(Tax Update) Malaysia Stamp Duty Overhaul : Self-Assessment and Higher Penalties

(Tax Update) Malaysia Stamp Duty Overhaul : Self-Assessment and Higher Penalties

Starting 2025, Malaysia is stepping into a new era for stamp duty.

For the first time ever, stamp duty is moving into self-assessment — putting the responsibility back on taxpayers.

Just like how we already self-assess income tax, now we must calculate and declare our own stamp duty too.

This change affects almost every business and individual dealing with legal documents — leases, agreements, and property transfers. If you’re signing any stamped instrument, this update applies to you.

Let’s break down the key changes under the Stamp Act Amendments (2025–2028) in simple terms.

1. Self-Assessment Regime Begins

No more waiting for IRB to tell you how much stamp duty to pay.

You calculate. You declare. You submit.

And it won’t happen overnight. It’s rolled out in 3 phases:

  • Phase 1 (2026) – Rental/lease agreements, general stamping, and securities.

  • Phase 2 (2027) – Property transfer instruments.

  • Phase 3 (2028) – All other instruments.

2. All Instruments Must Be Stamped

Stamp duty used to apply mostly to high-value transactions.

Now, even intercompany agreements, service contracts, and financing documents must be stamped — regardless of the duty amount — unless clearly exempted.

Don’t assume it's not needed.

3. IRB Audit Powers Expanded

IRB now has up to 5 years to audit your stamped documents.

And in cases of fraud, negligence, or willful default?
The audit window can go beyond 5 years.

Audits can be:

  • Desk audit – submission of documents for review.

  • Field audit – IRB visits your office for inspection.

4. Non-Compliance Comes with a Price

Late Stamping Penalties:

  • Within 3 months: RM50 or 10% of the shortfall (whichever is higher).

  • After 3 months: RM100 or 20% of the shortfall (whichever is higher).

Court Fines:

  • Ranges from RM1,000 to RM10,000.

  • Plus a special penalty equal to the underpaid duty.

Minimum Duty:

  • Set at RM10 per instrument, except for cheques and contract notes.

5. Changes in Duty Rates and Exemptions

  • Lease/Rental:
    The old RM2,400 exemption is gone.
    A new 4-tier duty rate applies — from RM1.00 to RM7.00 per RM250 of rent.

  • Power of Attorney:
    No more flat RM10. Now follows a new tiered structure.

  • Real Property Transactions:
    Exchanges and partitions now taxed like a sale — unless between close family or government bodies (RM10 duty applies).

6. Going Digital

Get ready for full digital compliance.

The IRB is building an online system to support:

  • Electronic stamping

  • Filing

  • Payment

They’ll also provide user guides and resources to help you comply.

7. What IRB May Ask During a Stamp Duty Audit

In general, IRB may request these documents:

3.1 Original instrument (surat cara asal)

3.2 Related supporting documents (e.g. agreement, invoice, payment slips)

3.3 Calculation basis of stamp duty payable (e.g. market value, rent computation)

3.4 Bank statement showing payment or transactions related to the instrument

3.5 Proof of ownership or control if involving shares or real property

3.6 Board of directors’ resolutions (if applicable)

3.7 Correspondence/emails related to the instrument

3.8 Any documents used to support exemptions or reliefs claimed

3.9 Any other documents deemed relevant by IRB for review

8. Who Handles Stamp Duty in Malaysia?

In Malaysia, lawyers traditionally handle Sale and Purchase Agreements (S&P) — including preparing documents and managing stamp duty for property transactions.

Meanwhile, licensed tax agents usually focus on income tax and corporate tax matters.

But with the new self-assessment system for stamp duty, everything changes.

Now, calculating, declaring, and defending your own stamp duty amount — especially during an IRB audit — may no longer be just a legal job. Tax agents must step in to ensure stamp duty audit readiness.

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