TP FAQs: Positioning of a R&D Company | 研发企业如何进行功能定位

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The R&D environment in Malaysia is evolving steadily, partly because of the increased need for R&D as domestic production capacity increases and partly due to the Malaysian government’s incentives for local R&D and innovation activities.

In the post-BEPS (Base Erosion and Profit Shifting) era, the question of how multinational companies should organise their Research and Development (R&D) activities in Malaysia to suit business needs better, enjoy tax benefits, and comply with the Group’s global transfer pricing arrangements is gaining importance for multinational companies in Malaysia.

Contractual R&D:

An offshore related party provides the R&D funds and accepts the R&D risk; the contracted R&D party offers R&D service but does not carry the risk.

Following the R&D agreement between the related parties, the contracted R&D party’s R&D services are marked up depending on their cost.

Limited Risk R&D:

The R&D company accepts limited R&D responsibilities and R&D-related risks, and it may have partial economic ownership of intangible assets.

Full-Fledged R&D:

The R&D company accepts full R&D responsibilities and R&D-related risks, as well as economic and legal ownership of any associated intangible assets.

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