Introduction
Stamp duty is chargeable on instruments but it is not chargeable on transactions. The instruments that are liable to stamp duty are listed in the First Schedule of the Stamp Act (Act 378) (“the Act”). Any unstamped or insufficiently stamped instruments are inadmissible as evidence in the court of law, nor will it be acted upon by a public officer.
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Ad Valorem Stamp
The rates of the stamp duty payable vary based on the nature of the instrument, i.e. whether the instrument will be stamped ad valorem (that is, according to the value) or in fixed stamp duty. In the case of ad valorem stamp, the amount of the considerations stated in the instruments or the market value of the property plays a vital role in deciding the amount of the stamp duty.
According to the guideline provided by Lembaga Hasil Dalam Negeri (“LHDN”)[i], the imposition of ad valorem duty is on:
- 1. 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);
- 2. Instruments creating interests in property (e.g. Tenancies and Statutory Leases);
- 3. Instruments of security for monies, including instruments creating contracts for payment of monies or obligation for payment of monies (generally described as `Bond`); and
- 4. Certain capital market instruments (e.g. Contract Notes).
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Foreign Currency Loan Agreement/Loan Instrument
The calculation of stamp duty on the loan agreements for foreign currency loan is different from Malaysian Ringgit loan. Malaysian Ringgit loan agreements generally attract stamp duty at 0.5% whereas for foreign currency loan, there will be a flat rate stamp duty of RM5 per RM100 or part thereof. The RM2,000 stamp duty ceiling cap is no longer applicable ever since the enforcement of Section 27(iii) of the First Schedule of the said Act on 1 January 2024.
The wordings of Section 27(iii) of the First Schedule of the said Act are as follows:
For illustration purpose, please see the example below regarding the calculation for the stamp duty on a facility agreement dated 2 January 2024 (the facility agreement as the principal agreement will be subject to ad valorem duty) for a loan of USD100,000.00:
[i] https://www.hasil.gov.my/en/stamp-duty/
This article is intended to be informative and not intended to be nor should be relied upon as a substitute for legal or any other professional advice.
About the author
Loong Shi Yi
Associate
Real Estate, Banking & Finance
Halim Hong & Quek
syloong@hhq.com.my
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