Malaysia: Transfer Pricing – An international perspective

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Overview:

In the recent past, transfer pricing has gained utmost importance as it has become one of the major source of revenue for the income tax authorities and at the same time, it has become a troublesome issue for the taxpayers to demonstrate that their international transaction with their associated enterprises are at arm’s length. The objective of this training program is to assist the managers to understand the basics of transfer pricing regulations as stipulated in the Income Tax and to give better understanding to the finance team of a company in relation to the practical aspects of how to deal with transfer pricing audits and assessments to attract least possible income tax litigation.

This program is expected to impart basic concepts of transfer pricing, issues faced by the taxpayers during transfer pricing assessments, what documents are required to be maintained and what are the factors that are required to be considered by the taxpayers when entering into transfer pricing arrangements/transactions.

Course Objectives:

• Why and What about Transfer Pricing- Concept Governing the Law
• Explanations of Basic Terminology used in Transfer Pricing regime
• Multinational Enterprise
• Arm’s length Price
• Associated Enterprise
• International Transaction
• Specified Domestic Transactions

Course Outline:

• Documentation to be maintained for Transfer Pricing Analysis (Global flow)
  1. Company and industry overview- generic Information
  2. Information on Functions, Assets, and Risk
  3. Economic Analysis
  4. Benchmarking and Conclusion
  5. Contemporaneous Documentation
  6. Accountants’ Report – Form 3CEB
• Functional, Asset and Risk analysis
• Economic Characterization and Analysis
• Selection of Tested Party
• Methods to compute the Arm’s Length Price
  1. Comparable Uncontrolled Price/ transaction
  2. Resale Price/ Market Minus price
  3. Cost plus price
  4. Profit Split Method
  5. Transactional Net Margin Method
• Need for Segmental and Cost allocation keys
• Profit Level indicator (PLI) and their practical usage
  1. Operating Net Margin
  2. Return on Total Cost
  3. Return on Operating Assets
  4. Berry ratio
• Benchmarking and Search process
• Methods to compute the Arm’s Length Price
  1. Comparable Uncontrolled Price/ transaction
  2. Resale Price/ Market Minus price
  3. Cost plus price
  4. Profit Split Method
  5. Transactional Net Margin Method
• Need for Segmental and Cost allocation keys
• Profit Level indicator (PLI) and their practical usage
  1. Operating Net Margin
  2. Return on Total Cost
  3. Return on Operating Assets
  4. Berry ratio
• Benchmarking and Search process
• Interesting concepts out of the FAR and Economic Analysis – with case law references
  • Use of Multiple Year Data
  • Aggregation of Transactions
  • Arithmetic Means and Use of the +/- 3% range
  • CUP Vs. TNMM
  • Use of Secret Comparables
• Economic Adjustments
  1. Working Capital Adjustments
  2. Capacity utilization Adjustments
  3. Risk Adjustments
  4. Depreciation Adjustments
  5. Use of Projections
  6. Self-Adjustments
• Benchmarking Special Transactions
  1. Loans
  2. Corporate Guarantees
  3. Royalty
  4. Recovery and Reimbursements
  5. Cost Allocations agreements
  6. Purchase, sale of fixed assets
  7. Loss-making companies
  8. Intra-Group Services
  9. IntangiblesTransfer Pricing Assessments and Dispute Resolution
• Introduction to Advance Pricing Arrangements
• Global Transfer Pricing perspective
  • Inter Quartile Range
  • Safe Harbor
  • Thin Capitalization
  • Location Savings
  • Exit Taxes
• Transfer Pricing as a tool for Business Structuring
• Transfer Pricing Issues- Sectorial Perspective
  • Pharmaceutical Industries
  • Media and Entertainment
  • Oil and Gas
  • Automobiles
  • Banking
  • Service Industry
• Importance of maintaining a Group Transfer Pricing Policy

Who Should Attend?

• Chief Financial Officers & Finance Directors
• Analysts
• Accountants & tax assistants
• Budget Officers / Forecasting Specialists
• Fund Managers and Investors
• Strategic Planners
• Private Equity and M&A Specialists
• Investment Bankers
• Corporate Bankers
• Auditors
• Tax Directors
• ACCA qualified professionals, CPA’s and Chartered accountants

General Notes

• All our courses can be facilitated as Customized In-House Training course.
• Course duration is flexible and the contents can be modified to fit any number of days.
• As for Open Enrolment Courses, we offer our clients the flexibility to chose the location, date, and time and our team of experts who are spread around the globe will assist in facilitating the course.
• The course fee includes facilitation, training materials, 2 coffee breaks, buffet lunch and a Certificate of successful completion of Training.
• FREE Consultation and Coaching provided during and after the course.