Under the APA Rules 2023, the IRB may decline an application for an APA where it appears to be an inefficient use of resources to pursue an APA if the proposed transaction is limited in nature and value, or the arm's length principle can be reliably applied without material doubt.

The APA Guidelines 2024 clarify that in order to ensure efficient use of resources, an APA application will only be considered where:

• Revenue in relation to business operations of covered transactions exceeds RM 100 million of taxable business income. (In contrast to the previous APA guidelines which require a turnover value exceeding RM100 million).
• The value of the proposed covered transaction must also exceed certain thresholds. Namely:
  • For sales, if it exceeds 50% of revenue
  • For purchases, if it exceeds 50% of total purchases
  • For cases involving financial assistance, if the financial assistance exceeds RM 50 million
  • For other transactions, if the total value exceeds RM 25 million
• Where the taxpayer has new operations, an APA application will only be considered where:
  • The business has just commenced in Malaysia, the business has to be operational for a minimum of 36 months
  • Where the business activity in relation to the covered transaction is new, the business activity must be operational for at least 12 months and the business overall must be operational for at least 36 months

• For taxpayers whose functions, assets and risks (FAR) and business model will remain the same, the proposed benchmarking analysis covering the APA should not result in an operating margin reduction of more than 3% of the average weighted margin for five years for existing businesses or three years for new businesses.
• If there is a change in FAR, an operating margin reduction of 5% or more may not be acceptable if there is no transfer of intangible property, major shift in FAR or transfer of significant people functions. In such instances, justifications and supporting evidence for the change in FAR must be submitted during the APA application.

• Under the previous APA guidelines, applicants were only highly encouraged to have a preliminary discussion with the IRB before a pre-filing meeting.
• Greater weight is placed on the preliminary discussion under the APA Guidelines 2024. The preliminary discussion must now be held at least three months from date of making the written request for a pre-filing meeting and certain documents must already be provided at the preliminary discussion stage.

• If negotiation fails to be reached in a bilateral APA, the taxpayer cannot convert the bilateral APA application into a unilateral APA application.
• For a multilateral APA, if negotiations fail to be reached with any one of the competent authorities, the taxpayer may choose to continue with a bilateral APA or multilateral APA with the remaining countries.