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Tax Update: Stamp Duty in Malaysia

Updated: Dec 28, 2022

The First Schedule of the Stamp Duty Act of 1949 describes the range of written documents on which stamp duty is imposed in Malaysia. Stamp duty will generally be applied to legal, commercial, and financial instruments.

Ad valorem and fixed duty are the two different forms of stamp duty. The amount of the ad valorem duty will depend on the kind and worth of the instruments.

Ad Valorem: are variable costs based on the value of a transaction that legal documents represent. These include taxes such as those based on the value of a property transfer or loan agreements.

Fixed Duty: they changed at a set price and include stamps for individual policies or copies.

If an instrument is executed within Malaysia, it must be stamped within 30 days of execution. The document must be stamped within 30 days of the initial receipt in Malaysia if it was executed outside of Malaysia.

There are exemptions and reliefs given under the provision of the Stamp Act 1949. To claims, the duty payer needs to know the difference on the exemption given.

Stamp duty exemptions are divided into two:

1. General and Special Exemption

a) Instruments eligible for exemption under Section 35 of the Stamp Act 1949, listed under the First Schedule to the same Act under the heading General Exemptions

2. Other Exemptions

b)This is under Section 80 of the Stamp Act 1949 given by the Minister of Finance. The duty payer must state the gazette reference or attach the exemption letter by the Ministry of Finance when making an application for stamp duty.

3. Remission

c)It is a part of an exemption where the amount of actual duty is reduced to a rate approved by the Minister of Finance under Section 80, Stamp Act 1949.