Malaysia Amends Transfer Pricing Rules, including simplified definition of MNE Group and new corresponding adjustment rule

The 2026 amendments in Rules represent a refinement of Malaysia’s transfer pricing regime, with the new corresponding adjustment provision being the most consequential change from a dispute. By allowing an approved offsetting adjustment to the other party to the same controlled transaction, Malaysia has strengthened the domestic mechanism for achieving a more balanced tax outcome following a transfer pricing adjustment. The availability of relief remains subject to a formal request and the approval of the Director General.

From a compliance perspective, MNE groups should reassess their transfer pricing documentation and group classification following the simplified MNE Group definition, particularly where entities operate through establishments in more than one jurisdiction. Taxpayers should also review historical assessments from assessment year 2023 onwards and identify cases where a corresponding adjustment request may be relevant.