Clarification on Stamp Duty Treatment in Malaysia

The Inland Revenue Board of Malaysia (hereinafter referred to as “IRBM”) has provided guidance on stamp duty treatment for employment instruments and exempted instruments under the First Schedule of the Stamp Act 1949 (hereinafter referred to as “the Act”). The treatment provided are as follows:

1. Instruments under the Exemption Category
   
   Instruments listed under the Exemptions column in the First Schedule of the Act are completely exempt from stamp duty. Taxpayers and employers are not required to stamp these documents or submit them to IRBM for endorsement.
   
   Several examples of instruments exempted under the First Schedule include:
   
   

   (1)	employment contracts where the monthly remuneration does not exceed RM3,000;
   (2)	bond given by any person when the estate to be administered does not exceed RM50,000;
   (3)	life insurance policy where the sum insured is not more than RM5,000; and
   (4)	agreement or memorandum where the matter whereof is of a value of less than RM300.

   
   
2. Instruments under the General Exemptions Category
   
   All instruments under the General Exemptions pursuant to Section 35 in the First Schedule of the Act must be submitted to the IRBM for endorsement. This ensures that only eligible parties and qualifying instruments may claim exemption from stamp duty.
   
   Examples of instruments under Section 35 of the Act are as follows:
   
   

   (1)	instruments executed by, on behalf of, or in favour of a Ruler of a State or the Government of Malaysia or any State;
   (2)	grants or leases made on behalf of the Government under the National Land Code;
   (3)	instruments for the sale, transfer or disposition of any ship or vessel registered or licensed under the Merchant Shipping Ordinance 1952;
   (4)	instruments relating to immovable properties outside Malaysia or things done or to be done outside of Malaysia;
   (5)	instruments relating solely to the business of any registered co-operative society, executed by an officer or member of the society, who would otherwise be liable for the duty; and
   (6)	instrument executed pursuant to a scheme of financing approved by the Central Bank, the Labuan Financial Services Authority, the Malaysia Co-operative Societies Commission or the Securities Commission as a scheme which is in accordance with the principles of Syariah, where such instrument is an additional instrument strictly required for the purpose of compliance with those principles but which will not be required for any other schemes of financing.

   
   
3. Employment Contracts exceeding RM3,000
   
   For employment contracts where the monthly remuneration is above the threshold of RM3,000, only the principal instrument or master contract is required to be stamped and endorsed. Any secondary or ancillary documents tied to the same employment are not required to be stamped and endorsed.
   

The clarity, consistency and certainly provided to taxpayers regarding stamp duty treatment for relevant documents. This is important to facilitate implementation and compliance of stamp duty in conjunction with the recent implementation of the Self-Assessment System for the Stamp Duty  via the e-Duti Setem system via MyTax Portal.

For further information, please visit the official website of the Inland Revenue Board of Malaysia at https://www.hasil.gov.my/en

KAIZEN Group, together with its associate firms in Malaysia, can help the clients to perform these compliances formalities so as to maintain the Malaysia company in good standing. Please call and talk to our professional accountants in Kaizen for further clarification.

Disclaimer All information in this article is only for the purpose of information sharing, instead of professional suggestion. Kaizen will not assume any responsibility for loss or damage.

If you wish to obtain more information or assistance, please visit the official website of Kaizen CPA Limited at www.kaizencpa.com or contact us through the following and talk to our professionals:
Email: info@kaizencpa.com
Tel: +852 2341 1444
Mobile : +852 5616 4140, +86 152 1943 4614
WhatsApp/ Line/ WeChat: +852 5616 4140
Skype: kaizencpa