CTPD Staff Decision & Learning Assistant

Guided CTPD Assessment

Answer in sequence. The result explains the route taken, not just the conclusion.

Step 1 • Paragraph 1.1

Does the taxpayer have a controlled transactioniA transaction between associated persons where one person controls the other, or both are under common control, and the pricing must be considered under the arm’s-length principle. under section 140A of the Income Tax Act 1967?iA transaction with an associated person where control exists. If there is no controlled transaction, CTPD is not required.

YesNo

Step 2 • Paragraph 1.4

Is the taxpayer a permanent establishment (PE) with a controlled transaction?iA PE with a controlled transaction must prepare a full CTPD regardless of the paragraph 1.7 thresholds.

YesNo

Step 3 • Paragraph 1.5(a) and (b)

Which description applies?

Individual not carrying on a businessIndividual carrying on business, only domestic controlled transactionsOther person iFor this tool, this is the catch-all choice where the taxpayer does not fall within either of the two individual categories listed immediately before it.

Step 4 • Paragraph 1.5(c)

What is the total value of all controlled transactions for the YA?iInclude operational transactions and financial assistance. Example: RM950,000 operations + RM500,000 financial assistance = RM1.45 million.

RM

Step 5 • Paragraph 1.5(d)

Are the controlled transactions solely domestic?

YesNo

Does either party enjoy a relevant tax incentive?iRelevant incentives include those under ITA section 127, the Promotion of Investments Act 1986, and ITA Schedules 7A and 7B. Certain deduction provisions are excluded.

YesNo

Are both parties taxed at the same headline tax rate?iThe source describes Malaysia’s standard corporate headline rate as 24%. An SME preferential rate is not treated as that headline rate for this exemption.

YesNo

Did either party suffer LBIT for both immediately preceding YAs?iUse accounting loss before interest and tax. The two consecutive YAs are those immediately before the tested YA, including start-up years.

YesNo

Dormant-company concession applicable?iThe source notes a concession where a qualifying dormant company’s losses arise only from minimum expenses such as audit, secretarial and filing costs.

YesNo

Step 6 • Paragraph 1.7 thresholds

Enter annual threshold information

Gross business income (RM)iFirst limb requires gross business income above RM30 million together with cross-border controlled transactions of at least RM10 million.

Cross-border controlled transactions (RM)

Controlled financial assistance provided or received (RM)iFinancial assistance between associated persons, such as loans or other financing arrangements, that is taken into account for the paragraph 1.7 threshold.iFull CTPD threshold: controlled financial assistance exceeding RM50 million annually.

Learning Centre

The decision logic in six practical rules.

1

No controlled transaction

No CTPD is required.

2

Permanent establishment

A PE with a controlled transaction prepares full CTPD regardless of the paragraph 1.7 threshold.

3

RM1 million test

Use the total of operational transactions and financial assistance. Not more than RM1 million qualifies under paragraph 1.5(c).

4

Domestic exemption

For paragraph 1.5(d), transactions must be solely domestic, neither party enjoys a relevant incentive, both have the same headline rate, and neither has two consecutive prior-year losses.

5

Full CTPD threshold

Full CTPD applies where gross business income exceeds RM30 million and cross-border controlled transactions are at least RM10 million, or controlled financial assistance exceeds RM50 million.

6

Below full threshold

If no exemption applies and the full threshold is not met, the taxpayer may opt for a full or minimum CTPD.

Important: Even when CTPD is not required, a taxpayer with controlled transactions must still be able to demonstrate arm’s-length compliance.

Scenario Lab

Test the two-year loss rule for the tested YA.

Company A: immediately preceding YA

Company A: second preceding YA

Company B: immediately preceding YA

Company B: second preceding YA

Ask the Assistant

A self-contained staff helper based only on this LHDN guide. Try “RM1 million”, “tax incentive”, “loss”, “PE”, “headline rate”, “threshold” or “arm’s length”.

Hello. Ask me about the CTPD decision rules in this guide.

Knowledge Check

Five questions with instant explanations.

Source & Limits

Primary source: “LHDN guide to determine whether to prepare CTPD.pdf”, covering Malaysia Transfer Pricing Guidelines 2024 paragraphs 1.1, 1.4, 1.5, 1.7 and 1.8, plus the IRBM explanatory material shown in the supplied document. The material displays a published date of 15 June 2026.

How staff should use this tool

Use it as an educational screening aid, not as tax advice or a substitute for reviewing the law and current IRBM guidance.
Confirm the facts, tested Year of Assessment, transaction values, tax incentive status, applicable tax regime and loss history.
Escalate uncertain cases to the company’s tax adviser or transfer pricing specialist.
Retain the conclusion and supporting facts in the client or internal work file, subject to company policy.

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