STAMP DUTY
Prepared by Sr Tan Say Keat
2022
INTRODUCTION
What Is Stamp Duty Malaysia?
Stamp Duty
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Stamp Duty is tax/duties imposed on documents / instruments
and not transactions.
An instrument is defined as any written document and in general,
stamp duty is levied on legal, commercial and financial instruments
listed under the First Schedule of Stamp Act 1949 (Act 378) .
The Assessment and Collection of Stamp Duties is sanctioned by
statutory law now described as the Stamp Act 1949.
Those that pay stamp duty will receive an official stamp on their
documents, making the stamped document to be legal document.
Documents/instruments must be duly stamped in order to be
admitted as an evidence in court.
Stamp Duty
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The Valuation and Property Services Department (JPPH) is to
value in addition to just based /adopt the consideration or amount
stated in agreement, when a property is transferred, a transferee is
required to pay a stamp duty. Example of transferee : Buyer.
The Stamp Duty Office (SDO) of the Inland Revenue Board
(IRB) refers the prescribed form to JPPH where the market value of the
property is ascertained and reported within one (1) working day for
standard SDO then informs the transferee/ lawyer of the duty payable.
The IRB will impose Stamp Duties based on the valuation
reported by JPPH.
Valuation for Stamp Duty Purpose (Conducted by JPPH)
Type of Duty
-Fixed Duty
-Ad Valorem Duty
Type of Duty
Fixed Duty
➢ Stamp Duty chargeable regardless of consideration or amount
prescribed in the instrument.
➢ Example of instrument:
- Education loan agreement, Memorandum and Article of
Association, Promissory Notes,Insurance Policy, Collateral
instruments, etc
What this basically means is, stamp duty is applicable at a
fixed tier for the instrument of transfer (Fixed Duties)
Type of Duty
Ad Valorem Duty
➢ Stamp Duty chargeable based on consideration prescribed in
the instrument or market value
➢ Example of instrument:
- Instrument of transfer of property, share, business, lease or
Loan Agreement , and etc.
What this basically means is, stamp duty is applicable at a
variable cost, depending on the value on the loan agreement
(Ad Valorem Duties)
- Basis of Duty
- Rate of Duty
- Date of Valuation
Basis of Duty
As provided for under the First Schedule of the
Stamp Act 1949, this duty is based on the
money value of the consideration or the market
value of the property, whichever is greater.
Rate of Duty
The duty/tax rate charged is subject to the First
Schedule of the Stamp Act 1949.
However, the rate may change in yearly Budget
announced by Minister of Finance, Malaysia.
Refer next slide for type of rate and stamp
duty calculation.
Stamp Duty
Calculation On
Instrument of Transfer
- Purchase of Property
- Loan
Stamp Duty Rate for Instrument Of Transfer
(The rate effective from 1 July 2019 )
Stamp Duty on Purchase of Property
For instance, when purchasing a property which
costs RM750,000, stamp duty to be paid :
= (First RM100,000 X 1%) + (Next RM400,000 X 2%)
+ (Remaining RM250,000 X 3%) }
= {RM1,000 + RM8,000 + RM7,500}
= RM16,500
Stamp Duty on Loan
Stamp duty on your loan agreement based on a flat rate
of 0.5% of the total loan amount.
Based on earlier example, say loan amount is 90% of
RM750,000 (which means deposit 10% is RM75,000)
Stamp duty to be paid :
= 0.5% x Loan Amount
= 0.5% x RM675,000
= RM3,375
Guidebook On
Registering of Property
In Malaysia
(extra and useful knowledge
just for you ☺)
Stamp Duty
Calculation On
Lease / Tenancy
Agreement
Lease / Tenancy Agreement
Example
Example, say you are renting out your property at RM 1,500 per month.
i.
If you sign the Tenancy Agreement for 1-year term
(or less than 1 year),
Stamp Duty payable = [(RM1,500 x 12 mths) – RM2,400] x RM1.00
RM250
=
RM 62.40
Example
Example, say you are renting out your property at RM 1,500 per month.
ii.
If you sign the Tenancy Agreement for 2-year term
(1 year < term < 3 years),
Stamp Duty payable = [(RM1,500 x 12 mths) – RM2,400] x RM2.00
RM250
=
RM 124.80
Example
Example, say you are renting out your property at RM 1,500 per month.
iii.
If you sign the Tenancy Agreement for 5-year term
(term > 3 years),
Stamp Duty payable = [(RM1,500 x 12 mths) – RM2,400] x RM4.00
RM250
=
RM 249.60
Date of Valuation
1.
•
Section 12A, Stamp Act 1949 ~
Where an instrument is chargeable with duty, the date for
determining the market value (date of valuation) of any
property being transferred, settled or gifted shall be:
❑
in the case of a settlement or gift,
➢
the date of execution of the instrument of
trust or settlement or gift;
Date of Valuation
❑
in the case of a transfer implementing a sale
under a duly stamped agreement of sale and
purchase,
➢
❑
the date of execution of that agreement;
in any other case,
➢
the date of execution of the instrument
of transfer.
Instruments
Chargeable
Instruments liable to stamp duty are those listed in the First Schedule of Stamp
Act 1949, which includes, but not limited to, the followings :i.
Affidavit, statutory declaration
ii.
Agreement to lease/let
iii.
Memorandum of agreement
iv.
Bond, covenant, loan, services, equipment lease agreement or instrument
v.
Charge, mortgage or other instrument executed by way of indemnity or
security
vi.
Contract
vii.
Dissolution of partnership
viii.
Gift
ix.
Insurance, policy of insurance
Duty by
Whom is
Payable?
Duty By Whom Payable
1.
Third Schedule of the Stamp Act 1949 specifies the types
of instruments and the person liable to pay stamp duty.
2.
Section 33, Stamp Act 1949 ~
3.
The expenses of providing the proper stamp duty be borne –
a)
in the case of the instruments described in the first
column of the Third Schedule, by the person mentioned
in the second column of such Schedule;
b)
in the case of every other instrument, by the person
drawing, making or executing such instrument.
Duty By Whom Payable
Extracts from the Third Schedule of the Tamp Act 1949
Mode of
Payment
Mode of Payment
Payment of stamp duty may be made by :i.
Cash (if the duty does not exceed RM100);
ii.
Revenue Stamp (if the duty does not exceed RM500); or
iii.
Money order, solicitor’s cheque or bank draft, made payable
to the Collector of Stamp Duty, and sent together with the
relevant instrument to the Stamp Duty Office by hand or
through registered post.
Exemption
from Stamp
Duty
Exemption from Stamp Duty
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▪
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Under Sect 80, Stamp Act 1949, the Minister of Finance
may, by order published in the Gazette, exempt, reduce, or
remit duties.
Exemptions or remittance must be published in the Gazette.
Stamp Duty exempted for purchase of low-cost house :o
Peninsula Malaysia < RM42k
o
Sabah / Sarawak < RM47k
Exemption from Stamp Duty
▪
Remission of 50% of the stamp duty chargeable on
any 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.
▪
Exemption for instrument of transfer of
immovable property operating as voluntary disposition
between husband and wife.
Exemption from Stamp Duty
▪
Purchase of FIRST Residential Property
Stamp duty exemption on the instrument of transfer and loan
agreement for purchase of first residential property by a Malaysian
citizen.
Exemption from Stamp Duty
▪
Full stamp duty exemption on the instrument of transfer in relation
to the purchase of the first residential property valued at no more than
RM 500,000 by a Malaysian citizen under the National Housing
Department’s Rent-to-Own (RTO) scheme.
o
The exemption is given at 2 stages of transfer, i.e.
❖
from the property developer to a qualifying financial
institution, and
❖
from the qualifying financial institution to the Malaysian
citizen.
Exemption from Stamp Duty
o
The exemption is subject to the execution of the following
agreements during the period from 1 January 2020 to 31
December 2022, i.e.
❖
SPA between the property developer and financial
institution, and
❖
RTO agreement between the financial institution and
the Malaysian citizen.
Exemption from Stamp Duty
▪
Abandoned housing projects
o
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 Miniter of Housing and Local Government (KPKT) to
carry on rehabilitation works for an abandoned project.
o
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.
o
This applies to instruments executed by the rescuing contractor or
developer on or after 1 January 2013 but not later than 31 December
2020, extended to 31 December 2025.
Exemption from Stamp Duty
▪
Abandoned housing projects
o
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.
o
The instruments are loan agreements approved by the approved financier
and instruments of transfer.
o
This exemption applies to instruments executed by an original purchaser on
or after 1 January 2013 but not later than 31 December 2020, extended to
31 December 2025.
Penalty
for Late
Stamping
Penalty for Late Stamping
▪
Penalty for late stamping as provided under Sect 47A is as follows :o
RM 25 @ 5% of the amount of the deficient duty, whichever sum be the
greater, if the instrument is stamped within 3 months after the time for
stamping;
o
RM 50 @ 10% of the amount of the deficient duty, whichever sum be the
greater, if the instrument is stamped later than 3 months but not later
than 6 months after the time for stamping; or
o
RM 100 @ 20% of the amount of the deficient duty, whichever sum be the
greater, in any other case.
Objection
& Appeal
Objection & Appeal
▪
A person is allowed to object the assessment made by the
Collector if he is dissatisfied with the said assessment.
▪
A written notice must be forwarded to the Collector (Stamp
Duty Office) to review the assessment within 30 days of
receiving the notice.
▪
If the person dissatisfies with the decision of the Collector, he
may appeal to the High Court within 21 days after the date the
assessment, and upon payment of duty in conformity
therewith.
Objection & Appeal
▪
High Court decisions :a)
If the Collector’s assessment is erroneous;
o
excess duty/penalty paid must be returned with or without
costs as the Court may determine.
b)
If the Collector’s assessment is right;
o
the Court may make an order for payment to the Collector
of the costs incurred by him in relation to the appeal.
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