Quick answer: A Malaysian taxpayer with related-party transactions should first test whether a CTPD exemption applies. If no exemption applies, the taxpayer must prepare either full or minimum contemporaneous transfer pricing documentation. The file must be completed and dated before the income-tax return due date and be ready for submission to LHDN within 14 days from service of a written notice.
Step 1: Do you have controlled transactions?
Controlled transactions are dealings between associated persons. Common examples include sales and purchases, management fees, shared services, royalties, related-party loans, guarantees and cost allocations. Both domestic and cross-border transactions can fall within Malaysia’s transfer pricing rules.
Start with a complete related-party register rather than relying only on ledger descriptions. Reconcile the transaction values to the financial statements and tax computation.
Step 2: Does a CTPD exemption apply?
The Malaysia Transfer Pricing Guidelines 2024 identify several exemptions. These include:
- An individual who is not carrying on a business;
- An individual carrying on a business, including a partnership, who has only domestic controlled transactions;
- A person whose total controlled transactions do not exceed RM1 million; and
- Certain persons with only domestic controlled transactions.
The RM1 million test includes operational transactions and the principal value of financial assistance. The domestic exemption is not automatic. According to HASiL’s June 2026 clarification, it may not apply where either party enjoys a tax incentive, the parties have different headline tax rates, or either party suffered losses in the two immediately preceding years.
Step 3: Do you meet the full-CTPD thresholds?
| Test | Current threshold | Result |
|---|---|---|
| Cross-border controlled transactions | Gross business income above RM30 million and cross-border controlled transactions totalling RM10 million or more | Full CTPD |
| Controlled financial assistance | More than RM50 million | Full CTPD |
| Not exempt but below both tests | No full-threshold trigger | Minimum or full CTPD |
Full CTPD contains a more complete group overview, business analysis, transaction details, functional analysis, pricing method and comparability analysis. Read HTL’s comparison of full versus minimum CTPD before deciding which file to prepare.
Step 4: Is the documentation contemporaneous?
CTPD must be prepared annually. It should be completed and dated before the due date for submitting the relevant tax return. A comparable-company database search may generally be refreshed every three years if the business and conditions remain unchanged, but financial data and the suitability of the comparables should still be reviewed annually.
The documentation is not normally filed with the tax return. However, LHDN can require it by written notice and the taxpayer then has 14 calendar days from the date the notice is served to furnish it.
Simple CTPD decision checklist
- List all related parties and transactions.
- Add operational transactions and financial-assistance principal values.
- Test the RM1 million and domestic-transaction exemptions.
- Check tax incentives, headline tax rates and prior-year losses.
- Apply the RM30 million/RM10 million and RM50 million full-CTPD tests.
- Prepare, date and retain the correct file before the return due date.
If the facts are borderline, record the basis for the conclusion. A written threshold analysis can prevent uncertainty when staff change or LHDN requests the file later. HTL can assist through its transfer pricing services and LHDN tax-audit support.
This article provides general information and is not a substitute for advice based on a specific transaction or tax position.
