What is Stamp Duty in Malaysia? Meaning, Rates & How It Works

Stamp duty in Malaysia is a tax imposed on written legal and commercial documents, known as instruments, to make them legally valid and enforceable under Malaysian law.

It applies to the document that records a transaction, not the transaction itself. This distinction is central to understanding how stamp duty works and why proper stamping is required.

What Does “Instrument” Mean in Stamp Duty Law?

Under Malaysian law, an instrument refers to any written document that creates, records, transfers, limits, or extinguishes a legal right or obligation.

Examples include:

• Agreements
• Deeds
• Contracts
• Letters of offer
• Transfer documents

If a transaction exists but is not documented, stamp duty generally does not apply. Once it is put into writing, the document becomes chargeable.

Why Stamp Duty Exists in Malaysia

Stamp duty serves three core purposes.

1. Legal Enforceability

Only properly stamped instruments are generally admissible as evidence in court. An unstamped document may not be enforceable.

2. Revenue Collection

Stamp duty is a source of government revenue, particularly from property and commercial activity.

3. Transaction Formalisation

Stamping ensures transparency and formal recognition of important legal and financial arrangements.

Together, these purposes explain why stamp duty is treated not merely as a tax, but as a gatekeeper for legal enforceability in Malaysia.

How Stamp Duty Works in Practice

Stamp duty applies when:

• An instrument is executed in Malaysia, or
• An instrument executed outside Malaysia is received in Malaysia

The document must usually be stamped within 30 days of execution or receipt.

In practice, failure to meet these requirements can delay transactions, affect enforceability, or trigger penalties.

Stamp duty is calculated based on:

• The type of instrument
• The value or consideration stated
• Whether it falls under ad valorem or fixed duty

Types of Stamp Duty in Malaysia

Ad Valorem Stamp Duty

This is calculated as a percentage of the value stated in the document.

Common examples:

• Property transfers
• Share transfers
• Certain financing agreements

Fixed Stamp Duty

A flat amount applies regardless of value.

Common examples:

• Simple agreements
• Certain service or appointment contracts

Common Documents Subject to Stamp Duty

The following instruments commonly attract stamp duty in Malaysia.

Property & Real Estate

• Sale and Purchase Agreements (SPA)
• Memorandum of Transfer (Form 14A)
• Deeds of Assignment
• Loan and charge documents

Business & Commercial

• Loan or financing agreements
• Share transfer forms
• Partnership agreements
• Service contracts

Personal & Legal

• Lease and tenancy agreements
• Power of Attorney
• Insurance policies

If you are unsure whether a document is chargeable, it is safer to assume it may require stamping until confirmed otherwise.

Stamp Duty Rates in Malaysia

Property Transfer Stamp Duty (Progressive)

These rates apply unless specific exemptions, remissions, or reliefs are approved under current guidelines.

Share Transfers

• Generally RM3 for every RM1,000 or part thereof.

Fixed Duties

• Certain agreements attract RM10 or other prescribed flat rates, depending on wording and purpose.

Actual duty depends on the instrument and prevailing rules.

Who is Responsible for Paying Stamp Duty?

Responsibility usually lies with:

• The buyer or transferee (for property or shares), or
• The party benefiting from the instrument

In practice, parties may agree contractually who bears the cost, but legal responsibility to ensure stamping remains.

What Happens If a Document is Not Stamped?

An unstamped or late-stamped instrument may face:

• Penalties (percentage of unpaid duty)
• Delays in legal or administrative processes
• Inadmissibility in court until stamping is rectified

Stamp duty compliance is therefore both a tax and legal risk issue.

Stamp Duty Exemptions and Reliefs (Overview)

Certain instruments may qualify for:

• Corporate restructuring relief
• Family transfer remission
• Approved financing or government-related exemptions

These are not automatic and usually require meeting strict conditions and documentation.

Stamp Duty and the 2026 Self-Assessment Regime

From 2026, Malaysia introduces a stamp duty self-assessment system.

This means:

• Taxpayers calculate duty themselves
• Authorities review later via audits
• Errors carry higher compliance risk

While the definition of stamp duty does not change, the responsibility for accuracy increases.

For a deeper explanation of the 2026 changes and compliance impact, refer to your dedicated Stamp Duty 2026 Update article. 

Common Misunderstandings About Stamp Duty

• “Stamp duty is a tax on transactions.”
  It is a tax on documents, not the transaction itself.
• “If both parties agree, stamping is optional.”
  Legal enforceability depends on proper stamping, regardless of agreement.
• “Only property transactions need stamp duty.”
  Many commercial and personal instruments are chargeable.

Understanding these distinctions prevents costly mistakes.

Conclusion: Stamp Duty Knowledge Supports Smarter Business Decisions

Understanding stamp duty is not just about tax compliance. It affects how agreements are structured, how transactions are documented, and how businesses protect themselves legally. With increased responsibility under Malaysia’s self-assessment framework, having clarity on obligations helps reduce risk and avoid unnecessary penalties.

For businesses managing contracts, property, or commercial arrangements, visibility and credibility matter just as much as compliance. Communicating accurate company information and regulatory awareness through a credible digital PR Agency presence helps counterparties, partners, and customers assess legitimacy before engaging, supporting smoother transactions and stronger business outcomes overall.