{"id":27894,"date":"2023-06-02T11:55:30","date_gmt":"2023-06-02T03:55:30","guid":{"rendered":"https:\/\/chengco.com.my\/wp\/?p=27894"},"modified":"2026-09-17T16:56:59","modified_gmt":"2026-09-17T08:56:59","slug":"transfer-pricing-disputes-protecting-your-business-with-proper-documentation","status":"publish","type":"post","link":"https:\/\/chengco.com.my\/wp\/2023\/06\/02\/transfer-pricing-disputes-protecting-your-business-with-proper-documentation\/","title":{"rendered":"Transfer Pricing Disputes: Protecting Your Business with Proper Documentation"},"content":{"rendered":"\n<div class=\"wp-block-stackable-columns stk-block-columns stk-block stk-0c6b51f\" data-block-id=\"0c6b51f\"><div class=\"stk-row stk-inner-blocks stk-block-content stk-content-align stk-0c6b51f-column\">\n<div class=\"wp-block-stackable-column stk-block-column stk-column stk-block stk-66203f7\" data-v=\"4\" data-block-id=\"66203f7\"><div class=\"stk-column-wrapper stk-block-column__content stk-container stk-66203f7-container stk--no-background stk--no-padding\"><div class=\"stk-block-content stk-inner-blocks stk-66203f7-inner-blocks\">\n<div class=\"wp-block-stackable-heading stk-block-heading stk-block-heading--v2 stk-block stk-59082a8\" id=\"transfer-pricing-disputes-protecting-your-business-with-proper-documentation\" data-block-id=\"59082a8\"><style>.stk-59082a8 .stk-block-heading__text{font-size:36px !important;font-weight:bold !important;font-family:\"Roboto\", Sans-serif !important;}@media screen and (max-width:999px){.stk-59082a8 .stk-block-heading__text{font-size:36px !important;}}<\/style><h1 class=\"stk-block-heading__text\">Transfer Pricing Disputes: Protecting Your Business with Proper Documentation<\/h1><\/div>\n\n\n\n<div class=\"wp-block-stackable-divider stk-block-divider has-text-align-left stk-block stk-8d1db70\" data-block-id=\"8d1db70\"><style>.stk-8d1db70 hr.stk-block-divider__hr{background:#0693e3 !important;height:10px !important;width:10% !important;}<\/style><hr class=\"stk-block-divider__hr\"\/><\/div>\n<\/div><\/div><\/div>\n<\/div><\/div>\n\n\n\n<div class=\"wp-block-stackable-columns aligncenter stk-block-columns stk-block stk-8e6b6e6\" data-block-id=\"8e6b6e6\"><div class=\"stk-row stk-inner-blocks stk-block-content stk-content-align stk-8e6b6e6-column\">\n<div class=\"wp-block-stackable-column stk-block-column stk-column stk-block stk-82f095d\" data-v=\"4\" data-block-id=\"82f095d\"><div class=\"stk-column-wrapper stk-block-column__content stk-container stk-82f095d-container stk--no-background stk--no-padding\"><div class=\"stk-block-content stk-inner-blocks stk-82f095d-inner-blocks\">\n<div class=\"wp-block-stackable-text stk-block-text stk-block stk-b14d3b5\" data-block-id=\"b14d3b5\"><p class=\"stk-block-text__text\">You have been hearing from LHDNM, us, and many others telling you that proper TP documentation is crucial, and must be produced in a timely fashion (during the related party transaction). The thing is TP documentation is not easy to produce, and the process is time-consuming. The goal of this advice is provide proof to LHDNM, Special Commissioners of Income Tax (SCIT), and the courts that LHDNM&#8217;s TP rulings have been abided by. Well, a recent case heard in High Court of Malaya proves just that.<\/p><\/div>\n\n\n\n<div class=\"wp-block-stackable-heading stk-block-heading stk-block-heading--v2 stk-block stk-3e56b54\" id=\"the-crucial-role-of-proper-tp-documentation-a-local-distributors-encounter\" data-block-id=\"3e56b54\"><h2 class=\"stk-block-heading__text\">The Crucial Role of Proper TP Documentation: A Local Distributor&#8217;s Encounter<\/h2><\/div>\n\n\n\n<div class=\"wp-block-stackable-text stk-block-text stk-block stk-9bff510\" data-block-id=\"9bff510\"><p class=\"stk-block-text__text\">An local distributor of Proctor &amp; Gamble International Operations Pte Ltd was charged by LHDNM for not abiding with the arm&#8217;s length principle in its transaction with its principal. In 2012, LHDNM conducted a TP audit on the said transaction, which took place somewhere in the mid-2000s. The distributor filed submitted its TP documentation in 2009, when requested to do so by LHDNM.<\/p><\/div>\n\n\n\n<div class=\"wp-block-stackable-text stk-block-text stk-block stk-6168930\" data-block-id=\"6168930\"><p class=\"stk-block-text__text\">From the audit, LHDNM determined that the distributor, among other findings, did not abide by the arm&#8217;s length principle, despite the adequate TP documentation submitted that proves just what the distributor contended, which leads to LHDNM making adjustment in the pricing, which resulted in additional tax payable with penalty.<\/p><\/div>\n\n\n\n<div class=\"wp-block-stackable-heading stk-block-heading stk-block-heading--v2 stk-block stk-dde5f1c\" id=\"lhdn-ms-ruling-and-the-aftermath-the-appeal-to-the-scit-and-high-court\" data-block-id=\"dde5f1c\"><h2 class=\"stk-block-heading__text\">LHDNM&#8217;s Ruling and the Aftermath: The Appeal to the SCIT and High Court<\/h2><\/div>\n\n\n\n<div class=\"wp-block-stackable-text stk-block-text stk-block stk-6503bc7\" data-block-id=\"6503bc7\"><p class=\"stk-block-text__text\">In turn, the distributor appealed to SCIT, and SCIT agreed with the distributor. LHDNM did not concur with SCIT, and, so, appealed to High Court of Malaya. The High Court, after hearing the case, agreed with SCIT&#8217;s decision, and dismissed LHDNM&#8217;s appeal.<\/p><\/div>\n\n\n\n<div class=\"wp-block-stackable-text stk-block-text stk-block stk-6387cc2\" data-block-id=\"6387cc2\"><p class=\"stk-block-text__text\">The key point in this story is that the proper TP documentation was essential for the distributor to make their case that they had fully complied with applicable TP rulings at the time of the transactions. Both SCIT&#8217;s and High Court of Malaya&#8217;s rulings were based on their examination of the TP documentation produced by the distributor during the transaction.<\/p><\/div>\n\n\n\n<div class=\"wp-block-stackable-heading stk-block-heading stk-block-heading--v2 stk-block stk-3dfc7bf\" id=\"lessons-learnt-importance-of-timely-tp-documentation\" data-block-id=\"3dfc7bf\"><h2 class=\"stk-block-heading__text\">Lessons Learnt: Importance of Timely TP Documentation<\/h2><\/div>\n\n\n\n<div class=\"wp-block-stackable-text stk-block-text stk-block stk-5372351\" data-block-id=\"5372351\"><p class=\"stk-block-text__text\">Again, we strongly advise any company engaging in related party transactions to produce TP documentations for every transaction as in when the transaction is taking place, for LHDNM would give your company only up to 14 days to submit the document upon request. Failure to do so will to a fine of any amount from RM20,000 up to RM100,000, imprisonment for 6 months, or both.<\/p><\/div>\n\n\n\n<div class=\"wp-block-stackable-text stk-block-text stk-block stk-c2666c9\" data-block-id=\"c2666c9\"><p class=\"stk-block-text__text\"><a href=\"https:\/\/chengco.com.my\/wp\/taxation-services-in-malaysia-2\/transfer-pricing-malaysia\/\" data-type=\"URL\" data-id=\"https:\/\/chengco.com.my\/wp\/taxation-services-in-malaysia-2\/transfer-pricing-malaysia\/\">&gt;&gt;&gt; Engage with us to complete your Transfer Pricing Documentation<\/a><\/p><\/div>\n\n\n\n<div class=\"wp-block-stackable-spacer stk-block-spacer stk--no-padding stk-block stk-e769d43\" data-block-id=\"e769d43\"><\/div>\n<\/div><\/div><\/div>\n<\/div><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Transfer Pricing Disputes: Protecting Your Business with Proper Documentation You have been hearing from LHDNM, us, and many others telling you that proper TP documentation is crucial, and must be produced in a timely fashion (during the related party transaction). The thing is TP documentation is not easy to produce, and the process is time-consuming. [&hellip;]<\/p>\n","protected":false},"author":61,"featured_media":33103,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"off","_et_pb_old_content":"","_et_gb_content_width":"","_eb_attr":"","content-type":"","footnotes":""},"categories":[122,1866],"tags":[],"class_list":["post-27894","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-tax","category-transfer-pricing"],"blocksy_meta":{"has_hero_section":"disabled","styles_descriptor":{"styles":{"desktop":"","tablet":"","mobile":""},"google_fonts":[],"version":8}},"_links":{"self":[{"href":"https:\/\/chengco.com.my\/wp\/wp-json\/wp\/v2\/posts\/27894","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/chengco.com.my\/wp\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/chengco.com.my\/wp\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/chengco.com.my\/wp\/wp-json\/wp\/v2\/users\/61"}],"replies":[{"embeddable":true,"href":"https:\/\/chengco.com.my\/wp\/wp-json\/wp\/v2\/comments?post=27894"}],"version-history":[{"count":3,"href":"https:\/\/chengco.com.my\/wp\/wp-json\/wp\/v2\/posts\/27894\/revisions"}],"predecessor-version":[{"id":34576,"href":"https:\/\/chengco.com.my\/wp\/wp-json\/wp\/v2\/posts\/27894\/revisions\/34576"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/chengco.com.my\/wp\/wp-json\/wp\/v2\/media\/33103"}],"wp:attachment":[{"href":"https:\/\/chengco.com.my\/wp\/wp-json\/wp\/v2\/media?parent=27894"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/chengco.com.my\/wp\/wp-json\/wp\/v2\/categories?post=27894"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/chengco.com.my\/wp\/wp-json\/wp\/v2\/tags?post=27894"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}