The Finance Bill 2023 was tabled for its first reading in the Dewan Rakyat of the Malaysian Parliament on 14 March 2023.
Amongst others, the Finance Bill 2023 proposes to amend the Stamp Act 1949 (‘
the Act’) in the following respects:
| 1. |
Charge, mortgage or assignment pursuant to agreement for discounting of invoices or hire purchase receivables |
| |
Item 27(d) of the First Schedule of the Act provides 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 is subject to stamp duty of RM10.00.1
It is proposed that the stamp duty of RM10.00 under item 27(d) be extended 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 |
| |
Item 32(c) of the First Schedule of the Act provides 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 is subject to stamp duty of RM10.00.2
It is proposed that the stamp duty of RM10.00 under item 32(c) be extended 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 the proposed 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.
The foregoing amendments to the Act will come into operation on the date that the Finance Act 2023
3 comes into operation.
Alert by Sheba Gumis (Partner) of the Corporate Practice of Skrine.
1 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.
3 The Finance Bill 2023 will become the Finance Act 2023 after it has been passed by the Dewan Rakyat and the Dewan Negara and has received Royal Assent and been gazetted.