Proposed Amendments to the Stamp Act
24 November 2025
The Finance Bill 2025 (“Bill”) was tabled for its First Reading in the Dewan Rakyat (House of Representatives) of the Malaysian Parliament on 18 November 2025. Upon its being passed by the said House, the Bill will be presented to the Dewan Negara (Senate) and if passed, for Royal Assent. The Bill will become law after it is gazetted and come into operation on a date or dates to be appointed by the Minister of Finance.
The Bill contains proposed amendments to various fiscal legislation, including the Stamp Act 1949 (“Stamp Act”). The amendments to the Stamp Act are set out in Chapter IV of the Bill.
A summary of the main amendments to be made to the Stamp Act pursuant to the Bill are set out below.
| 1. |
Stamp duty on transfer of residential property to non-citizen and non-permanent resident |
The rate of stamp duty on an instrument of transfer for the sale of residential property to a foreign company or a person who is not a citizen or permanent resident of Malaysia will be increased to 8% of the purchase consideration or the market value of the property, whichever is the higher.
To give effect to this amendment:
- the following definition will be inserted into section 2 of the Stamp Act:
““residential property” means a house, condominium, apartment, flat, service apartment or small office home office solely to be used as a dwelling house”;
- item 32(aa) of the First Schedule, which provides for sale of various assets to a foreign company or a person who is not a citizen or permanent resident of Malaysia, will be disapplied to the sale of residential property to a foreign company or a non-citizen who is not a permanent resident of Malaysia; and
- a new item 32(ab) will be introduced to the First Schedule to provide that stamp duty at the rate of 8% of the purchase consideration or market value of the property, whichever is the higher, will be chargeable on an instrument of transfer for the sale of residential property to a foreign company or a person who is not a citizen or permanent resident of Malaysia.
| 2. |
Increase in exemption threshold for stamping of employment contract |
Presently, an agreement for services or personal employment where the wages do not exceed RM300 per month is exempted from stamp duty of RM10 under Exemption (b) to item 4 of the First Schedule. Exemption (b) will be amended to increase the exemption threshold from RM300 to RM3,000. This means that an agreement for services or personal employment where the wages do not exceed RM3,000 per month will be exempted from stamp duty.
| 3. |
Imposition of deadline for recovering duty paid for agreements deemed as conveyance upon sale |
Section 21(1) of the Stamp Act provides that an agreement for the sale of equitable interest or interest in certain property, e.g. goodwill and book debts, shall be charged with the same ad valorem duty as if it were an actual conveyance on sale.
Section 21(7) of the Stamp Act provides for a refund by the Collector of Stamp Duties (“Collector”) of the ad valorem duty paid on such agreement if the agreement is thereafter rescinded or annulled, or for any other reason be not substantially performed or carried into effect, so as to operate as or be followed by a conveyance or transfer.
The Bill will amend section 27(2) by imposing a requirement that the refund subject to “an application made within twenty-four months after the date of instrument by the person whom it was first or alone executed”.
| 4. |
Payment of stamp duty on an instrument for exchange of property |
Presently, item 7 of the Third Schedule provides that the stamp duty payable on any instrument whereby an exchange of property is effected is to be borne by the parties in equal share. The Bill will amend this item so that the stamp duty for such an instrument is to borne by “the grantee or transferee.”
| 5. |
Utilising excess payment to pay other tax due and payable |
A new section 80C will empower the Collector to utilise:
- any excess duty paid by a person under the Stamp Act to pay any amount of duty or tax, as the case may be, which is due and payable by that person under the Stamp Act or under the Income Tax Act 1967 (“ITA”), the Petroleum (Income Tax) Act 1967 (“PITA”), the Real Property Gains Tax Act 1976 (“RPGTA”) or the Labuan Business Activity Tax Act 1990 (“LBATA”); and
- any excess tax paid by a person under the ITA, the PITA, the RPGTA and the LBATA to pay any stamp duty due and payable by that person under the Stamp Act.
Effective date of amendments
All the above amendments are to come into operation on
1 January 2026.
Comments
The amendments mentioned in paragraphs 1 and 2 above are to give effect to measures announced in the 2026 Malaysian Budget speech.
The amendment in paragraph 5 above relating to the Collector’s power to utilise any excess duty paid to other duties due and payable under the Stamp Act or taxes due and payable under the ITA, the PITA, the RPGTA and the LBATA will align the provisions of the Stamp Act with the corresponding provisions under the ITA, the PITA, the RPGTA and the LBATA.
In relation to the increase in stamp duty on an instrument of transfer of property to a non-citizen and non-permanent resident, an interesting point is whether the increased duty will be charged on an instrument of transfer dated after 1 January 2026 but is executed pursuant to a sale and purchase agreement entered into before that date. It is hoped that the Director General of Inland Revenue will clarify this point as soon as possible.
Alert by Sheba Gumis (Partner) and Joey Tiw (Senior Associate) of the Tax Practice of Skrine.
This article/alert contains general information only. It does not constitute legal advice nor an expression of legal opinion and should not be relied upon as such. For further information, kindly contact skrine@skrine.com.