Tax Update: Stamp Duty in Malaysia
Updated: Jun 9
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.
Stamps
The Stamps Assessments and Payment System (STAMP) was created to make it easier to stamp documents electronically. Revenue Stamps and Franking Machine Stamping will be replaced by receipt printouts and stamp certificate produced by STAMPS (online).
It is highly recommended because it is easily accessible, saves time on processing the documents, and the process of stamping and storing data is more systematic.
STAMPS applications are only accepted for registered users. There is various type of STAMPS users, including:
Law Firms
Banks
Insurance Companies
Companies and other Registered Agents
Payment methods, it can be paid by Manually (Revenue Service Centre in cash, revenue stamps, money order, postal money, clients check or bank draft) or via Online.
Digital Economy
A riding number of compelling stories offering both terrifyingly thrilling and apocalyptic prospects have drawn attention to the digital economy. While some express concern about the loss of jobs to automation, others are amazed by what digital technology is capable of. Then there are genuine doubts as to whether this will result in helping those who need it the most.
The digital economy is a term that captures the impact of digital technology on patterns of production and consumption. This includes how goods and services are marketed, traded, and paid for. Digital economy is now recognized to include all parts of economy that exploit technology change that leads to markets, business models and day-to-day operations being transformed. This covers, from traditional technology, media and telecom sectors through to new digital sectors.
Even though payments and delivery are still made physically, each digital transaction is regarded as part of the digital economy. The Income Tax Act 1967 will be used for tax individuals and companies engaged in internet transaction.
Hope this information is helpful for everyone. This is everything you need to know about STAMP Duty in Malaysia.