This news comes ahead of the country’s budget on October 23 which is anticipated to include new transfer pricing rules and updated guidelines.

The rules will support the contemporaneous documentation requirement which was brought in at the beginning of the year.

The number of audits will also increase due to the Inland Revenue Board (IRB) placing more resources into their new Multinational Tax Department.

The department focuses on transfer pricing and will be bolstered by the appointment of a number of transfer pricing specialists.

“At the moment, the IRB can’t do many audits because of the small team but the team is growing and I expect an increase in the number of audits over the coming months and years,” said Theresa Goh, transfer pricing partner, Deloitte, Malaysia. “Audit activity will undoubtedly increase as the authorities get more experienced.”

Despite the IRD’s desire for greater compliance, some taxpayers have called for the requirement to keep contemporaneous documents to be deferred so that they can better cope during the downturn.

“There is no doubt that the reason businesses want this deferral is because of the economic situation and the associated costs involved of keeping contemporaneous documents,” said Goh.

Though the number of audits look set to increase, as of January 1 2009 taxpayers can apply to the IRB for unilateral, bilateral and multilateral advanced pricing agreements in an attempt to reduce disputes.