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The Assessment and collection of Stamp Duties is sanctioned by statutory
law now described as the Stamp Act 1949.
Types of Duty
The Stamp Act 1949 provides for:-
The imposition of Ad Valorem Duties (that is, according to the value) on:
(i) Instruments of transfer (implementing a sale or gift) of property
including marketable securities (meaning loan stocks and shares of public
companies listed on the Kuala Lumpur Stock Exchange), shares of other
companies and of non tangible property, for example, book debts, benefits
to legal rights and goodwill;
(ii) Instruments creating interests in property, for example Tenancies and
Statutory Leases;
(iii) Instrument of security for monies including instruments creating
contracts for payment of monies or obligation for payment of monies
(generally described as "Bond");
(iv) Certain capital market instrument, for example, Contract Notes and
The Imposition of Fixed Duties on
(i) A number of other legal, commercial, mercantile or capital market
instruments, for example, Power or Letter of Attorney, Articles of
Association of a Company, Promissory Notes, Policy of Insurance etc; and
(ii) 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.
Determination Of Liability
(i) The first step is to identify the class of instrument under which a
particular chargeable instrument may fall into. In the case of standard
instruments, the rule in classification of instruments is that the real
and true meaning of the instrument is to be ascertained, that the
description of it given in the instrument itself by the parties is
immaterial. Whereas in the case of non-standard instruments, the substance
of the instrument, as construed by examination of the rights and
obligations created and not its FORM will determine its classification.
Examples where this RULE would apply include instruments effecting
divestment of rights or interests in property by way of a " Declaration of
Trust" or a "Deed of Family Arrangement" or release on "Sale" or by way of
"Gift" or by way of "Security".
(ii) The second step involves statement of liability of standard
instruments where an instrument is liable to stamp duty within two
different categories or heads. It is provided that distinct matters
including separate considerations shall be separately charged.
(iii) The third step involves non-standard instrument which by its
classification will be liable to ad valorem duty. This instrument would
require examination and when appropriate, measurement of the value of the
consideration, that is, the price of the promise or act to be performed by
the instrument.
The major principle in the application of the law on stamp duties is that
the subject matter of tax is the INSTRUMENT and not the TRANSACTION.
Examples Of Instruments Liable To Stamp Duty
Purchase Of Property
Tenant And Landlord
Person Receiving Financing
Purchase Of Property
Business Undertaking
In the case of purchase of any BUSINESS UNDERTAKING, the contract of sale
and purchase is chargeable to ad valorem duty on the price relating to
goodwill, debt and other chose-in action. The rate of duty is the same as
that of IMMOVABLE PROPERTY.
Immovable Property
The prescribed rate of duty is as shown below. The duty at this rate is
also payable where the instrument of transfer constitutes a DEED OF
ASSIGNMENT executed on sale or gift of the contractual interest on the
property.
-On the first RM100,000:
RM1.00 for every RM100 or fractional part of RM100.
-On any amount in excess of RM100,000 but not exceeding RM500,000:
RM2.00 for every RM100 or fractional part of RM100.
-On any amount in excess of RM500,000
RM3.00 for every RM100 or fractional part of RM100.
Stock, Shares or Marketable Securities
The prescribed rate of duty is RM3.00 for every RM1,000 or fractional part
of RM1,000 on the price or value thereof on the date of transfer,
whichever is the greater.
Tenant And Landlord
-The lease or tenancy instrument which secures annual rent not exceeding
RM2,400 is EXEMPTED from duty and presentation of these instruments at a
stamping office or centre is not necessary.
-The prescribed rate of duty on the instrument which secures annual rent
exceeding RM2,400 is as follows:
(For every RM 250 or part thereof in excess of RM2, 400)
When the lease is for a period Duty Rate
Not exceeding one year RM1.00
Exceeding one but not exceeding three years RM2.00
Exceeding three years or for any indefinite period RM4.00
(For every RM250 or part thereof in excess of RM2,400
-If the consideration for tenancy constitutes or includes a PREMIUM,
additional duty is chargeable and it is calculated on the amount of the
premium at the rate chargeable on immovable property.
-If the lease provides for differential rent, please contact The Deputy
Collector of Stamp Duty for further information.
Person Receiving Financing
Where the undertaking for discharge of a debt is:
-by way of PROMISSORY NOTE, the duty on the note is RM10.00 irrespective
of whether it is executed in favour of a commercial bank, merchant bank or
borrowing company or otherwise. The stamping must be completed BEFORE the
instrument is executed.
-secured by way of mortgage, charge, debenture and others, the duty on the
principal security is calculated at the rate of RM 5.00 for every RM
1000.00 or part thereof.
Time Of Stamping Instruments
Instruments executed in Malaysia
In general all instruments executed in Malaysia should be stamped on or
before the time of execution.
Instruments executed out of Malaysia
Instruments other than cheques or promissory notes must be stamped within
30 days after it has first been received in Malaysia.
Cheques or notes drawn out of Malaysia
Cheques or promissory notes drawn or made out and brought into Malaysia
before it is stamped must affix the proper adhesive stamp before
presenting the same for acceptance or payment or endorses transfers or
otherwise negotiates the same in Malaysia.
Stamping of documents after executions
In general, any unstamped or insufficiently stamped instrument excluding
cheque or promissory note drawn or made within Malaysia may be stamped
after execution on payment of the unpaid duty, if the instrument is
presented for stamping;
-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 out of Malaysia
Adjudication of Instruments
Purpose of adjudication
An application to determine the amount of duty chargeable on any executed
instrument can be made to the Collector. For this purpose the Collector
may require that the instruments be furnished together with an affidavit
or other evidence. The Collector may refuse such application until the
required instrument and evidence have been furnished accordingly.
The purpose of adjudication is 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.
Adjudication Of Instruments
The fee payable for adjudication of an instrument is RM10 ( with effect
from 1st January 1996 )
Responsibility Of Company Secretary / Registrar
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 is punishable under
Section 69(2) with a fine not exceeding RM1,500.
Responsibility Of Solicitors
If in doubt of any technical matters or procedures, please contact The
Deputy Collector of Stamp Duty for clarification. The clerk or office boy
SHOULD NOT BE INSTRUCTED to represent your firm in technical matters and
procedures regarding stamping.
Penalty
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)
Method of Payment
Payment may be made in the following manner:-
(i) Cash (if the duty does not exceed RM100) or
(ii) Revenue Stamp (if the duty does not exceed RM500) or
(iii) Money Order, Solicitor's Cheque or Bank Draft,made payable to the
Deputy Collector of Stamp Duty and sent together with the relevant
instrument to the stamp duty office by hand or through registered post.
Relief From Stamp Duty
Relief may be given pursuant to:
(i) Section 15 Stamp Act 1949
(ii) Section 15A Stamp Act 1949
RECENT AMENDMENTS TO THE STAMP ACT 1949
(With effect from 1 January 2001)
(i) All fixed duty documents (other than cheques, Articles of Association
of a company, Memorandum of Association of a company) are subject to duty
of RM10.00.
(ii) All documents constituting a Charge or Mortgage, Agreement for a
Charge or Mortgage (including that under the Syariah), Bond, Covenant,
Debenture etc. being the principal security for the payment or repayment
of money are subject to duty of RM5.00 for every RM1,000.00 or part
thereof.
(iii) All documents being the security for payment or repayment of money
made for the purpose of pursuing higher education in higher educational
institutions are subject to duty of RM10.00.
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