Strategizing International Tax Best Practices – by Keith Brockman

The Malaysian Inland Revenue Board (MIRB) has added a new check box on the 2014 tax return form for corporate taxpayers to declare whether transfer pricing documentation has been prepared.  Contemporaneous documentation should be prepared accordingly (i.e. 7 months from the close of the financial year).  The KPMG Newsletter describing this new initiative is referenced at the following link:

Click to access tp-malaysia-may6-2014.pdf

Re: Best Practices, new transfer pricing boxes / questions on tax returns are becoming a common practice.  Some questions by a multinational to ensure proper governance for tax return transfer pricing disclosures include:

  • What internal governance mechanism is in place to alert the tax dept. timely of new disclosures for proper planning of contemporaneous documentation, etc.?
  • Is the tax return preparer / reviewer knowledgeable about the transfer pricing documentation processes in place to answer the questions accurately?
  • If a transfer pricing question is to be answered negatively (i.e., no documentation exists), is there adequate time to proactively address, as applicable?  Is there any correlative impact for a financial statement tax reserve?
  • For transfer pricing methodology questions, who ensures the proper methods are accurately disclosed?
  • Is there a pre-audit strategy, upon notification, to review tax return disclosures?
  • Is there a documented process in the global tax risk framework that alerts the tax dept. of new disclosures?

These questions, among others, should be discussed to ensure internal and external alignment in a corporation’s tax risk policy.


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