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Transfer pricing tax audits in Asia Pacific: The case of MNEs in Malaysia

Published on 01 Sep 13 by "AUSTRALIAN TAX FORUM" JOURNAL ARTICLE

With the growing number of MNEs investing in the Asia-Pacific region, transfer pricing has become the most challenging tax issue for the companies and tax authorities in this region. This study examines the factors that could potentially trigger a transfer pricing audit of MNEs operating in Malaysia. Data collected from the tax authority shows that MNEs with low net profit margin were prone to audit. A disproportionate focus of audit was on larger MNEs. MNEs audited include manufacturers, distributors/retailers, or those in the service industry and involved primarily in tangible goods and intra-group services. The results suggest that the Malaysian tax authority is becoming more vigilant in transfer pricing audit, and with more guidance from the United Nations and OECD to combat international transfer pricing tactics, its audit strategy and processes are bound to grow in scale, scope and sophistication.

Author profiles:

Dr Lin Mei Tan
Lin Mei works for the School of Accountancy, Massey University, Palmerston North, New Zealand. Current at 30 September 2015 Click here to expand/collapse more articles by Lin Mei TAN.
 
Ming Ling Lai
Ming works in Accounting Research Institute & Faculty of Accountancy, Universiti Teknologi MARA, Malaysia.
Current at 1 September 2013


Shaikh Osman Muzairi
Shaikh works in Accounting Research Institute & Faculty of Accountancy, Universiti Teknologi MARA, Malaysia.
Current at 1 September 2013
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