Executive Offshore Shipping SDN BHD is in the business of chartering offshore support vessels. It is related to another company, one Eagle High (L) Limited which is a ship-owning company registered in the special tax zone of Labuan where transfer pricing provisions were first introduced in 2020. Eagle High (L) Limited provided (i) charter hire of vessels and (ii) crew management services to Executive Offshore Shipping for the Years of Assessment – 2014 to 2016. In consideration for these services Executive Offshore Shipping paid a cost-plus mark-up rate of 35% as the charter hire and crew management fee. Following an audit the tax authorities asserted that Executive Offshore Shipping SDN BHD had underreported the its taxable income for FY 2014 to 2016. An assessment was issued where additional income of RM19,808,218.39 had been determined by reference to the arm’s length principle. The tax authorities rejected the benchmark study and transfer pricing methods applied by Executive Offshore Shipping. Executive Offshore Shipping ... Read more