Update on IRB latest focus on inter-group borrowing

Inter-Group Financing Arrangement

Inter-Group Financing Arrangement

𝐈𝐧𝐭𝐞𝐫𝐞𝐬𝐭-𝐟𝐫𝐞𝐞 𝐚𝐫𝐫𝐚𝐧𝐠𝐞𝐦𝐞𝐧𝐭𝐬 𝐚𝐫𝐞 𝐭𝐲𝐩𝐢𝐜𝐚𝐥𝐥𝐲 𝐧𝐨𝐭 𝐚𝐜𝐜𝐞𝐩𝐭𝐚𝐛𝐥𝐞 𝐭𝐨 𝐭𝐡𝐞 𝐈𝐑𝐁 𝐚𝐬 𝐚 𝐠𝐫𝐨𝐮𝐩 𝐜𝐨𝐦𝐩𝐚𝐧𝐲 𝐥𝐞𝐧𝐝𝐢𝐧𝐠 𝐟𝐮𝐧𝐝𝐬 𝐭𝐨 𝐚𝐧𝐨𝐭𝐡𝐞𝐫 𝐠𝐫𝐨𝐮𝐩 𝐜𝐨𝐦𝐩𝐚𝐧𝐲 𝐢𝐬 𝐫𝐞𝐪𝐮𝐢𝐫𝐞𝐝 𝐭𝐨 𝐜𝐡𝐚𝐫𝐠𝐞 𝐦𝐚𝐫𝐤𝐞𝐭 𝐢𝐧𝐭𝐞𝐫𝐞𝐬𝐭 𝐫𝐚𝐭𝐞𝐬.

 Why ? It is not acceptable to IRB.

Before we proceed further, let’s get yourself understand the concept of Inter-Group Financing (IGF)

IGF transactions are defined as financial assistance between associated persons that could include loans, interest bearing trade credits, advances or debt and the provision of any security and guarantee (See Chapter I X of the Malaysian Transfer Pricing Guidelines 2012 as revised in July 2017).

S140A ICA 1967 is to empower the Director General to make adjustments on transactions of goods, services or financial assistance carried out between associated persons based on the arm’s-length principle.

Taxpayers is to prepare contemporaneous transfer pricing documentation to justify the arm’s-length nature of their related party transactions.

Read full article from IRB- Malaysia Transfer Pricing Guideline 2012
http://lampiran1.hasil.gov.my/pdf/pdfam/MalaysianTransferPricingGuidelines2012.pdf

 
 
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