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28 Austl. Tax F. 479 (2013)
Transfer Pricing Tax Audits in Asia Pacific: The Case of MNEs in Malaysia

handle is hein.journals/austraxrum28 and id is 462 raw text is: Transfer pricing tax audits in Asia Pacific: the case of MNEs in Malaysia Ming Ling Lai*, Shaikh Osman Muzairi** and Lin Mei Tan*** Abstract 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. Accounting Research Institute & Faculty of Accountancy, Universiti Teknologi MARA, Malaysia. Email: laimingling@salam.uitm.edu.my. Accounting Research Institute & Faculty of Accountancy, Universiti Teknologi MARA, Malaysia. Email: laimingling@salam.uitm.edu.my. School of Accountancy, Massey University. Email: 1.m.tan@massey.ac.nz. Acknowledgement: An earlier version of this paper was presented at the 19th Annual Conference on Pacific Basin Finance, Economics, Accounting and Management, 8-9 July 2011, the Grand Hotel, Taiwan. The funding from Accounting Research Institute, Ministry of Higher Education Malaysia is gratefully acknowledged. The authors also thank the anonymous reviewers for their insightful comments This paper was accepted for publication on 5 April 2013. 479

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