Malaysian Tax Law - Stamp Duty

• Published date: 12 September 2022
• Subject Matter: Finance and Banking, Government, Public Sector, Tax, Financial Services, Government Contracts, Procurement & PPP, Tax Authorities
• Law Firm: One Asia Lawyers
• Author: Mr Yuki Hashimoto and Farhatun Najad Zulkipli

1. What is Stamp Duty

In Malaysia, Stamp duty is a tax levied on a variety of written instruments specifies in the First Schedule of Stamp Duty Act 1949 ("the Act"). In general term, stamp duty will be imposed to legal, commercial and financial instruments.

There are two types of Stamp Duty namely ad valorem duty and fixed duty. For the ad valorem duty, the amount payable will vary depending on type and value of the instruments. For fixed duty, generally the amount payable starts at a nominal value of RM10 per instrument.

An instrument is required to be stamped within 30 days of its execution if executed within Malaysia. If the instrument is executed outside Malaysia, it must be stamped within 30 days after it has been first received in Malaysia.

In this section, we will explain about the stamp duty procedures in Malaysia and the importance of having your instruments or documents stamped in accordance with the law.

2. Examples of Instruments / Documents Subjected to Stamp Duty

2.1 First Schedule of Stamp Duty Act 1949 laid down all the types and categories of instruments subject to the specific stamp duty. It includes certain exception where stamp duty will be exempted. Among the example of the instruments subjected to stamp duty are as follows:

1. Shares Transfer
2. Real properties Transfer (Sale and Purchase of Land, Houses Buildings, etc.)
3. General stamping of contracts / agreements
4. Tenancy, lease or rental agreements
5. Security documents
6. Selling of annuity

2.2 The rates of duty vary according to the nature of the instruments and transacted values.

Example of the calculation of the stamp duty are as follows:

Non-listed shares, stocks or marketable securities (e.g. Transfer Form Section 105 Companies Act 2016)	RM3 for every RM1,000.00 or any fraction thereof based on consideration, or value whichever is greater. The Stamp Office generally adopts one of the 2 methods for valuation of unlisted ordinary shares for purposes of stamp duty: - net tangible assets; or - sale consideration.
Service Agreement	Stamp duty of 0.5% on the value of the services / loans. However, stamp duty may be subject to ad volarem rate of 0.1% (depending on the type of the Service Agreement)1.
Loan Agreements	For loan instruments involving loan in Ringgit Malaysia, 0.1% rate is available for loans without security. For stamp duty on foreign currency loan agreements is generally capped at RM2,000.00.
Tenancy Agreement	(i) Less than 1 year (RM1 in every RM250 of the annual...