Every time client asks me the same question :
“Mr Koh, your fee for preparing Transfer Pricing Documentation can deduct tax or not?”

My answer used to be very fast.
“No.”

Then client will argue.
“Cannot be lah. Finance Ministry already announced. Budget also got say. Government already give tax deduction.”

Then I will give the boring answer that many SME bosses don’t like to hear.
“Boss, announcement is announcement. Wait until P.U. is out.”

PU most commonly refers to a Pemberitahuan Undangan, which translates to Legislative Supplement or Legal Notification. It represents subsidiary legislation (such as rules, regulations, or exemption orders) published in the government gazette.

This is the part many taxpayers misunderstand.

In Malaysia tax, Budget speech is not yet the final law.
Press statement is not yet the final law.
Minister announcement is not yet the final law.

The real question is always :
Where is the gazette order?

This transfer pricing documentation fee story is a very good example.

On 13 October 2023, during Budget 2024, our Prime Minister and Finance Minister, Datuk Seri Anwar Ibrahim, announced that tax deduction would be given on the cost of preparing transfer pricing documentation.

Good news? Yes.
Can claim straight away? Slow down first.

Because after the announcement, taxpayers still had to wait for the law.

And the wait was not one week.
Not one month.
Almost 20 months later, the gazette order finally came out.

That is why I always tell SME clients:
“Don’t plan your tax based on what you heard. Plan your tax based on what the law says.”

Before the P.U. came out, the position was not so comfortable.

We had to fall back on the general tax deduction rule. The expense must be wholly and exclusively incurred in producing business income.

Sounds simple, right? Actually not always simple.

Transfer pricing documentation fee is a compliance cost.
Some may argue it is part of doing business.
Some may argue it is to protect the company from transfer pricing risk.

But without a specific gazette order, there was always uncertainty. Now that the gazette order is finally out, we can talk properly.

But boss, don’t be too happy too fast.

This is not a forever-goodie.
There is a time frame.
There are conditions.
There is a qualifying period.

And transfer pricing issue is not only for big multinational companies.
Many SME groups also have transfer pricing issues.

One Sdn Bhd charges management fee to another related company.
One family company lends money to another company without interest.
One company pays staff salary, but the staff also work for related companies.
One holding company charges admin fee to operating companies.

Read the full content in our blog
https://www.ktp.com.my/blog/transfer-pricing-tax-deductions/29may2026