

Draft transfer pricing rules (issued for public consultation in late December 2021) include a requirement for application of the arm’s length principle with regard to the pricing of cross-border transactions between associated enterprises (related parties) and with permanent establishments.

The closing date for submitting comments regarding the public consultation is 28 February 2022.

Under the draft transfer pricing rules [PDF 294 KB]—

  • In general, the arm’s length price would be the amount that independent parties would have agreed in relation to the arrangement if those independent parties had entered into that arrangement. This arm’s length pricing criterion would be an income tax requirement and would not affect commercial arrangements or other tax liabilities.
  • The OECD Transfer Pricing Guidelines would be expected to be a reference source with regard to application of the transfer pricing rules in Malta; however, the methodologies for determining the arm’s length price have not yet been designated.
  • Micro, small or medium-sized enterprises would be excluded from the scope of the transfer pricing rules.
  • The transfer pricing rules would not apply to transactions below a threshold aggregate arm’s length value of all cross-border arrangements.
  • There are provisions in the draft rules addressing the issuance of unilateral transfer pricing rulings and advance pricing agreements (APAs).

It is expected that the transfer pricing rules would be effective from financial years beginning on or after 1 January 2024.

Read a January 2022 report prepared by the KPMG member firm in Malta


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