Introduction

Malaysia stamp duty is a tax imposed on written instruments rather than transactions. Governed by the Stamp Act 1949, it applies to legal, commercial, and financial documents. The person liable to pay is determined by the Third Schedule of the Act.

Types of Stamp Duty

Fixed Duty

Fixed duty is charged without considering the transaction value. It applies to:

• Legal and commercial instruments such as Power of Attorney, Articles of Association, Promissory Notes, and Insurance Policies.
• Duplicate, subsidiary, or collateral instruments where the original has been duly stamped.

Ad Valorem Duty

Ad valorem duty is imposed based on the instrument’s value or consideration. It applies to:

• Property transfers (sale or gift), including marketable securities like listed shares on Bursa Malaysia.
• Creation of property interests, such as tenancies or statutory leases.
• Security for monies, including bonds and contracts obligating payment.
• Capital market instruments, such as contract notes.

Tax Treatment and Compliance

• The Inland Revenue Board of Malaysia (LHDN) administers stamp duty collection.
• Instruments must be stamped within 30 days of execution in Malaysia (or within 30 days of receipt if executed abroad).
• Penalties apply for late stamping, up to 100% of the duty payable.
• Exemptions and reliefs exist for specific transactions, such as merger/restructuring or transfer of assets between related companies (subject to conditions).

Key Takeaways

• Stamp duty applies to instruments, not transactions.
• Fixed duty: flat charge, regardless of value.
• Ad valorem duty: charged based on transaction value or market value.
• Must be stamped within 30 days to avoid penalties.
• Governed under the Stamp Act 1949.

FAQ

Q1: Who is liable to pay Malaysia stamp duty?
The liability is set out under the Third Schedule of the Stamp Act 1949, depending on the type of instrument.

Q2: What is the difference between fixed duty and ad valorem duty?
Fixed duty is a flat charge regardless of value, while ad valorem duty is based on consideration or market value.

Q3: Are all property transfers subject to stamp duty?
Yes, transfers of real property, shares, and intangible assets (like goodwill) attract ad valorem duty.

Q4: What happens if stamp duty is not paid on time?
Penalties apply, ranging from additional fixed charges to up to 100% of the duty amount.

Q5: Is there any exemption for stamp duty in Malaysia?
Yes. Certain exemptions exist, such as transfers between associated companies or transactions approved under restructuring schemes.

ANC Group – Your Personal Tax Advisor

Tax consulting is the core service of ANC Group. Our tax professionals provide clients with comprehensive tax support and guidance. We offer tax consulting and compliance services for expatriates, entrepreneurs, and listed and non-listed companies.

Our tax consulting services include business tax, transaction tax, personal tax, and corporate income tax. We don’t just guide you in interpreting and applying complicated taxation rules, but to explore new opportunities and business trends.

ANC Group keep you abreast with Malaysia tax updates and any changes in the local regulations.

We work closely with industry specialists, authorities, and associated professionals within ANC Group to provide the best-in-class integrated tax planning solutions. ANC specialists coordinate the accounting and taxation services to bring your business to success.

If you need professional tax advisory services regarding the Malaysia Income Tax Act 1967, our team is ready to assist you. Contact us here to discuss how we can support your business.