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Consequences for Not preparing TP Documentation
The Finance Act 2020 was gazette just before new year (31 December 2020), with effective date of 1 January 2021.
With the coming into force of this Finance Act 2020 Transfer Pricing is given a much more significant position than before.
(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. )
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
Penalties for failure to furnish transfer pricing documentation (new section 113B): impose penalties for failure to timely furnish transfer pricing documentation.
Power to Disregards
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.
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.
There is a new section being added to Income Tax Act 1967 especially on “Failure to Furnish Comtemporaneous Transfer Pricing Documentation”
The Finance Act 2020 was gazette just before the new year (31 December 2020), with effective date of 1 January 2021. 😅
There are two very important power tax authority now has. They make transfer pricing so important effective from 1 January 2021.
Knowing how IRB will conduct their Transfer Pricing is important. It is like a student sitting for the exam, this audit framework is akin to the exam syllabus 😁. Knowing the syllabus you will be well prepared and ready when the audit letter arrived. 😇
“Renovation & Refurnishment is one of the most exciting tax deduction available in 2020/2021. We are looking at RM 300,000. That’s a big sum to claim 🥰. No more guessing required. the gazette order has been published [PU(A) 381/2020] just before the new year. There is some bad news to this.