Stamp duty exemption on qualifying loan/financing agreements for SMEs

The Stamp Duty (Exemption) Order 2020 (‘Exemption Order’) was gazetted on 15 May 2020 and came into operation retrospectively on 27 February 2020

The Exemption Order exempts from stamp duty loan or financing agreements that satisfy the criteria set out in the Exemption Order.

To qualify for the exemption, the following conditions must be fulfilled –
 
  1. The loan or financing facility must one that is approved under one of Bank Negara Malaysia’s funds for small medium enterprises1, namely –
  1. Special Relief Fund;
  1. All Economic Sectors Facility including Small and Medium Enterprises Automation and Digitalisation Facility;
  1. Agrofood Facility; or
  1. Micro Enterprises Facility;
  1. The loan or financing agreement relating to the loan or financing facility must be executed between a small and medium enterprise and a financial institution2 on or after 27 February 2020 but no later than 31 December 2020;
  1. An application must be submitted for the exemption; and
  1. The application for exemption must be accompanied by an offer letter from the financial institution to the small and medium enterprise which states the approval of the loan or financing facility.

Comments
 
This measure will greatly assist small and medium enterprises which are seeking loans or financing facilities to weather the economic downturn caused by the global outbreak of the Covid-19 pandemic.
 
 
 

1 “small medium enterprises” means enterprises as may be determined by the National Small and Medium Enterprises Council.
2 For the purposes of the Exemption Order, a ‘financial institution’ has the meaning assigned to “banker” under section 2 of the Stamp Act 1949, and any person prescribed as a financial institution by the Minister of Finance under section 2(1) of the Central Bank of Malaysia Act 2009 for the purposes of section 49 of the Stamp Act 1949.