Malaysia legislation
Section 17D
Section 17D
(2)
Subject to subsection (3), where a person in the basis period for a year of assessment enters into a transaction with an associated person for that year for the acquisition or supply of property or services, then, for all purposes of this Act, that person shall determine and apply the arm’s length price for such acquisition or supply.
(3)
Where the Director General has reason to believe that any property or services referred to in subsection (2) is acquired or supplied at a price which is either less than or greater than the price which it might have been expected to fetch if the parties to the transaction had been independent persons dealing at arm’s length, the Director General may in the determination of the chargeable profit of the person, substitute the price in respect of the transaction to reflect an arm’s length price for the transaction.
(4)
The transactions referred to in subsection (2) shall be construed as a transaction between—
(a)
persons one of whom has control over the other; or
(b)
persons both of whom are controlled by some other person, in this section referred to as “third person”.
Labuan Business Activity Tax 31
(5)
Without prejudice to the generality of paragraph 17C(6)(a), for the purpose of subsection (4), “control” refers to persons one of whom owns shares of the other person, or a third person who owns shares of both persons, where the percentage of the share capital held in either situation is twenty per cent or more and—
(a)
the business operations of that person depends on the proprietary rights, such as patents, non-patented technological know-how, trademarks or copyrights, provided by the other person or a third person;
(b)
the business activities, such as purchases, sales, receipt of services, provision of services, of that person are specified by the other person, and the prices and other conditions relating to the supply are influenced by such other person or a third person; or
(c)
where one or more of the directors or members of the board of directors of a person are appointed by the other person or a third person.
(6)
In this section, “transaction” has the same meaning assigned to it under paragraph 17C(6)(b).
Delegation of Director General’s functions