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Malaysia Stamp Duty

Are you planning to purchase or transfer property in Malaysia? If so, it’s important to factor stamp duty into your financial planning, as it forms a key part of the cost structure in any real estate transaction.

 

Understanding Stamp Duty in Malaysia

Stamp duty in Malaysia falls under two main categories:

1. Fixed Duties

These are set, flat-rate charges applied to certain documents. Examples include:

• Copies or duplicates of original documents
• Policies or instruments not based on the value of a transaction

2. Ad Valorem Duties

These are variable charges based on the monetary value of the transaction. Common examples include:

• Transfer of property ownership (based on the property’s market value)
• Loan agreements (based on the loan amount)
• Share transfers

For instance, when purchasing a house, stamp duty is calculated according to a tiered rate structure, depending on the value of the property.

 

Stamp Duty on Property Transfers and Loan Agreements

When it comes to property transactions in Malaysia, stamp duty is a key cost that buyers must consider—both for the transfer of ownership and the associated loan agreement.

• 1% – On the first RM100,000 of the price of the property
• 2% – Between RM100,001 and RM500,000
• 3% – Between RM500,001 to RM1 million
• 4% – Anything that is above RM1 million

Remember that stamp duty will also affect any loan agreement of the property in question. This is because loan agreements are considered legal documents too. For loan agreements, the duty imposed will be a flat rate of 0.5%. This percentage is applied to the loan’s full value.

 

Stamp Duty on Property Transfers

Stamp duty for the transfer of real estate is calculated based on a tiered rate structure, applied to the property’s purchase price or market value (whichever is higher):

• 1% on the first RM100,000
• 2% on the next RM400,000 (RM100,001 to RM500,000)
• 3% on the next RM500,000 (RM500,001 to RM1,000,000)
• 4% on any amount above RM1,000,000

These rates are referred to as Ad Valorem Duties, as they vary according to the value of the property.

 

Stamp Duty on Loan Agreements

Stamp duty also applies to the loan agreement associated with the property purchase. This is because loan agreements are classified as legal instruments under the Stamp Act.

• The duty is charged at a flat rate of 0.5% of the total loan amount.

For example, if you take out a loan of RM500,000 to finance a property purchase, the stamp duty payable on the loan agreement would be RM2,500.

 

Are Shares Subject to Stamp Duty?

Yes, stamp duty also applies to the transfer of shares in Malaysia. Whether you are dealing with unlisted shares, marketable securities, or stocks listed on Bursa Malaysia, stamp duty may be imposed based on the transaction value.

1. Non-Listed Shares

• RM3 for every RM1,000 or part thereof
• Based on the higher of the consideration or value

2. Shares or Stocks Listed on Bursa Malaysia

• RM1.50 for every RM1,000 or part thereof
• Stamp duty exceeding 0.1% is remitted for contract notes executed from 13 July 2023 to 12 July 2028
• Maximum stamp duty payable: RM1,000 per contract note

3. Listed Marketable Securities

• RM1 for every RM1,000 or part thereof
• Based on the transaction value
• Maximum stamp duty payable: RM200 per contract note

 

Stamp Duty Obligations in Malaysia

Stamp duty obligations in Malaysia may arise from a wide range of transactions and legal documents. These include, but are not limited to:

Category	Common Instruments Subject to Stamp Duty
Property Transactions	– Sale and Purchase Agreements (SPA) – Transfer documents – Loan agreements – Mortgage and security documents
Lease & Tenancy	– Lease agreements – Tenancy agreements
Shares & Securities	– Share transfer documents (private companies) – Shares or stocks listed on Bursa Malaysia – Debentures – Listed marketable securities
Business & Partnership	– Partnership agreements – LLP agreements – Memoranda of Understanding (MoU) – Business sale agreements – Memoranda of Association – Articles of Association
Financial Agreements	– Loan agreements – Service agreements – Education loan/scholarship agreements – Hire-purchase agreements – Hire agreements
Legal & Official Documents	– Trust deeds – Powers of attorney – Employment contracts – Wills – Deeds of Assignment and Release
Construction	– Construction contracts
Insurance	– Insurance policies
Miscellaneous	– Affidavits and statutory declarations – Letters of credit and guarantee

 

These instruments are subject to either fixed or ad valorem stamp duties, depending on the nature and value of the transaction.

 

Method of Payment for Stamp Duty in Malaysia

1. Electronic Stamp Certificate
   Stamp duty payments can be made conveniently online through the Inland Revenue Board of Malaysia’s (LHDNM) official e-stamping portal at https://stamps.hasil.gov.my. Once the stamping application is submitted and payment is made, an electronic stamp certificate is issued. This certificate corresponds to the value of the duty paid and must be affixed or attached to the relevant instrument. With the certificate in place, the instrument is legally deemed to be duly stamped.
2. Compound Duty Payment
   Under Section 9 of the Stamp Act 1949, certain common types of instruments are eligible for compound duty, allowing simplified payment without submitting the entire document for formal stamping. Compound duty is typically a fixed or nominal fee paid on specific instruments, which include:

• • Cheques
  • Policies of insurance
  • Contract notes
  • Memorandum of Association & Articles of Association
  • TNB Electric Supply forms

 

When to Pay Stamp Duty and Penalties for Late Payment

1. The instrument must be stamped within 30 days from the date it is executed in Malaysia or within 30 days after it is received in Malaysia if it is executed outside Malaysia.
2. If it is not stamped within the stipulated period, the penalty imposed is based on the delay period as follows:
   • RM50.00 or 10% of the deficient duty, whichever is higher, if stamped within 3 months after the time for stamping;
   • RM100.00 or 20% of the deficient duty, whichever is higher, if stamped after 3 months from the time for stamping;

To avoid unnecessary penalties and legal complications, it is important to ensure stamp duty is paid promptly.

These stamp duty obligations are governed by the IRB, and non-compliance may result in penalties or fines. If you are uncertain whether stamp duty applies to your transaction, please contact us before signing any agreements. We are here to help you stay compliant and avoid unnecessary costs.