Malaysia implements stamp duty exemptions for sale and purchase agreements until May 2021

28 August 2020

In conjunction with the Malaysian Government’s unveiling of the National Economic Recovery Plan in response to the Covid-19 pandemic, Stamp Duty Orders were gazetted on 28 July 2020 and came into force retrospectively on
1 June 2020.

Under the Stamp Duty (Exemption) (No. 3) Order 2020, any loan agreement to finance the purchase of a residential property valued at more than RM300,000 but not more than RM2,500,000 under the Home Ownership Campaign 2020/2021 (“HOC”) executed between an individual and a licensed lender is exempted from stamp duty.

The Stamp Duty (Exemption) (No. 4) Order 2020 stipulates that any instrument of transfer for the purchase of residential property valued at more than RM300,000 but not more than RM2,500,000 under the HOC is also exempted from stamp duty for the first RM1,000,000 or less of the value of the residential property and stamp duty of RM3.00 will be imposed for every RM100 of the balance amount of the value of the residential property which is more than RM1,000,000.

Both the stamp duty exemptions above will only be applicable if:

• The sale and purchase agreement (“SPA”) is executed between an individual (who is a Malaysian citizen) and a property developer (registered with (i) the Real Estate and Housing Developers’ Association (REHDA) Malaysia, (ii) the Sabah Housing and Real Estate Developers Association (SHAREDA), or
  (iii) the Sarawak Housing and Real Estate Developers’ Association (SHEDA));
• The purchase price in the SPA is a price after a discount of at least 10% from the original price offered by the property developer except for a residential property subject to controlled pricing; and
• The SPA is executed on or after 1 June 2020 but not later than 31 May 2021 and is stamped at the Inland Revenue Board Malaysia.