Stamp duties are imposed on 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. The person liable to pay stamp duty is set out in the Third Schedule of Stamp Act 1949.
The Assessment and Collection of Stamp Duties is sanctioned by statutory law now described as the Stamp Act 1949
TYPES OF DUTY
a. Ad Valorem Duty
The rate of duty varies according to the nature of the instruments and the consideration stipulated in the instruments or the market value of the property.
The imposition of ad valorem duty (that is, according to the value) is on:
- Instruments of transfer (implementing a sale or gift) of property including marketable securities (meaning loan stocks and shares of public companies listed on the Bursa Malaysia Berhad), shares of other companies and of non-tangible property (e.g. book debts, benefits to legal rights and goodwill).
- Instruments creating interests in property (e.g. Tenancies and Statutory Leases)
- Instruments of security for monies, including instruments creating contracts for payment of monies or obligation for payment of monies (generally described as `Bond`)
- Certain capital market instruments (e.g. Contract Notes)
b. Fixed Duty
Duty is imposed without any relation to the consideration paid or amount stated in the instrument. The imposition of fixed duty is on:
- A number of other legal, commercial, mercantile or capital market instruments (e.g. Power or Letter of Attorney, Articles of Association of a Company, Promissory Notes, Policy of Insurance etc); and
- A duplicate or a subsidiary or a collateral instrument when it can be shown that the original or principal or primary instrument has been duly stamped.
INSTRUMENTS LIABLE TO STAMP DUTY
Instruments liable to stamp duty are those listed in the First Schedule of the Stamp Act 1949
EXEMPTIONS / RELIEF FROM STAMP DUTY
- General exemptions under Section 35 in First Schedule, Stamp Act 1949 and Specific exemptions under item 2, 4 and 32 in First Schedule, Stamp Act 1949
- Relief may be given pursuant to Section 15 and Section 15A, Stamp Act 1949:
- Section 15 : Relief from Stamp duty in case of reconstructions or amalgamations of companies.
- Section 15A : Relief from Stamp Duty in case of transfer of property between associated companies.
Application for relief can be done online through STAMPS
ADJUDICATION OF INSTRUMENTS
a. Purpose Of Adjudication.
The purpose of adjudication is to ensure that the instrument is duly stamped to protect the parties to the contract in respect of the admissibility of the instrument as evidence in court during a civil proceeding. An instrument which is not duly stamped is not admissible in court as evidence.
b. Adjudication of Instruments
- All application for adjudication can be submitted at any LHDNM counter in Stamp Branch Offices, Revenue Service Centres and District Offices or online through STAMPS website at https://stamps.hasil.gov.my
MODE OF STAMPING
The payment of duty on an instrument may be denoted by:
- Revenue Stamps (Setem Hasil) can be purchased at all Post Offices in Malaysia. Revenue stamps are available in the following denominations:
- RM 1.00
- RM 5.00- RM10.00- RM50.00- RM100.00- RM250.00
Cancellation of the revenue stamps can be done at Stamp Branch Offices, Revenue Service Centres and District Offices. Under Schedule 2 of the Stamp Act 1949, specific persons are conferred the power to cancel revenue stamps.
Power to Compound Duty. The compounding payment of duty as stipulated by Section 9 Stamp Act 1949, is restricted to the following types of instruments:
- cheques
- policies of insurance- contract notes- Memorandum of Association & Article of Association.- TNB Electric Supply form
- Kew. 38 Receipt Payment of duty for stamping through the issuance of Kew. 38 Receipt
PERSONS LIABLE TO STAMP DUTY
- The Third Schedule of the Stamp Act 1949 specifies the types of instruments and the person liable to pay stamp duty.
- The liability for payment of duty is provided under section 33 of the Stamp Act 1949.
MODES OF PAYMENT
Payment may be made at any LHDNM Stamp Duty Branch Offices and Revenue Service Centres in the following manner:-
- Cash; or
- Revenue Stamp (Setem Hasil) (if the duty does not exceed RM500) or
- Money Order, Solicitor`s Cheque (client account) or Bank Draft, made payable to the Collector of Stamp Duty and submitted together with the relevant instrument to the stamp duty office by hand or through registered post.
- Payment can also be made at District Offices but restricted only to the following modes of payment:-
- Payment using Revenue Stamp (Setem Hasil)
- Amount duty payable not exceeding RM500.00
PENALTY (STAMP DUTY)
- An instrument may be stamped within 30 days of its execution if executed within Malaysia or within 30 days after it has been first received in Malaysia, if it has been executed outside Malaysia.
- If it is not stamped within the period stipulated, a penalty of:
(a) RM25.00 or 5% of the deficient duty, whichever is the greater, if stamped within 3 months after the time for stamping;
(b) RM50.00 or 10% of the deficient duty, whichever is the greater, if stamped after 3 months but not later than 6 months after the time for stamping;
(c) RM100.00 or 20% of the deficient duty, whichever is the greater, if stamped after 6 months from the time for stamping; may be imposed.
(the above rates are effective from 1/1/2003)
RESPONSIBILITY OF PRIME CUSTOMER/SOLICITORS/COMPANY SECRETARY/ REGISTRAR/BANKING AND FINANCIAL INSTITUTIONS
- Section 52(1) of The Stamp Act 1949 PROHIBITS registration, acceptance or authentication of any instrument which has not been duly stamped. If your duties include registration, acceptance or authentication of any instrument including share transfer and Deed of Assignment, contact the Deputy Collector of Stamp Duty if in doubt as to whether fixed duty or ad valorem duty is payable on the instrument.
Failure to comply with the provisions of this section will be subjected to a fine not exceeding RM1,500.00, under Section 69(2), Stamp Act 1949.
- Comply with procedures stipulated by LHDNM Stamp Duty Branch Offices and Revenue Service Centres
- Contact Deputy Collector of stamp duty if in doubt with regards to technical issues and work procedures.
- Lawyers or authorised officers may represent the company pertaining to technical issues and work procedures on stamp duty
