The 2022 Malaysian Budget (‘2022 Budget’) was tabled by the Minister of Finance before the Malaysian Parliament on 29 October 2021. Our Alert that highlights some of the measures proposed under the 2022 Budget can be accessed here.
 
In furtherance of the 2022 Budget, the Finance Bill 2021 (‘the Bill’) was presented for its First Reading in the Dewan Rakyat (House of Representatives) of the Malaysian Parliament on 9 November 2021.
 
In addition to the proposed amendments to other fiscal legislation, the Bill proposes several amendments to the Stamp Act 1949 (‘the Act’). This article outlines the main amendments to be made to the Act which were not included in the Minister of Finance’s speech for the 2022 Budget.
 
Refund of excess payment and finality of assessment
 
Section 39 of the Act, inter alia, provides that if, upon an appeal, the Court is satisfied that the assessment or additional assessment by the Collector of Stamp Duties (‘Collector’) is erroneous, the Court may order the excess duty and any fine or penalty paid to be repaid to the taxpayer.
 
The Bill will add a new section 39(4A) to the Act to provide that the Collector shall not be compelled to refund the excess duty and any fine or penalty paid unless the assessment has become final and conclusive in accordance with section 36D of the Act.
 
To give effect to the proposed amendments to section 39, the Bill will introduce a new section 36D which provides that for the purposes of the Act, an assessment shall be final and conclusive where: 

Payment for indorsement of exemption
 
A new section 37(2A) will be introduced into the Act to provide that where an instrument is chargeable with duty exceeding RM10 and the instrument is exempted from duty, the person bringing the instrument to the Collector for indorsement is required to pay a fee of RM10 to the Collector to certify the exemption of such instrument from duty.
 
Allowance for spoiled stamps
 
Presently section 57 of the Act allows a person to apply for a refund of spoiled stamps in the circumstances set out in that section. For example, (a) the stamp used on an instrument is inadvertently and undesignedly spoiled, obliterated or rendered unfit for its intended purpose before the instrument is executed; or (b) the stamp used on an instrument executed by any party thereto is inadvertently and undesignedly spoilt, and in lieu thereof another instrument for the same purpose has been executed and duly stamped by the same parties; or (c) the stamp used on an instrument executed by any party which by reason of the inability or refusal of any person to act on the same has failed for its intended purpose, provided the application for refund is made within 12 months. The Bill will amend the Act to extend the 12-month deadline for making an application for refund to 24 months.
 
Notwithstanding the above, it should be noted that an existing provision of the Act provides that where an instrument of transfer has been rejected by the Registrar of Titles, the application for refund must be made within two months from the date of rejection of the instrument of transfer by the Registrar.
 
Allowance for misused stamps
 
The time period allowed under section 58 of the Act for a person to apply for a refund where (a) a stamp of greater value than was necessary has been inadvertently used for an instrument liable to duty; or (b) a stamp has been inadvertently used for an instrument not liable to any duty, will be extended from 12 months to 24 months after the date of the instrument, or, if it is not dated, after the execution thereof by the person by whom it was first or alone executed.
 
Use of electronic medium
 
The Bill proposes that section 77A of the Act be amended to extend the use of electronic medium to the following matters: 

Effective date
 
All the proposed amendments will come into operation on 1 January 2022.
 
Comments
 
The proposed amendments are generally administrative in nature, save for the proposed new sections 36D and 39(4A) which provide when an assessment is deemed final and conclusive. The effect of these sections is akin to granting a stay order to the Collector from refunding the stamp duty (save for costs) to taxpayers until the right of appeal is exhausted. In other words, the timeframe for a refund could be prolonged.
 
The proposed amendments that extend the time frame for applying for refund of spoiled stamps or misused stamps to 24 months are welcomed.
 
Alert by Desmond Liew (Senior Associate) of the Tax Practice and Tan Wei Liang (Associate) of the Corporate Practice of Skrine.