Advance Pricing Arrangement Guidelines 2024 (“APA Guidelines 2024”)

The Income Tax (Advance Pricing Arrangement) Rules 2023 (“APA Rules 2023”) were gazetted on 29 May 2023 replacing the Income Tax (Advance Pricing Arrangement) Rules 2012.

On 2 April 2024, the IRB issued a revised Advance Pricing Arrangement Guidelines, replacing the 2012 edition of the Advance Pricing Arrangement Guidelines (“APA Guidelines 2012”) to align with the changes introduced in the APA Rules 2023.

The APA Guidelines 2024 explains the manner a taxpayer may apply for an APA to the Director General or a Competent Authority and the manner in which such an application will be processed and administered. The APA Guidelines 2024 also explains procedural and administrative requirements of Section 138C of the Income Tax Act 1967 and the APA Rules 2023.

The salient points of the APA Guidelines 2024 are summarised below.

Taxpayers that carry on cross-border transactions with an associated person from non-treaty counties can apply for a Unilateral APA (“UAPA”).
Taxpayers that carry on cross-border transactions with an associated person from treaty countries can apply for a Bilateral APA (“BAPA”) or a Multilateral APA (“MAPA”).
A Permanent Establishment may only apply for a BAPA or MAPA, and the request must be made by its head office on behalf of the PE.
There are additional requirements for the application of APA (e.g., revenue threshold for the covered transaction, a taxpayer undergoing audit / investigation, newly commencedbusiness, proposed benchmarking results for taxpayers who have the same business model / change in business model, etc.).
A preliminary discussion with the tax authorities is permissible at least 3 months from the date of making a request in writing for pre-filing meeting.
Taxpayers are required to furnish documentation requested by the tax authorities for the pre-filing meeting and for the formal application.
Subject to conditions, a roll-back is permissible for the application of BAPA and MAPA, for a maximum of three years of assessment immediately preceding the covered period.
Information to be included in the Annual Compliance Report (“ACR”) include a detailed report and analysis by the taxpayer on ownership structure, local organisational chart, details of controlled transactions, relevant accounting entries in relation to the compensating adjustment, etc.
Taxpayers are given six months from receipt of notification from the Director General to submit the formal application. Timeline for renewal applications is two months.
Taxpayers need to submit additional information during the course of APA proceedings within 30 days. Failure to submit the information within the stipulated timeline shall deem that the APA application has been withdrawn by the taxpayer.
The Director General may revoke the APA if the taxpayer fails to disclose any occurrence of voluntary disclosure, investigation, audit or incentive approval.
The Director General may cancel the APA if it is found that the APA of the participating foreign competent authority has been cancelled.
Application for new APA will incur a non-refundable application fee of MYR 5,000 (if application is made within two months after receipt of the notification from the Director General to proceed); or MYR 10,000 (if the application is made after two months but within six months after receipt of the notification from the Director General. Application for renewal of APA will incur a non-refundable fee of MYR 5,000.