In today’s interconnected global economy, businesses often operate across multiple jurisdictions, engaging in transactions between subsidiaries, affiliates, or related entities. These internal dealings may carry significant tax implications.
This is where transfer pricing comes into play. Transfer pricing refers to the rules and methods for pricing transactions between related parties. At its core, it seeks to ensure that these transactions are conducted at “arm’s length” – that is, priced as if they occurred between independent parties.
Why does this matter to companies? The answer lies in compliance and risk management. Regulatory authorities worldwide generally impose documentation requirements and penalties for non-compliance. A failure to comply could lead to disputes with tax authorities and reputational risk.
To promote consistency and fairness, the Organisation for Economic Co-operation and Development (“OECD“) has issued the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations (“OECD Guidelines“), which serve as the international benchmark. The OECD Guidelines articulate the arm’s length principle and provide detailed methodologies for pricing intra-group transactions. They also underpin the Base Erosion and Profit Shifting (“BEPS“) initiatives, aimed at curbing tax avoidance and enhancing transparency. Most jurisdictions align their domestic rules with these standards.
In this Guide, we set out the key aspects of transfer pricing in Cambodia, Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam, covering the following:
- General framework: What is the role of the OECD Guidelines in your jurisdiction’s transfer pricing framework? How does domestic legislation or regulations define “related parties”?
- Transfer pricing documentation and compliance: Who must file documentation? When must it be filed?
- Permanent establishments: How does your jurisdiction approach the attribution of profits to permanent establishments?
- Dispute resolution and advance pricing agreements: What mechanisms are available to prevent or resolve transfer pricing disputes?
- Safe harbours and simplification measures: Does your jurisdiction offer any safe harbour rules or simplification measures?
Whether you are a business leader, legal adviser, or simply curious about the mechanics of global commerce, we hope that you will find this Guide useful in scoping out the key points of each jurisdiction’s transfer pricing framework.
For more information, click here to read the full Guide.
Disclaimer
Rajah & Tann Asia is a network of member firms with local legal practices in Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam. Our Asian network also includes our regional office in China as well as regional desks focused on Brunei, Japan and South Asia. Member firms are independently constituted and regulated in accordance with relevant local requirements.
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Please note also that whilst the information in this publication is correct to the best of our knowledge and belief at the time of writing, it is only intended to provide a general guide to the subject matter and should not be treated as legal advice or a substitute for specific professional advice for any particular course of action as such information may not suit your specific business and operational requirements. You should seek legal advice for your specific situation. In addition, the information in this publication does not create any relationship, whether legally binding or otherwise. Rajah & Tann Asia and its member firms do not accept, and fully disclaim, responsibility for any loss or damage which may result from accessing or relying on the information in this publication.
