Transfer Pricing Disclosure Form in Malaysia: How to Fill and Avoid IRBM Red Flags
With increasing scrutiny from the Inland Revenue Board of Malaysia (IRBM), transfer pricing compliance has become a non-negotiable priority for businesses involved in related-party transactions.
One of the most critical and often misunderstood components of this compliance is the Transfer Pricing Disclosure Form (TPDF).
Failing to complete this form accurately or ignoring its importance can trigger red flags, leading to costly audits, tax adjustments, or even penalties.
In this guide, we’ll explain what the Transfer Pricing Disclosure Form in Malaysia is, who needs to complete it, how to fill it properly, and how to avoid common mistakes that may draw the IRBM’s attention.
What Is the Transfer Pricing Disclosure Form (TPDF)?
The Transfer Pricing Disclosure Form (TPDF) is a mandatory declaration form required by the IRBM for companies that are subject to Section 140A of the Income Tax Act 1967 and the Income Tax (Transfer Pricing) Rules 2023.
It must be submitted together with the annual tax return (Form C).
Introduced as part of Malaysia’s effort to align with OECD standards and strengthen enforcement against base erosion and profit shifting (BEPS), the TPDF helps IRBM identify high-risk taxpayers who engage in controlled transactions with related parties.
Who Is Required to Submit the TPDF?
You must file the TPDF if your business:
- Is involved in controlled transactions (transactions with associated persons)
- Has a gross income of more than RM25 million; and
- The total amount of related-party transactions exceeds RM15 million, or the value of financial assistance exceeds RM50 million
Even if you’re not required to prepare full documentation, you may still be required to submit the disclosure form — making it essential for all companies with related-party dealings to assess their position carefully.
Related: Simplified vs. Full Transfer Pricing Documentation in Malaysia
Key Sections of the Transfer Pricing Disclosure Form
The TPDF is part of the appendix to Form C and typically includes the following fields:
1. Nature of Controlled Transactions
You must disclose the type of related-party transactions, which may include:
- Sale or purchase of goods
- Provision of services
- Royalties or licensing arrangements
- Financial assistance (loans, guarantees)
- Use or transfer of tangible/intangible assets
2. Counterparties
Identify the names and countries of the related parties involved.
3. Method Used
Declare which transfer pricing method was applied. Common methods include:
- Comparable Uncontrolled Price (CUP)
- Resale Price Method
- Cost Plus Method
- Transactional Net Margin Method (TNMM)
- Profit Split Method
Learn more: Choosing the Right Transfer Pricing Method
4. Basis for Method Selection
Provide a brief rationale for why the chosen method is the most appropriate based on your transaction and industry.
5. Availability of Documentation
Declare whether you have contemporaneous transfer pricing documentation in place.
How to Avoid IRBM Red Flags
Filling the TPDF may seem straightforward, but inaccuracies or inconsistencies can attract unnecessary attention from the IRBM. Below are the top red flags and how to avoid them:
1. Omitting Related-Party Transactions
Failing to disclose all controlled transactions — even those deemed minor — may be interpreted as an attempt to conceal information. Ensure all transactions, including intercompany services or management fees, are included.
2. Using Inappropriate TP Methods
Choosing a method without proper justification may trigger scrutiny. The method must be supported by a functional and economic analysis and benchmarking study where relevant.
Related: Transfer Pricing Policy vs. Documentation – What’s the Difference?
3. Lack of Contemporaneous Documentation
Merely stating that documentation is “available” without actually preparing it in accordance with Malaysian TP Guidelines could expose you to penalties.
4. Mismatch Between TPDF and Financial Statements
If the figures in your disclosure form differ significantly from your audited financials or Form C, this could raise concerns during an IRBM audit.
Learn more: Transfer Pricing Requirements and New Penalties in Malaysia
Recent Changes and Penalties You Should Know
Under the 2023 Transfer Pricing Rules, and in line with Budget 2021 updates, the IRBM has stepped up its enforcement.
Here’s what business owners need to be aware of:
- Failure to furnish documentation can result in a fine of RM20,000 to RM100,000 per year of assessment
- Transfer pricing adjustments may lead to additional taxes and surcharges up to 5%
- Backdating of documentation is not allowed; it must be prepared contemporaneously
See also: Forgetting to Update Your Transfer Pricing Document? Here’s Why It Matters
Practical Tips for Business Owners
1. Centralise Your Data
Ensure your finance, tax, and accounting teams maintain consistent and organised records of all related-party transactions.
2. Review Annually
Update your transfer pricing documentation annually — even if there are no major changes. The IRBM expects documentation to reflect the business environment of each year.
3. Perform a Benchmarking Study
Conduct a benchmarking study using comparable companies and reliable data to support the arm’s-length nature of your prices.
4. Engage a Trusted Audit and Tax Partner
An experienced audit firm in Malaysia can help you navigate transfer pricing obligations, ensure accurate disclosures, and manage IRBM queries effectively.
Related read: Advantages of Transfer Pricing for Your Organisation
How ShineWing TY Teoh Can Help
At ShineWing TY Teoh, we provide end-to-end support for transfer pricing compliance, including:
- Preparing full and simplified transfer pricing documentation
- Completing the Transfer Pricing Disclosure Form accurately
- Designing and implementing group-wide transfer pricing policies
- Conducting benchmarking studies and functional analyses
- Supporting during IRBM audits and managing risk exposure
Our team ensures that your business remains compliant while taking advantage of tax planning opportunities available under Malaysian law.
Final Thoughts: Proactive Compliance Pays Off
Transfer pricing enforcement in Malaysia is evolving rapidly, and the Transfer Pricing Disclosure Form is one of IRBM’s primary tools for identifying audit targets. For business owners, being proactive, accurate, and transparent in your disclosures is the best way to minimise risk.
Proper transfer pricing compliance is not just about avoiding penalties — it’s about building credibility, improving financial governance, and supporting long-term growth.
Need help with transfer pricing in Malaysia?
Contact ShineWing TY Teoh for expert guidance tailored to your business.
Further Reading
- Malaysia Transfer Pricing Rules and Their Business Impact
- Transfer Pricing Policy vs. Documentation
- How Transfer Pricing Works
