Fri, Sep 13, 2019
Recently, the Inland Revenue Board of Malaysia (IRBM) issued the Restriction on Deductibility of Interest Rules (ESR) which are intended to prevent base erosion through the use of excessive interest expense or any payments which are economically equivalent to interest via controlled financial assistance.
The ESR addresses the following main points:
Timing
Who is Affected
How it Works
Given that the ESR has been effective from July 1, 2019, Malaysian taxpayers should undertake a comprehensive review of their existing loans/financial assistance arrangements to determine if they fall within the scope of the ESR and undertake an appropriate transfer pricing analysis to support the arm’s length nature of the interest rates or other payments.
The ESR announcement by IRBM is available here.
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