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The Transfer Pricing Rules 2023

The new Transfer Pricing Rules 2023 (Transfer Pricing Rules) were gazetted on 29 May 2023, and are effective from year of assessment (YA) 2023 onwards.

Key highlights:

  • Companies must prepare contemporaneous transfer pricing documentation before the due date of the basis period for tax return filing.

  • Such documentation must contain the followings:

- information about the Multinational Enterprise Group and the taxpayer's business as outlined in schedules 1 and 2, respectively.

- documents regarding cost contribution arrangements under rule 10 are required

as specified in schedule 3,

- an index of all prepared documentation

- the date of completion for the contemporaneous transfer pricing documentation

- The documentation must include all documents supporting the transfer pricing

analysis, any figures used to determine the arm's length price under rule 6, and

details of any material changes to the business conditions during the basis period.

  • Taxpayers must provide the contemporaneous transfer pricing documentation in writing within 14 days from the date of notice.

  • The arm's length range is now defined as a range of figures or a single figure falling between 37.5 percentile to 62.5 percentile of the data set, acceptable by the Director General (DG) in determining whether the arm's length price has been applied.

  • In case the DG suspects that the price is not at arm's length, an adjustment must be made to reflect the arm's length for that transaction.

  • The DG may impose a surcharge under s 140A(3C) of the Income Tax Act 1967.

Income Tax (Transfer Pricing) Rules_PUA165_2023
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