S 113B

of Income Tax Act 1967

Section 113B :

Failure to Furnish Comtemporaneous Transfer Pricing Documentation

(1) Any person who makes default in furnishing contemporaneous transfer pricing documentation in respect of any year of assessment, in accordance with any rules made under paragraph 154(1)(ed) to implement and facilitate the operation of section 140A, shall be guilty of an offence and shall, on conviction, be liable to a fine not less than twenty thousand ringgit and not more than one hundred thousand ringgit or to imprisonment for a term not exceeding six months or to both. 

(2) In any prosecution under subsection (1), the burden of proving that contemporaneous transfer pricing documentation has been furnished shall be upon the accused person 

(3) Where a person has been convicted of an offence under subsection (1), the court may make a further order that the person shall comply with the relevant provisions of the rules under which the offence has been committed within thirty days, or such other period as the court deems fit, from the date the order is made. 

(4) Where in relation to any year of assessment a person makes default in furnishing contemporaneous transfer pricing documentation in accordance with any rule made under paragraph 154(1)(ed) to implement and facilitate the operation of section 140A, and no prosecution under subsection (1) has been instituted in respect of the default in furnishing contemporaneous transfer pricing documentation, the Director General may be notice in writing or in the notice of assessment require that person to pay a penalty of not less than twenty thousand ringgit and not more than one hundred thousand ringgit and, if that person pays that penalty, or where the penalty is abated or remitted under subsection 124(3), so much, if any, of the penalty as has not been abated or remitted, he shall not be liable to be charged on the same facts with an offence under subsection (1). 

(5) The person served with a notice in writing referred to in subsection (4) may appeal to the Special Commissioners within thirty days as if the notice was a notice of assessment and the provisions of this Act relation to appeals shall apply accordingly with any necessary modifications.

What is the significance of this New Section 113B on Transfer Pricing?

Penalties for NonCOMPLIANCE WITH TRANSFER PRICING DOCUMENTATION

This New section provides the legality to impose penalty of  RM 20,000 to RM 100,000 and / or Imprisonment of up to six month for failure to furnish transfer pricing documentation.

This section makes transfer pricing so important effective from 1 January 2021.

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author avatar
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.