Malaysia: Updated advance pricing arrangement guidelines

Updated guidelines tighten the eligibility criteria for APA applications

Updated guidelines tighten the eligibility criteria for APA applications

The Malaysia Inland Revenue Board (MIRB) updated its advance pricing arrangement (APA) guidelines to realign guidance on APAs to changes introduced in the Income Tax (Advance Pricing Arrangement) Rules 2023, which were released in May 2023. Read TaxNewsFlash

The updated guidelines tighten the eligibility criteria for APA applications, including setting out the MIRB’s expectations on profit margins based on the proposed benchmarking analysis:

  • For a taxpayer whose functions, assets, and risks (FAR) and business model remain the same, the proposed benchmarking analysis must not result in a reduction in operating margin that is more than 3% of the average weighted margin for the last five years in the case of existing business, or at least three years for a taxpayer who commenced business operations in the previous three to five years
  • For a taxpayer with a change in FAR, a reduction of equal to or more than 5% reduction in operating margin may not be acceptable if there is no transfer of intangible properties or major shift in FAR or transfer of significant people functions

Read a May 2024 report prepared by the KPMG member firm in Malaysia



The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 3712, 1801 K Street NW, Washington, DC 20006.