Recently, the Inland Revenue Board of Malaysia (IRBM) introduced certain changes in Form MNE, requiring additional details in relation to cross-border transactions for undertaking transfer pricing risk–assessment. Form MNE is required to be filled and submitted by the taxpayers within 30 days of receiving a notice from the IRBM.
The updated Form MNE [Pin 1/2017], requires the following additional information in Part C of the Form:
- Name of the company and country in which the taxpayer has entered into a cross-border transaction if the said country has a lower tax rate compared to Malaysia.
- Details on any business restricting activity carried out within the group in last five years including:
- The relevant date when the restructuring took place; and
- Number of employees before and after restructuring.
- Information in relation to Research and Development (R&D) activities performed by the taxpayer, such as:
- The type of R&D activity;
- Type of process involved in the R&D activity (i) enhancement of a product's production or engineering process, (ii) enhancement of current product or updating the current model, (iii) creating a new product;
- Whether the R&D activity is performed for own use or on the behalf of other related parties;
- Whether there are any incentive granted in relation to the aforesaid R&D activities; and
- Whether the R&D activity leads to the creation of an intellectual property.
- Information associated with any financial assistance received by the taxpayer from related parties, such as:
- Name of the company and country of the financial provider;
- Type of financial assistance;
- Whether interest paid or any other remuneration paid for the financial assistance;
- Information on the type of payment (if different from interest); and
- Frequency of payment.
- Group information associated with a brand name or intellectual property if any, held by the group or its related parties:
- Name of the legal owner and its location; and
- List of related companies performing R&D activity.
- Part D of the updated Form MNE [PIN 1/2017] would also require details in relation to the transactions entered into with related companies inside and outside Malaysia.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.