Stamp Duty

Basis of taxation

Stamp duty is chargeable on instruments and not on transactions. If a transaction can be effected without creating an instrument of transfer, no duty is payable.

An unstamped or insufficiently stamped instrument is not admissible as evidence in a court of law, nor will it be acted upon by a public officer.

Assessment and payment of stamp duty can be made electronically via the Inland Revenue’s Stamp Assessment and Payment System (STAMPS system). This is to be entirely online by 1 January 2024.

 

Rates of duty

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

Generally, transfer of properties can give rise to significant stamp duty:

  • Properties (other than shares, stock or marketable securities)

 

Value (RM)

Rate

Duty payable (RM)

On the first

  100,000

RM1 per RM100 or part thereof

    1,000

On the next

  400,000

RM2 per RM100 or part thereof

    8,000

On the next 

  500,000

RM3 per RM100 or part thereof

  15,000

 

1,000,000

 

  24,000

In excess of

1,000,000

RM4 per RM100 or part thereof

 

  • Non-listed shares, stock or marketable securities

RM3 for every RM1,000 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.

  • Shares or stock listed on Bursa Malaysia

RM1.50 for every RM1,000 or any fraction thereof based on the transaction value.

  • Listed marketable securities

    RM1 for every RM1,000 or any fraction thereof based on the transaction value.

  • Service Agreements and Loan Agreements

Stamp duty of 0.5% on the value of the services / loans. However, stamp duty may be remitted in excess of 0.1% for the following instruments:

1.   Service agreement

 

 

Stamp duty

All service agreement (one tier)

 

Ad valorem rate of 0.1%

Multi-tier service agreement:

a)   Non-government contract (i.e. between private entity and service providers)

 

First level

 

Ad valorem rate of 0.1%

Subsequent level(s)

Up to RM50

b)   Government contract (i.e. between Federal /State Government of Malaysia or State / local authority and service providers)

First level

Exempted

Second level

Ad valorem rate of 0.1%

Subsequent level(s)

Up to RM50

 


2.   Loan agreement / loan instrument

Malaysian Ringgit (RM) loan agreements generally attract stamp duty at 0.5% However, a reduced stamp duty liability of 0.1% is available for RM loan agreements or RM loan instruments without security and repayable on demand or in single bullet repayment.

Stamp duty on foreign currency loan agreements is generally capped at RM2,000.

 

Stamping

Instruments executed in Malaysia which are chargeable with duty must be stamped within 30 days from the date of execution. When the instruments are executed outside Malaysia, they must be stamped within 30 days after they have first been received in Malaysia.

 

Penalty

The penalty imposed for late stamping varies based on the period of delay. The maximum penalty is RM100 or 20% of the deficient duty, whichever is higher.

 

Relief / Exemption / Remission from stamp duty

Examples of the exemptions, remissions or reliefs of stamp duty available are as follows:

1.  Merger and acquisition

  • Relief on the transfer of the undertakings or shares under a scheme of reconstruction or amalgamation of companies (conditions apply).

  • Relief on the transfer of assets between associated companies, where either company owns 90% or more of the other company, or where a third company owns 90% or more of both associated companies (conditions apply).
  • Stamp duty exemption on qualifying instruments executed for the merger and acquisition (M&A) of Micro, Small and Medium Enterprises (MSMEs) approved by the Ministry of Entrepreneur Development and Cooperatives (MEDAC) from 1 July 2020 to 30 June 2022 and executed by 31 December 2022.

2.   Financing instrument

  • Stamp duty exemption on loan/financing agreements executed from 1 January 2022 to 31 December 2026 between MSMEs and investors for funds raised on a peer-to-peer (P2P) platform registered and recognised by the Securities Commission Malaysia. 
  • Stamp duty exemption on instrument of agreement for a loan or financing in relation to a Micro Financing Scheme (approved by the National Small and Medium Enterprise Development Council) between a borrower and a participating bank of financial institution.
  • Stamp duty exemption on all loan or financing instruments in relation to the Professional Service Fund for an amount up to RM50,000 between a borrower and Bank Simpanan Nasional.
  • Stamp duty exemption on all instruments of an Asset Sale Agreement & Asset Lease Agreement executed between customer and financier made under Syariah law principles for renewing any Islamic revolving financing facility, provided instrument for existing facility is duly stamped.
  • Stamp duty on any instruments of an Asset Lease Agreement executed between a customer and a financier made under the Syariah principles for rescheduling or restructuring any existing Islamic financing facility is remitted to the extent of the duty that would be payable on the balance of the principal amount of the existing Islamic financing facility, provided instrument for existing Islamic financing facility has been duly stamped.

  • Stamp duty exemption on all instruments relating to the purchase of property by any financier for the purpose of leaseback under the principles of Syariah or any instrument by which the financier shall assume the contractual obligations of a customer under a principal sale and purchase agreement.

  • Stamp duty exemption on loan or financing agreements executed from 1 January 2021 to 31 December 2021 in respect of financing facilities approved by Bank Negara Malaysia for small and medium enterprises (SME), i.e. All Economic Sectors Facility, Automation and Digitalisation Facility and Agrofood Facility.
  • Stamp duty exemption on loan or financing agreements executed from 1 July 2021 to 31 December 2022 (extended to 31 December 2024) in relation to restructuring or rescheduling of business loans due to the inability of the borrower to comply with existing repayment schedule consequent to deteriorating financial conditions.


3.   Instrument of transfer

  • Remission of 50% of stamp duty chargeable on the instrument of transfer of immovable property operating as voluntary disposition between parent(s) and child and vice versa, provided that the recipient(s) is a Malaysian citizen. W.e.f 1 January 2023, the instrument of transfer for transfer of immovable property between husband and wife, parent and child or grandparent and grandchild by way of love and affection, is subject to stamp duty at nominal rate of RM10.
  • Exemption for instruments of transfer of immovable property operating as voluntary disposition between husband and wife.
  • Stamp duty exemption on all instruments of transfer of land, business, asset and share in relation to the conversion of a conventional partnership or a private company to be a limited liability partnership.

4.  Purchase of first residential property

  • Stamp duty exemption on the instrument of transfer and loan agreement for purchase of first residential property

Value of property & type of instrument (RM)

Exemption

Sale & Purchase agreement executed during the period

Up to 500,000 
(Instrument of transfer & loan agreement) (note 1)

100%

1.1.2021 to 31.12.2025 

500,001 - 1,000,000
(Instrument of transfer & loan agreement) (note 2)

75%

1.1.2022 to 31.12.2023

Note 1 - Full stamp duty exemption on the instrument of transfer in relation to the purchase of the first residential property valued at no more than RM500,000 by a Malaysian citizen under the National Housing Department’s Rent-to-Own (RTO) scheme. The exemption is given at 2 stages of transfer, i.e. from the property developer (PD) to a qualifying financial institution (FI), and from the FI to the Malaysian citizen.  The exemption is subject to execution of the following agreements during the period from 1 January 2020 to 31 December 2022, i.e. sale and purchase agreement between the PD and FI and RTO agreement between the FI and the Malaysian citizen. 

Note 2 - Purchase of first residential property with a value exceeding RM500,000 but not more than RM1 million will receive 75% stamp duty exemption on instrument of transfer and loan agreement under Keluarga Malaysia Home Ownership Initiative (i-Milik). 

5.  Home Ownership Campaign 2020/2021 

  • Stamp duty exemption on the instrument of transfer and loan agreement for purchase of residential property valued more than RM300,000 but not exceeding RM2,500,000 by Malaysian citizens under the Home Ownership Campaign 2020/2021: 

Value of property & type of instrument (RM)

Stamp duty rate

Sale & Purchase agreement executed during the period

More than 300,000 – 2,500,000
- On the first 1,000,000
- 1,000,001 to 2,500,000
(Instrument of transfer)

 

Exempted
RM3 for every RM100

1.6.2020 to 31.12.2021

More than 300,000 – 2,500,000
(Loan agreement)

Full exemption

1.6.2020 to 31.12.2021


6.  Abandoned housing projects

  • Stamp duty exemption on instruments executed by a rescuing contractor or a developer, that is a contractor or a developer who is appointed or approved by the Minister of Housing and Local Government to carry on rehabilitation works for an abandoned project. The instruments are loan agreements approved by the approved financier and instruments of transfer for the purpose of transferring revived residential property in relation to the abandoned project.  This applies to instruments executed by the rescuing contractor or developer on or after 1 January 2013 but not later than 31 December 2025.

  • The instruments executed by an original purchaser, that is a purchaser whose name is stated in the Sale and Purchase Agreement in relation to an abandoned project, or his beneficiary are exempted from stamp duty.  The instruments are loan agreements approved by the approved financier and instruments of transfer. The exemption applies to instruments executed by an original purchaser on or after 1 January 2013 but not later than 31 December 2025.


7.   Others

  • Stamp duty exemption on specified instruments for the purpose of a securitisation transaction.
  • Stamp duty exemption on all instruments relating to the issue of, offer for subscription or purchase of, or invitation to subscribe for or purchase debentures or Islamic securities approved by the Securities Commission and the transfer of such debentures or Islamic securities.
  • Stamp duty in excess of RM1,000 is remitted for all instruments of contract notes relating to the sale of shares or stock which are listed on an approved stock exchange.
  • Stamp duty in excess of RM200 is remitted for all instruments of contract notes relating to the sale of marketable securities which are listed on an approved stock exchange.
  • Stamp duty in excess of RM200 is remitted for all instruments of contract notes relating to the sale of shares, stocks or marketable securities in companies incorporated in Malaysia or elsewhere between a local broker and an authorised nominee on behalf of a foreign broker.

  • Stamp duty exemption on contract notes for sale and purchase transaction of structured warrant or exchange-traded fund approved by the Securities Commission, executed from 1 January 2018 to 31 December 2025.
  • Stamp duty exemption on Perlindungan Tenang insurance policies and takaful certificates with a yearly premium / contribution:
    - not exceeding RM100 for policies / certificates issued from 1 January 2019 to 31 December 2021.
    - not exceeding RM150 for policies / certificates issued from 1 January 2022 to 31 December 2025.

  • Stamp duty exemption for individuals and MSMEs on insurance policies for fire, fire business interruption, personal accident, travel, liability, engineering (with annual premium / contribution value not exceeding RM150 for individuals and RM250 for MSMEs, respectively) issued from 1 January 2022 to 31 December 2025.
  • Stamp duty of RM10 on educational loan/scholarship agreement executed from 1 January 2023

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PwC Malaysia

General enquiries, PwC Malaysia

Tel: +60 (3) 2173 1188

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