Stamp Act 1949 amendments gazetted, laying groundwork for self-assessment regime

26 February 2025

On 31 December 2024, the Finance Bill 2024 and Measures for the Collection, Administration and Enforcement of Tax Bill 2024 (collectively, “Bills”) were gazetted and became law, following their passage in the Senate (Dewan Negara) on 16 December 2024. These Bills contain amendments to various tax legislation including but not limited to the Income Tax Act 1967, Real Property Gains Tax Act 1976, and Stamp Act 1949 (“Stamp Act”).

This article focuses on the amendments made to the Stamp Act and summarises some of the key changes, including an increase in penalties and the introduction of a self-assessment regime.

General amendments to the Stamp Act (effective 1 January 2025)

Increase in penalties

The Stamp Act is amended to increase the penalty for the late stamping of instruments as follows:

• If stamped within three months after the prescribed time for stamping, the penalty is RM50 or 10% of the amount of duty unpaid, whichever is greater;
• In any other case, the penalty is RM100 or 20% of the amount of duty unpaid, whichever is greater.

If a person defrauds or intends to defraud the Government of any duty, the fine imposed has been amended from a fixed amount of RM5,000 to between RM1,000 to RM20,000.

Minimum amount of duty

A minimum stamp duty of RM10 will apply to all instruments, except for cheques and contract notes, which will continue to be taxed at their existing rates.

Requirement to produce a warrant

The Stamp Act is amended to require that anyone exercising the right of access to enter any building or place or the right to take possession of any documents given by section 3A of the Stamp Act must carry a warrant issued by the Collector of Stamp Duties (“Collector”) that identifies them. The person must show this warrant if demanded by any person with reasonable grounds to make such demand.

Amendments to the First Schedule: Instruments chargeable with stamp duty

Ad valorem duty is imposed on an assignment of a life insurance policy by way of gift or trust at RM10 to RM1,000 where sum insured does not exceed RM1,000,000 and 1% to 4% in any other case.

Stamp duty on leases without fine or premium has been increased as follows:

• Lease period not exceeding one year: RM1 for every RM250 or part thereof;
• Lease period exceeding one year but not more than three years: RM3 for every RM250 or part thereof;
• Lease period exceeding three years but not more than five years: RM5 for every RM250 or part thereof; or
• Lease period exceeding five years or for an indefinite period: RM7 for every RM250 or part thereof.

A power or letter of attorney which involves the conveyance of real property will attract ad valorem duty of 1% to 4%. A duty of RM10 will be imposed on a power or letter of attorney that is not in relation to the conveyance of real property. 

Implementation of self-assessment regime (effective 1 January 2026)

The Stamp Act is amended in anticipation of the implementation of the self-assessment regime. These amendments are in line with the Government’s Budget 2025 announcement on 18 October 2024, where it was announced that a stamp duty self-assessment regime will be implemented in phases from 1 January 2026.

Self-assessment process

The amended Stamp Act outlines the process for the self-assessment of stamp duty as follows:

• Every person shall electronically file their stamp duty return in the prescribed form together with the instrument that is executed and chargeable with duty (including instruments executed abroad and received in Malaysia);
• Once the stamp duty return is filed, the Collector is deemed to have made an assessment by virtue of the newly amended section 36(1)(a) of the Stamp Act. However, the Collector reserves the discretion to adjudicate the instrument and assess the duty payable under the amended section 36(1)(b) (“Adjudication Route”);
• Where the stamp duty return is deemed to be an assessment under section 36(1)(a) of the Stamp Act, the duty payable on the instrument shall be due on the day the stamp duty return is filed;
• Where the Collector proceeds with the Adjudication Route, the instrument is to be stamped within 14 days from the date the notice of assessment is issued.

Records relating to payable stamp duty must be kept by the person liable for such duty for a period of seven years.

Adjudication Route

Under the Adjudication Route, the Collector has the discretion to require the taxpayer to furnish the following:

• An abstract of the relevant instrument;
• An affidavit setting out all the facts and circumstances relating to the liability of the instrument to stamp duty or the amount of duty chargeable; or
• Any other evidence which he considers necessary for the adjudication or determination of duty.

It should be noted that the Collector may refuse to assess the duty until such items have been furnished.

Powers of Collector

When the amendments to the Stamp Act in respect of the self-assessment regime come into effect on 1 January 2026, the Collector will be empowered to, among other things:

• issue a notice requiring any person to deliver, or attend personally before him to produce, any documents such as instruments, books, accounts, or records, for the purpose of ascertaining whether an instrument is chargeable with duty;
• search and inspect any instrument, book, account, record, document, object, article, material or thing (“Documents and Records”) and make extracts or copies of it;
• enter into any land, building or place for the purposes of searching and inspecting the Documents and Records, with reasonable facilities and assistance provided by its owners or occupiers;
• issue a notice requiring any person to furnish a translation of the Documents and Records in the national language.

Power to raise assessments

The Collector now has the authority to raise an assessment or an additional assessment within five years from the date the duty was paid if it appears that the original assessment made on an instrument was insufficient.

The Collector can also raise an assessment at any time if it appears that the duty was lost due to fraud, wilful default committed by any person or on behalf of any person, or acts of negligence.

Relief from an error or mistake

The Stamp Act is also amended to introduce an avenue where any person may make a relief application to the Collector within 24 months after the stamp duty return was filed, to seek a repayment of duty that was excessively paid. The Collector will inquire and make a repayment of duty for the relief where it appears just and reasonable to do so.

New offences, fines and penalties

Following the implementation of the self-assessment regime, the Stamp Act is amended to introduce new offences, fines and penalties. These include the following offences, for which a person, upon conviction, will be liable to a fine not exceeding RM10,000:

• Failure to comply with the notice to furnish Documents and Records and any translation of such;
• Obstruction or refusal to allow the Collector access to any land, building or place, and failure to provide reasonable facilities and assistance;
• Failure to comply with directions to answer any question lawfully asked by the Collector or the valuers authorised by him;
• Obstruction or hindrance of the Collector or the valuers authorised by him in the exercise of the Collector’s powers;
• Failure to keep records;
• Failure to electronically file a stamp duty return without a reasonable excuse.

It will also be an offence if any person makes an incorrect return or gives incorrect information unless it was done in good faith. Upon conviction of the offence, the person will be liable to a fine in the range of RM1,000 to RM10,000 and a special penalty equal to the amount of unpaid duty.

Further information

This article has been prepared with the assistance of Associate Matthew Wong Eu Ca.