Stamp Duty Exemptions for Targeted Relief and Recovery Facility Gazetted

The Stamp Duty (Exemption) (No. 12) Order 2021 [P.U.(A) 385/2021] (‘E.O. No. 12/2021’) and the Stamp Duty (Exemption) (No. 13) Order 2021 (‘E.O. No. 13/2021’) [P.U.(A) 386/2021] were gazetted on 8 October 2021. E.O. No. 12/2021 and E.O. No. 13/2021 are deemed to have come into operation on 1 December 2020.
 
Both E.O. No. 12/2021 and E.O. No. 13/2021 relate to stamp duty exemptions on instruments of loan or financing agreements under the Targeted Relief and Recovery Facility approved under Bank Negara Malaysia (‘BNM’)’s Fund (‘TRRF’) for small and medium enterprises (individually a ‘SME’ and collectively ‘SMEs’).
 
The TRRF is a RM6.0 billion facility made available by BNM under section 49 of the Central Bank of Malaysia Act 2009 by BNM to SMEs in the services sector (excluding the tourism and tourism-related sectors1) through financial institutions to provide relief and support the recovery of the aforesaid SMEs affected by the reintroduction of Covid-19 containment measures since June 2020. The financing under the TRRF is only for working capital purposes and is subject to a limit of RM500,000 per SME and RM75,000 per micro-enterprise. The TRRF will be available until 31 December 2021 or full utilisation, whichever is earlier.
 
E.O. No. 12/2021
 
E.O. No. 12/2021 exempts from stamp duty any instrument of loan or financing agreement for the TRRF executed between a participating financial institution and a SME.
 
The exemption under E.O. No. 12/2021:

  1. applies to an instrument of loan or financing agreement executed pursuant to a letter of offer issued by a participating financial institution on or after 1 December 2020 but not later than 31 December 2021; and 

  2. is subject to the condition that the instrument of loan or financing agreement is to be accompanied by a letter of offer from the participating financial institution to the SME which states the approval of the loan or financing facility. 
For the purposes of E.O. No. 12/2021:

  1. a “small and medium enterprise” has the same meaning assigned to it under section 2 of the Small and Medium Industries Development Corporation Act 1995; and 

  2. a “participating financial institution” refers to any of the following entities: 
  • Affin Bank Berhad
  • Affin Islamic Bank Berhad
  • Alliance Bank Malaysia Berhad
  • Alliance Islamic Bank Berhad
  • AmBank (M) Berhad
  • AmBank Islamic Berhad
  • Bank Islam Malaysia Berhad
  • Bank Kerjasama Rakyat Malaysia Berhad (Bank Rakyat)
  • Bank Muamalat Malaysia Berhad
  • Bank of China (Malaysia) Berhad
  • Bank Pertanian Malaysia Berhad (Agrobank)
  • Bank Simpanan Nasional
  • CIMB Bank Berhad
  • CIMB Islamic Bank Berhad
  • HSBC Bank Malaysia Berhad
  • HSBC Amanah Malaysia Berhad
  • Hong Leong Bank Berhad
  • Hong Leong Islamic Bank Berhad
  • Malayan Banking Berhad
  • Maybank Islamic Berhad
  • MBSB Bank Berhad
  • OCBC Bank (Malaysia) Berhad
  • OCBC Al-Amin Bank Berhad
  • Public Bank Berhad
  • Public Islamic Bank Berhad
  • RHB Bank Berhad
  • RHB Islamic Bank Berhad
  • Small Medium Enterprise Development Bank Malaysia Berhad (SME Bank)
  • Standard Chartered Bank Malaysia Berhad
  • United Overseas Bank (Malaysia) Bhd 
E.O. No. 13/2021
 
E.O. No. 13/2021 exempts from stamp duty any instrument of loan or financing agreement for the TRRF executed between BNM and a participating financial institution.

The exemption under E.O. No. 13/2021 applies to an instrument of loan or financing agreement executed on or after 1 December 2020 but not later than 31 December 2021.
 
For the purposes of E.O. No. 13/2021, a participating financial institution” refers to any of the following entities:

  • Affin Bank Berhad
  • Alliance Bank Malaysia Berhad
  • Alliance Islamic Bank Berhad
  • AmBank (M) Berhad
  • Bank Islam Malaysia Berhad
  • Bank Kerjasama Rakyat Malaysia Berhad (Bank Rakyat)
  • Bank Muamalat Malaysia Berhad
  • Bank of China (Malaysia) Berhad
  • Bank Pertanian Malaysia Berhad (Agrobank)
  • Bank Simpanan Nasional
  • CIMB Bank Berhad
  • HSBC Bank Malaysia Berhad
  • Hong Leong Bank Berhad
  • Malayan Banking Berhad
  • MBSB Bank Berhad
  • OCBC Bank (Malaysia) Berhad
  • Public Bank Berhad
  • RHB Bank Berhad
  • Small Medium Enterprise Development Bank Malaysia Berhad (SME Bank)
  • Standard Chartered Bank Malaysia Berhad
  • United Overseas Bank (Malaysia) Bhd 
Comments
 
The stamp duty exemption granted in respect of qualifying instruments under E.O. No. 12/2021 will be welcomed by SMEs that have obtained financing under the TRRF.
 
Oddly, with the exception of Alliance Islamic Bank Berhad, the Islamic banks included in E.O. No. 12/2021 that are subsidiaries of conventional banks, for example CIMB Islamic Bank Berhad which is a subsidiary of CIMB Bank Berhad, have been omitted from E.O. No. 13/2021. On the surface, this could mean that any instrument of loan or financing agreement under the TRRF executed between these Islamic financial institutions and BNM will not be eligible for exemption from stamp duty under E.O. No. 13/2021. It may be possible that the funding from BNM is obtained by the conventional bank which is the holding company and then extended to the Islamic bank subsidiary by way of book entries and thus does not involve the execution of an instrument which is subject to stamp duty.
 
Alert prepared by Kok Chee Kheong (Partner) and Vanessa Ho Pei Wei (Associate) of the Corporate Practice of Skrine.
 

1 Micro-enterprises and SMEs involved in core tourism activities and tourism-related sectors may be eligible to apply for funding under the PENJANA Tourism Financing Facility.

This 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.