The Finance Act 2023 was gazetted on 31 May 2023.
Amongst others, Chapter IV of the Finance Act 2023 introduces the following amendments to the Stamp Act 1949 (‘
the Act’) with effect from
1 June 20231:
| 1. |
Charge, mortgage or assignment pursuant to agreement for discounting of invoices or hire purchase receivables |
Prior to the amendments, Item 27(d) of the First Schedule of the Act provided that a charge or mortgage on or an assignment of accounts receivables to a bank, merchant bank or finance company licensed under the Banking and Financial Institutions Act 1989 or under the Islamic Banking Act 1983 or a scheduled institution as defined under section 2 of the Banking and Financial Institutions Act 1989 pursuant to an agreement for discounting invoices or hire purchase receivables was subject to stamp duty of RM10.00.2
The Act is now amended to extend the stamp duty of RM10.00 under Item 27(d) to a charge or mortgage or assignment of receivables pursuant to an agreement for discounting invoices or hire purchase receivables to any statutory body, agency of the Government or of the State Government, or any company in which the Government or the State Government has interest, which provides financing to a small and medium enterprise (‘SME’). |
| 2. |
Conveyance upon absolute sale of accounts receivable or book debts pursuant to factoring agreement |
Prior to the amendments, Item 32(c) of the First Schedule of the Act provided that a conveyance, assignment or transfer upon the absolute sale of any accounts receivables or book debts to a bank, merchant bank or finance company licensed under the Banking and Financial Institutions Act 1989 or under the Islamic Banking Act 1983 or a scheduled institution as defined under section 2 of the Banking and Financial Institutions Act 1989 pursuant to a factoring agreement was subject to stamp duty of RM10.00.3
The Act is now amended to extend the stamp duty of RM10.00 under item 32(c) to a conveyance, assignment or transfer upon the absolute sale of any accounts receivables or book debts pursuant to a factoring agreement to any statutory body, agency of the Government or of the State Government, or any company in which the Government or the State Government has interest, which provides financing to a SME. |
Both these amendments will result in significant stamp duty savings for a SME that proposes to charge, mortgage or assign accounts receivable pursuant to a receivables discounting agreement, or to convey, assign or transfer upon an absolute sale of accounts receivables or book debts pursuant to a factoring agreement to any statutory body, agency of the Government or of the State Government, or any company in which the Government or the State Government has interest, which provides financing to a SME.
Alert by Sheba Gumis (Partner) of the Corporate Practice of Skrine.
1 Section 20 of the Finance Act 2023.
2 The Banking and Financial Institutions Act 1989 and the Islamic Banking Act 1983 have been superseded by the Financial Services Act 2013 and the Islamic Financial Services Act 2013 respectively.