In Part 1 of our article published on 26 November 2024¹, we outlined the proposed amendments to be made to the Stamp Act 1949 (“Act”) pursuant to the Finance Bill 2024 (“Finance Bill”) and the Measures for the Collection, Administration and Enforcement of Tax Bill 2024 (“Tax Measures Bill”) other than the proposed amendments to implement the self-assessment stamp duty system (“STSDS”).
 
As it may be recalled from Part 1, it has been announced in the 2025 Malaysian budget speech that STSDS will be introduced from 1 January 2026.²
 
In this second part of our article, we outline the proposed amendments that will be made to the Act to provide the framework for the implementation of STSDS.
 
All the proposed amendments outlined in this part of our article will come into operation on 1 January 2026.
 
BACKGOUND
 
According to Appendix 18 of the 2025 Malaysian Budget Speech, STSDS will be introduced in three phases as follows:
 

 
To implement the STSDS, the following amendments will be made to the Act pursuant to the Tax Measures Bill and the Finance Bill:
 
THE TAX MEASURES BILL

1.0	New sections 35A and 35B (Return and Record Keeping)

1.1	A new section 35A requires every person, other than an authorised person3, to furnish by electronic medium to the Collector, a return (“return”) in the prescribed form together with the executed instrument which is chargeable with duty.
1.2	The return shall specify the description of instrument and the amount of duty with which the instrument is chargeable, and contain such particulars as may be required by the Collector.
1.3	For the purpose of ascertaining that the proper amount of duty has been paid on an instrument, a new section 35B requires every person who is liable to pay duty chargeable on an instrument to keep the instrument and all relevant documents in relation to the instrument for seven years from the date the duty is paid.

2.0	Amendments to section 36 (Adjudication and assessment as to proper duty)

2.1

Subject to exceptions stated therein, section 36(1) presently requires all chargeable instruments to be brought to the Collector for assessment of duty chargeable on the instrument. Section 36(1) will be replaced to provide that when a return and an instrument have been furnished in accordance with section 35A, the Collector shall:

(a)	be deemed to have made an assessment of duty on the instrument based on the information furnished in the return; or
(b)	assess the duty with which the instrument is chargeable

2.2	A new section 36(1A) confers discretion on the Collector to determine the instruments falling within section 36(1)(a) in any manner he deems fit.
2.3	Section 36(2) will be replaced by a provision which provides that where the Collector is deemed to have made an assessment under section 36(1)(a):

(a)	the return shall be deemed to be an assessment; and
(b)	the duty on the instrument shall be due and payable on the day the Collector is deemed to have made an assessment.

2.4

Where the Collector exercises the right to assess duty under section 36(1)(b), he may require an abstract of the instrument, affidavit or other evidence to be furnished to him (new section 36(2A)) and may refuse to assess the duty under section 36(1)(b) until such document or evidence has been furnished to him (new section 36(2B)).

3.0	Amendment to section 37 (Certificate by Collector)

3.1

Section 37(1) will be replaced by a provision which provides that where a return and instrument has been furnished to the Collector under section 35A for assessment of duty under section 36, 36A, 36AA, 36B or 36CA4, the Collector shall certify that the relevant duty chargeable has been paid by indorsing the fact and the amount of the payment on the instrument.

4.0	Amendment to section 40 (Time of stamping after adjudication)

4.1	Section 40 which, among others, permits an instrument to be stamped within 14 days after receipt of the notice of assessment (or such other period as may be allowed by the Collector) will be amended to apply only to instruments that are assessed by the Collector under section 36(1)(b).

5.0	Amendment to section 43 (Bills, cheques or notes drawn out of Malaysia)

5.1

Section 43 will be amended to impose an obligation on a person who comes into possession of a cheque or promissory note drawn or made out of Malaysia, to furnish a return together with the instrument to the Collector under section 35A within 30 days after the instrument is first received in Malaysia.

6.0	New section 50B (Relief in respect of error or mistake)

6.1

A new section 50B will be introduced to enable a duty payer who has paid excessive stamp duty to apply to the Collector within 24 months after furnishing the return, for relief by reason of an error or mistake made by the duty payer. Upon receipt of the application, the Collector shall inquire into the matter and give, by way of repayment of duty, such relief in respect of the error or mistake as appears to the Collector to be just and reasonable.

7.0	New section 72B (Penalty for failure to keep record and other offences)

7.1

A new section 72B introduces an offence for the failure by any person, without reasonable excuse, to keep books, records and documents in accordance with section 9(7)5 or section 35B6 or to notify the Collector of the occurrence of any of the events in accordance with section 15(6A)7 or section 15A(6)8. The offence is punishable with a fine not exceeding RM10,000.

8.0	New section 72C (Failure to furnish return)

8.1	The new section 72C provides as follows:

(a)	that it is an offence for any person to fail, without reasonable excuse, to furnish a return with an executed instrument chargeable with duty in accordance with section 35A; the offence is punishable with a fine not exceeding RM10,000 (section 72C(1));
(b)	upon conviction of a person for the offence under section 72C(1), the court may also order the person to comply with the relevant provision of the Act within 30 days or such other period as the court considers appropriate, from the date of the court order (section 72C(2)); and
(c)	where no prosecution has been instituted under section 72C(1) for failure to furnish a return with the executed instrument, the Collector may require the person to pay a penalty of not less than RM200 and not more than RM2,000 (section 72C(3)).9

9.0	New section 72D (Incorrect returns)

9.1

The new section 72D(1) provides that a person commits an offence if he: (a) makes an incorrect return by omitting or understating any duty of which he is required to make; or (b) gives any incorrect information in relation to any matter affecting his chargeability to duty, unless he satisfies the court that the incorrect return or incorrect information was made or given in good faith. Such offence is punishable with a fine of not less than RM1,000 and not more than RM10,000. In addition, the person shall pay a special penalty equal to the amount of duty which has been undercharged in consequence of the incorrect return or incorrect information or which would have been undercharged if the return or information had been accepted as correct.

9.2

The new section 72D(2) provides that where no prosecution is instituted against a person in respect of an incorrect return or incorrect information in the circumstances described in section 72D(1), the Collector may require that person to pay a penalty equal to the amount of duty which has been undercharged in consequence of the incorrect return or incorrect information or which would have been undercharged if the return or information had been accepted as correct.10

10.0	Amendment to section 3A (Powers of the Collector)

10.1

The powers of the Collector under section 3A have been expanded in several respects. Among these is the power under the new section 3A(3A) to require individuals to provide Bahasa Malaysia translations (or for East Malaysia, English translations) of any documents that are not kept in Bahasa Malaysia, where the Collector deems it necessary. This ensures that documents in languages other than Bahasa Malaysia or English are accessible for the purpose of the investigation.

10.2

The list of offences under section 3A(5) has also been expanded11 and the maximum fine payable upon conviction has been increased from RM250 to RM10,000.

11.0	Amendment to section 15 (Relief from duty for reconstructions or amalgamations)

11.1	Paragraph (a) of the proviso to section 15(1) is to be amended to provide that an instrument relating to the transfer of undertaking or shares under a scheme of reconstruction or amalgamation is not deemed to be duly stamped unless:

(a)	the instrument is stamped with the duty to which it would but for section 15 be liable; or
(b)	a return is furnished together with the instrument to the Collector in accordance with section 35A, and the Collector having assessed the instrument under section 36(1)(b), has certified that the full duty with which the instrument is chargeable has been paid, or that the instrument is not chargeable with duty.

12.0	Amendment to section 15A (Relief from duty for transfer of property between associated companies)

12.1	The proviso to section 15A(1) will be amended to provide that an instrument relating to the transfer of property or shares between associated companies is not deemed to be duly stamped unless:

(a)	the instrument is stamped with the duty to which it would but for section 15A be liable; or
(b)	a return is furnished together with the instrument to the Collector in accordance with section 35A, and the Collector having assessed the instrument under section 36(1)(b), has certified that the full duty with which the instrument is chargeable has been paid, or that the instrument is not chargeable with duty.

13.0	New section 77D (Forms)

13.1	The Collector is empowered under the new section 77D to prescribe such forms as may be required for the purposes of the Act.

14.0	New Section 36CA (Assessment and additional assessment in certain cases)

14.1	A new section 36CA will, inter alia, empower the Collector to:

(a)	make an assessment or additional assessment within five years after the date the duty is or would have been paid, if it appears to him that no or insufficient duty has been paid on a chargeable instrument; and
(b)	make an assessment on an instrument, without limitation of time, where any fraud or wilful default or negligence has been committed in relation to stamp duty.

14.2	The second sub-paragraph of paragraph 21 of the Explanatory Statement to the Finance Bill states that the new section 36CA is to empower the Collector to raise additional assessment as a consequence of the introduction of STSDS.

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