Transfer Pricing in Singapore and Malaysia

Learning CentreNews & MediaTransfer Pricing in Singapore and Malaysia

Transfer Pricing in Singapore and Malaysia.

“Transfer pricing (TP) is like Hainanese chicken rice,” explained Adriana Calderon, Director, Transfer Pricing Solutions Asia, and Hong Chuan Tan, Director, Transfer Pricing Solutions Malaysia, in a webinar organised by the Singapore Chartered Tax Professionals.

“While both Singapore and Malaysia adhere to the same arm’s length principle, each country has a distinct ‘flavour’ when it comes to TP. In this regard, taxpayers must be mindful of the nuanced differences, both in terms of the TP regulations as well as the tax authorities’ approach and administration.


  • In determining the arm’s length price of a Related-Party Transaction, the Singapore tax authority does not have a specific preference for any one method. Conversely, the Malaysian tax authority has a preference for traditional transactional methods over transactional profit methods.
  • Under Malaysia’s transfer pricing (TP) regime, all taxpayers that have entered into domestic or international controlled transactions are required to prepare contemporaneous TP documentation, whether full or simplified.
  • Singapore provides certain safe harbours for TP, such as the indicative margin which taxpayers can apply on their related party loans under S$15 million. Conversely, there are no such safe harbours in Malaysia.

Comparison Between Two Neighbours

From different thresholds for TPD to the general approach taken by the tax authorities, there are many differences between Singapore and Malaysia’s TP regimes. Businesses with operations in both countries should be mindful of the nuanced differences when preparing their TPD, so as to avoid the domino effect of incorrect transfer prices leading to prior years’ TP adjustments, incorrect tax returns, and possible indirect tax issues. To minimise their TP risks, taxpayers should ideally prepare TPDs for all their open YAs (that is, five YAs in Singapore and seven YAs in Malaysia) if they have not done so already.

This article is intended for general guidance only. It does not constitute professional advice and may not represent the views of Transfer Pricing Solutions Asia, the facilitator or the SCTP. While every effort has been made to ensure the information in this article is correct at time of publication, no responsibility for loss to any person acting or refraining from action as a result of reading this article or using any information in it can be accepted by Transfer Pricing Solutions Asia, the facilitator or the SCTP.

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