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Transfer Pricing
The Finance Act 2020 was gazette just before new year (31 December 2020), with effective date of 1 January 2021.
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With the coming into force of this Finance Act 2020 Transfer Pricing is given a much more significant position than before.
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(By the way, there are no substantial differences of the transfer pricing provisions in the final version of the Finance Act 2020 compared to its proposed version in the Finance Bill 2020. )
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Here’s the two very important power tax authority now has. They make transfer pricing so important effective from 1 January 2021.
Failure to furnish documents
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Penalties for failure to furnish transfer pricing documentation (new section 113B): impose penalties for failure to timely furnish transfer pricing documentation.
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Power to Disregards
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Authority to disregard structures in a controlled transaction (section 140A): Rule 8 of the Income Tax (Transfer Pricing) Rules 2012 would be inserted into the tax law, under new subsections that would grant authority to the Director General of Inland Revenue to disregard and recharacterise any structure adopted by a person in a controlled transaction.
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Surcharge for transfer pricing adjustment (section 140A): allow the Inland Revenue Board to impose a surcharge of not more than 5% on any transfer pricing adjustment made during all tax audit and investigation cases regardless whether the audit result in additional tax or otherwise.
Finance Act 2020
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Tan Lee Ling
Tax Consultant by training in the Big Four and trained several years with Dr Choong. Being a Chartered Accountant with a law degree. Specialised in compliance, tax planning and tax investigation in her early years. Being in tax for 12 years, to her Tax is like a tree, it is the life force for the country, tax is dynamic, continuously changing and growing. Lee Ling is the conduit in charge of not just sharing these tax changes, also to bring Dr Choong's brilliant tax planning to the tax professionals and business community.
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