Updates on Malaysia´s Transfer Pricing Tax Audit Framework (penalties and surcharges)

The Inland Revenue Board of Malaysia (“IRBM”) issued the updated Transfer Pricing Tax Audit Framework (“TPTAF”) effective 31 July 2025, which revoke the previous framework dated 24 December 2024.

The latest TPTAF clarifies the application of penalty and surcharges for TP adjustments, with key changes as follows.

Item	TP TAF (24 December 2024)	TP TAF (Effective 31 July 2025)
The penalty of 15 % to 45 % of tax undercharged	Applicable for audit cases commencing prior to 1 January 2021	Applicable for transfer pricing adjustments in basis periods commencing before 1^st January 2021
The imposition of 5 % surcharge (or 0 % to 4 % in case of voluntary disclosure)	Applicable for audit cases commencing on or after 1 January 2021	Applicable for transfer pricing adjustments in the basis periods commencing on or after 1 January 2021
The penalty under section 113B of the Income Tax Act 1967	Applicable for failure to submit a TPD	Applicable for failure to submit a contemporaneous TPD