- What is Stamp Duty?
Stamp duty is a tax duty imposed on instruments and not transaction. An instrument is defined as any written document and in general, – stamp duty is levied on legal, commercial and financial instruments.
- Sale and Purchase Agreements
- Mortgage and Security Documents
- Memorandum of Understanding
* If you are signing a legally binding document, it is likely that stamp duty will be applicable in accordance with the relevant laws and regulations.
The duty is payable to IRBM (Inland Revenue Board of Malaysia).
- Importance of Stamp Duty
Under the Stamp Act 1949, certain instruments must be duly stamped to be considered legally enforceable. Legal documents that are not stamped or are inadequately stamped may face rejection as evidence in court, potentially jeopardizing legal claims or defences. Proper stamping is also crucial for the official transfer of property ownership, ensuring that the transfer is recognized by authorities. In addition, failure to stamp documents on time may result in penalties imposed by the authorities, making compliance both a legal obligation and a financial safeguard.
- Stamp Duty Self-Assessment System (SDSAS) w.e.f 1 Jan 2026
Effective 1 January 2026, the Inland Revenue Board of Malaysia (IRBM) will implement a Self-Assessment System for Stamp Duty. Under this new framework, the responsibility for calculating and declaring stamp duty will shift to taxpayers. This means that individuals and entities will be required to self-assess the applicable stamp duty, submit the declaration, and ensure timely payment in compliance with the relevant laws and guidelines.
- Stamp Duty on Employment Contract
The Inland Revenue Board (IRB) has announced that employment contracts will be subject to stamp duty effective 1 January 2025. Employment contracts signed between 2022 and 2024 were subjected to stamp duty; however, these will now be exempted. Only employment contracts executed on or after 1 January 2025 will be subject to stamp duty. The IRBM will waive the penalty for any late stamping of employment contracts, provided the taxpayers stamp the employment contracts latest by 31 December 2025.
- Malaysia Stamp Duty Self-Assessment System (SDSAS) Implementation in 3-Phases
| Phase |
Effective Date |
Type of Instruments |
| Phase 1 |
From 1 January 2026 |
Instruments or agreements related to rental or lease, general stamping and securities |
| Phase 2 |
From 1 January 2027 |
Instruments of transfer of property ownership |
| Phase 3 |
From 1 January 2028 |
Instruments or agreements other than stated in Phase 1 and Phase 2 |
Notes:
- Penalties for Non-Compliance: Failure to accurately self-assess and pay stamp duty may result in fines and penalties.
- Record-Keeping: Taxpayers are required to maintain records of stamped instruments and related documents for a period of 7 years.
- Audit Framework: The Inland Revenue Board (IRB) has implemented a Stamp Duty Audit Framework effective 1 January 2025 to facilitate this transition.
- Rates of Duty
The rates of the duty are varied according to the nature of instrument and transacted value.
Newly proposed rates of stamp duty effective from 1 Jan 2025 as follows:
- Life insurance policy by way or gift or trust be subject to a fixed rate depending on the sum insured, as follow:
| Where the Sum Insured |
Stamp Duty Payable |
| Does not exceed RM100,000.00 |
RM10 |
| RM100,000.01 to RM500,000.00 |
RM100 |
| RM500,000.01 to RM1,000,000.00 |
RM500 |
| More than RM1,000,000.00 |
RM1,000 |
*In any other case apart from the above would be subjected to ad valorem stamp duty of between 1% to 4% on the value of the sum insured.
- Stamp Duty on cheque related instrument is chargeable be increased from RM0.15 to RM1.00 for each cheque leaf issued.
- Loan or financing agreements for the purchase of goods based on Syariah Principles (within the meaning under the First Schedule of the Hire Purchase Act 1967) stamp duty is fixed at RM10.00.
- Currently, ad valorem stamp duty is imposed on the exchange or partition of real property only when consideration—such as cash or other property—is involved. However, effective 1 January 2025, all exchanges or partitions of real property will be treated as sale and purchase transactions, regardless of whether consideration is present. As such, ad valorem stamp duty will be imposed based on the value of the property involved.
An exemption applies to the specific scenarios outlined below, where a fixed stamp duty of RM10 will be imposed for the exchange of real property for another real property, or for the partition or division of any real property between: –
-
- In such partition or division both transferor and transferee are the original owners of the real property;
-
- Such exchange of real property is between any person and a Ruler of a State or the Government of Malaysia or of any State; or
-
- Such exchange of real property is between husband and wife, parent and child, grandparent and grandchild or among siblings.
- Stamp duty treatment for instrument on lease or agreement for lease of any immovable property amended as below:
| Average rent and other annual consideration |
For every RM250 or part thereof |
| Not Exceeding 1 year |
RM1.00 |
| 1 – 3 years |
RM3.00 |
| 3 – 5 years |
RM5.00 |
| Exceeding 5 years or for any indefinite period |
RM7.00 |
The above proposed stamp duty rates are also applicable to instruments where the average rent or lease is RM2,400 or lower.
- Penalty for late stamping e.f 1 Jan 2025
Stamping should be done within 30 days from the date the contract is signed, missing this window will lead to penalties from IRBM. The penalty for late submission is as follows:
| Within 30 Days |
No penalty |
| 31 Days to 3 months |
RM50 or 10% of the stamp duty, whichever is higher |
| More than 3 Months |
RM100 or 20% of the stamp duty, whichever is higher |
- Penalty for non-compliance e.f 1 Jan 2026
Duty payers who are guilty of an offence may be liable on conviction to the following penalties:
| Failure to keep record and other offences |
Fine not exceeding RM10, 000 |
| Failure to furnish return with the instrument which is executed and chargeable with duty |
Fine not exceeding RM10, 000 |
| Incorrect returns |
Fine of not less than RM1, 000 and not more than RM 10, 000
*Additionally, individuals shall pay a special penalty equal to the amount of duty which has been undercharged in consequence of the incorrect return or incorrect information, or which would have been undercharged if the return or information had been accepted as correct. |
Summary – New Responsibilities for Taxpayers
With the implementation of the Self-Assessment System for Stamp Duty, Malaysian taxpayers will assume full responsibility for determining, calculating, and declaring stamp duty obligations. Under this new system, taxpayers must assess whether an instrument is chargeable, compute the correct duty, and submit the declaration independently via the STAMPS platform—without prior assessment or confirmation from the Inland Revenue Board Malaysia (IRBM).
Given this shift, it is crucial for taxpayers to have a thorough understanding of stamp duty regulations. Errors or omissions in assessment or reporting may result in audits, penalties, and substantial fines. Proper compliance and due diligence are essential to avoid costly consequences.
