Stamp Duty in Malaysia: Rates, Exemptions & Penalties

When you sign a contract in Malaysia—whether it is a tenancy agreement, a property purchase, or a business loan—you will invariably come across the term Stamp Duty. In the eyes of the law, a document is generally not admissible as evidence in court unless it has been properly “stamped.”

Stamp duty is a tax imposed by the Inland Revenue Board of Malaysia (LHDN) on legal, commercial, and financial instruments. It is the process of certifying a document to give it legal weight and ensuring that the government receives its portion of the transaction tax.

This guide provides a clear breakdown of the current stamp duty rates for 2024/2025, common exemptions for homeowners and businesses, and the penalties you might face for missing the stamping deadline.

Key Takeaways

• What It Is: A tax on written documents, not on transactions or people.
• Ad Valorem vs. Fixed: Rates are either based on the value of the transaction (Ad Valorem) or a flat fee (Fixed).
• Stamping Deadline: Documents must be stamped within 30 days of execution (signing) within Malaysia.
• Digital Evolution: Physical revenue stamps are largely replaced by the STAMPS portal managed by LHDN.
• 2024/2025 Exemptions: Significant relief remains for first-time homebuyers and property transfers between family members (Love and Affection).

What is Stamp Duty?

Stamp duty is governed by the Stamp Act 1949. There are two types of duties:

1. Fixed Duties: Set amounts that do not vary with the value of the document (e.g., RM10 for a subsidiary agreement or power of attorney).
2. Ad Valorem Duties: Calculated based on the value of the consideration or the market value of the subject matter (e.g., property transfers, share transfers, or loan agreements).

Common Stamp Duty Rates in Malaysia (2024/2025)

The rate you pay depends heavily on the type of document being stamped.

1. Property Transfer (Instrument of Transfer/MOT)

For the transfer of real estate, the rates are tiered based on the property price:

Property Value (RM)	Stamp Duty Rate
First RM100,000	1%
RM100,001 to RM500,000	2%
RM500,001 to RM1,000,000	3%
Above RM1,000,000	4%

2. Share Transfers

For the transfer of shares in a private limited company (Sdn Bhd), the rate is:

• RM3 for every RM1,000 (or 0.3%) of the consideration or market value, whichever is higher.

3. Loan Agreements

For most loan agreements or service agreements:

• 0.5% of the total loan amount (RM5 for every RM1,000).

4. Tenancy Agreements

The duty for tenancy depends on the annual rent and the duration of the lease:

Lease Duration	Rate for every RM250 of annual rent (above RM2,400)
Less than 1 year	RM1.00
1 to 3 years	RM2.00
More than 3 years	RM4.00

Important Exemptions and Remissions (Current for 2025)

The Malaysian government provides several exemptions to stimulate the property market and support family wealth transfers.

1. First-Time Homebuyers

As of the latest budget updates, first-time buyers enjoy:

• 100% exemption on stamp duty for the Instrument of Transfer and Loan Agreement for properties priced up to RM500,000.
• This exemption is part of the government’s ongoing effort to increase home ownership among the youth and middle-income groups.

2. Transfer Between Family (Love and Affection)

Transfers of property between certain family members enjoy significant remissions:

• Husband to Wife (or vice versa): 100% exemption.
• Parent to Child (or vice versa): 100% exemption, limited to the first RM1 million of the property’s value. For any amount exceeding RM1 million, the remaining balance is taxed at the standard ad valorem rate, but the duty is reduced by 50%.

3. Business Restructuring

Stamp duty remissions are available for certain types of corporate restructurings, mergers, or share transfers within a group of companies, subject to Section 15 or 15A of the Stamp Act 1949 and specific LHDN guidelines.

The Cost of Delay: Penalties for Late Stamping

Stamping must be completed within 30 days of the document being signed. If you miss this window, the following penalties apply under Section 47A of the Stamp Act:

• Within 3 months late: RM25.00 or 5% of the duty, whichever is higher.
• Between 3 to 6 months late: RM50.00 or 10% of the duty, whichever is higher.
• More than 6 months late: RM100.00 or 20% of the duty, whichever is higher.

Did You Know?

Malaysia has fully transitioned to the Electronic Result Slip system. You no longer need to visit an LHDN office for physical stamping. You submit your document via the STAMPS portal, pay the duty online, and download a digital certificate that carries a QR code for verification by lawyers and banks.

Ready to Streamline Your Business Finances?

Maintaining a clean legal and financial trail is essential for long-term business health. From stamping agreements to reconciling your daily sales, digital tools are the key to efficiency.

Explore Financial Solutions from Razorpay Curlec

Conclusion: Don’t Overlook the Details

Stamp duty is a critical step in “legalizing” your business transactions. Whether you are a founder signing a Sdn Bhd shareholder agreement or a landlord finalizing a lease, ensuring your documents are stamped correctly and on time protects your legal rights. By understanding the tiered rates and utilizing current government exemptions, you can manage your transaction costs effectively.

Frequently Asked Questions (FAQs)

1. Who usually pays the stamp duty?

While it can be negotiated, the standard practice in Malaysia is:

• Property: The Buyer pays.
• Tenancy: The Tenant pays.
• Loan: The Borrower pays.

2. Is a document valid if it is not stamped?

The document remains a valid contract, but it cannot be produced in court as evidence until it is stamped. You would have to pay the original duty plus the accumulated late penalties before the court will admit the document.

3. Can I stamp a document myself?

Yes, individuals and business owners can register for an account on the LHDN STAMPS portal to submit documents for assessment and pay the duty via FPX.

4. What is the difference between Stamp Duty and SST?

SST (Sales and Service Tax) is a tax on the consumption of goods and services. Stamp Duty is a tax on the legal instruments (documents) that facilitate those transactions. They are two separate taxes managed by different departments.