Real Property Gains Tax (“RPGT”) and Stamp Duty

Stepping into the Self-Assessment System Era

Introduction

In Malaysia, the self-assessment system (“SAS”) was first introduced in 2001 for companies’ submission of income tax returns. Subsequently, this was expanded for businesses, partnerships, co-operatives and employed individuals in 2004.

Now, the Government of Malaysia has expanded the application of the SAS and introduced it for RPGT and stamp duty. The introduction of the SAS will shift the duty of computing the taxpayer’s RPGT and stamp duty liabilities from the Inland Revenue Board (“IRB”) to the taxpayers or duty payers respectively. Effectively, the burden and responsibility to declare the appropriate amount of RPGT or stamp duty payable in accordance with the prevailing laws and legislation, i.e. RPGT under the Real Property Gains Tax Act 1976 and stamp duty under the Stamp Act 1949, were transferred to the taxpayers or duty payers.

While the IRB will reduce its workload as they are not required to compute the RPGT liabilities or stamp duties under the previous official assessment system, the IRB will shift its focus to conducting audits to ensure that the taxpayers and duty payers are in compliance with the prevailing tax laws and legislation when submitting their relevant returns.

Following the introduction of SAS for RPGT and stamp duty, the IRB has also published the RPGT Audit Framework and the Stamp Duty Audit Framework, both on 1 January 2025. Further in the article, we will dive into the key details of the introduction of SAS for RPGT and stamp duty including the aforementioned audit frameworks and latest updates announced by the IRB.

Real Property Gains Tax (RPGT)

Introduction of SAS for RPGT

Pursuant to the gazette of the Finance Act 2024 and Measures for the Collection, Administration and Enforcement of Tax Bill 2024, both on 31 December 2024, the SAS for RPGT was introduced to be implemented beginning from year 2025.

Below are the salient points on the SAS for RPGT.

No.	Salient Point	Details
1	Effective date of implementation of SAS	From 1 January 2025
2	When to file RPGT returns	Within sixty (60) days from the date of disposal
3	When to pay RPGT	Within ninety (90) days from the date of disposal
4	Date of disposal is based on	Date of agreement; or Where there is no agreement, the date of completion of the disposal
5	Disposal price	Amount or value of the consideration in money or money’s worth for the disposal of the chargeable asset
6	RPGT rates	0% - 30% depending on type of taxpayer and holding period

RPGT Audit Framework

Following the introduction of the SAS for RPGT, the RPGT Audit Framework was published on 1 January 2025. It is expected that RPGT audits will be conducted by the IRB as a tool to encourage voluntary compliance and to provide awareness and education to taxpayers on their responsibilities and obligations in regards to RPGT filing as well as to penalize any errant taxpayers. We explore the salient points from the RPGT Audit Framework which are as follows.

No.	Salient Points	Details
1	Effective date of the audit framework	Effective 1 January 2025
2	Audit period	Covering the preceding three (3) years of assessment (“YAs”). If there are issues discovered during the audit, the audit period may be extended up to the preceding five (5) YAs. Time limit for audit up to preceding five (5) YAs is not applicable in cases of fraud or wilful default.
3	Audit selection criteria	Selection based on risk assessment criteria Information received from third parties Specific issues for certain groups of disposers Selection by location Other methods as IRB deems fit
4	Audit process and timeframe	Initial Action IRB will issue to the taxpayer an official letter via email or post to request for documents and information (“information request letter”) from the taxpayer. Taxpayer will be given fourteen (14) days from the date of the information request letter to furnish the requested documents and information to the IRB. Where no documents or information are required, the IRB will not issue the information request letter but will instead issue Notice of Assessment together with the details of the tax adjustments. Document Review The RPGT Audit Officer(s) will review all documents related to the asset disposal including expenses and incidental costs to verify the claims made by the taxpayer. In certain circumstances, the RPGT Audit Officer(s) may also be required to review other documents that are not related to the asset disposal. Pursuant to Section 28 of the Real Property Gains Tax Act 1976 (“RPGTA”), the RPGT Audit Officer(s) is allowed full access to the taxpayer’s records and to make copies of the relevant records and documents. In circumstances where the RPGT Audit Officer(s) is required to take the original copies of documents, the RPGT Audit Officer will prepare a list of the documents and an acknowledgement or receipt of the said documents. The taxpayer is allowed to make copies of those documents, if required. Conclusion of Audit The taxpayer may be summoned to the IRB office to discuss the audit findings. If there are no updates, the taxpayer may contact the IRB branch office handling the RPGT audit case to request for an update on the status of the RPGT audit or to provide further information to expedite the conclusion of the RPGT audit. Taxpayer will be informed by way of an audit findings letter which will cover the issues that have been raised together with the reasons and rationale for raising those issues. If the taxpayer disagrees with the audit findings, the taxpayer may submit an appeal together with supporting documents and information within eighteen (18) days from the date of the audit findings letter. If no appeal is made by the taxpayer within the eighteen (18) days period, the taxpayer is assumed to agree with the audit findings. Finally, the IRB will issue an audit resolution letter detailing the profit adjustment, additional tax and penalties. Subsequently, the IRB will issue the Notice of Assessment, Notice of Additional Assessment or Certificate of Non-Chargeability, as applicable. If no audit adjustments are made, the IRB will issue a letter of conclusion of audit with no findings. Audit Timeline The RPGT audit must be completed within ninety (90) days from the date of commencement of audit or date of the information request letter.
5	Generally requested documents	Stamped Sale and Purchase Agreement / Stamped Form 14A / Stamped Memorandum of Transfer or other evidence of disposal of asset. Stamped Sale and Purchase Agreement / Stamped Form 14A / Stamped Memorandum of Transfer / Grant / Private Search Record from the Land Office or other evidence or evidence of acquisition of asset. Valuation report by a licensed valuer for disposal and acquisition subject to market value, if applicable. Supporting documents of discounts / rebates received from the developer or disposer, if applicable. Supporting documents of expenditure on disposal and acquisition of asset. Certificate of Non-Chargeability (CKHT 5 or CKHT 5A) pursuant to Section 21A of the RPGTA together with tax calculation issued by the IRB for loss claims on the asset that has been disposed of previously. Power of attorney of the disposer for the purpose of transfer of ownership by the disposer's representative. Grant of Probate / Letter of Administration / Will for the disposal of the estate. In cases where there are insufficient documents in relation to the disposal of the asset, the RPGT audit officer(s) may request for additional documents or information as follows: Copy of identity card, citizenship certificate, birth certificate / adoption certificate or marriage certificate for the gift of love. Audited financial statements with the Director's Report, if applicable. Bank statements. Other matters as provided under Section 27 of the RPGTA.
6	Voluntary disclosure	Taxpayers are allowed to conduct a voluntary disclosure in writing at any time after the due date for submission of the RPGT returns and can be done by way of letter or electronic medium. However, this is only applicable if the IRB has not initiated an RPGT audit on the disposal. Voluntary disclosure is only available to taxpayers that have already submitted the RPGT returns.
7	Penalties pursuant to Section 30(2) of the RPGTA	Cases audited by the IRB – 45% Voluntary disclosure within six (6) months from the due date for submission of RPGT returns – 10% Voluntary disclosure after six (6) months from the due date for submission of RPGT returns – 20%
8	Appeal process	Pursuant to Section 18 of the RPGTA, a taxpayer who does not agree with the Notice of Assessment, Notice of Additional Assessment or Certificate of Non-Chargeability raised by the IRB, may file an appeal to the Special Commissioners of Income Tax within thirty (30) days from the receipt of the Notice of Assessment, Notice of Additional Assessment or Certificate of Non-Chargeability. The appeal against the assessment must be made by way of submission of duly completed Form Q to the IRB.

Stamp Duty

Introduction of SAS for Stamp Duty

Pursuant to the gazette of the Finance Act 2024 and Measures for the Collection, Administration and Enforcement of Tax Bill 2024, both on 31 December 2024, the SAS for stamp duty was introduced to be implemented in phases starting from the year 2026.

The SAS for stamp duty will be implemented in phases as follows:

Phase	Effective date	Types of instruments
Phase 1	From 1 January 2026	Instruments or agreements related to rental or lease, general agreement stamping and securities
Phase 2	From 1 January 2027	Instruments of transfer of property ownership
Phase 3	From 1 January 2028	Instruments or agreements other than stated in Phase 1 and Phase 2

Below are the salient points on the SAS for stamp duty.

No.	Salient Point	Details
1	When to file stamp duty returns	If executed in Malaysia - Within thirty (30) days from the date of execution of the instrument or agreement If executed outside Malaysia – Within thirty (30) days from the date the instrument or agreement is first brought into Malaysia
2	When to pay stamp duty	If executed in Malaysia - Within thirty (30) days from the date of execution of the instrument or agreement If executed outside Malaysia – Within thirty (30) days from the date the instrument or agreement is first brought into Malaysia
3	Who is liable to the stamp duty	The person liable to stamp duty depends on the type of instrument as specified under Schedule 3 of the Stamp Act 1949. If it is not specified, generally the person who prepares or signs the document will be liable to the stamp duty.
4	Stamp duty rates	Fixed duty Ad valorem duty

Stamp Duty Audit Framework

Following the introduction of the SAS for stamp duty, the Stamp Duty Audit Framework was published on 1 January 2025. It is expected that stamp duty audits will be conducted by the IRB as a tool to encourage voluntary compliance and to provide awareness and education to taxpayers on their responsibilities and obligations in regards to stamp duty filing as well as to penalize any errant taxpayers. We explore the salient points from the Stamp Duty Audit Framework which are as follows.

No.	Salient Points	Details
1	Effective date of the audit framework	Effective 1 January 2025
2	Types of stamp duty audit	General review Audit conducted by way of review of the instruments and documents that are submitted during the stamping application, and interview with duty payers, if required. Comprehensive review Audit conducted by way of review of all instruments and agreements executed by the duty payer which may be carried out at the duty payer’s office premises, IRB office or any premises agreed between the IRB and duty payer.
3	Audit period	Covering the preceding three (3) calendar years Time limit for audit up to preceding three (3) calendar years is not applicable in cases of fraud, duty evasion or wilful default.
4	Audit selection criteria	Selection based on risk assessment criteria Based on specific industries Specific issues for certain groups of duty payers Information received from third parties
5	Audit process and timeframe	Initial Action For general review, the Stamp Office will issue an Audit Notification Letter to the duty payer. For comprehensive review, the Stamp Office will issue an Audit Visit Letter. This letter will state the date of visit, documents to be reviewed, name of the audit officer(s) and period of audit visit (usually between one (1) to four (4) days depending on the complexity involved). Duty payer will be given fourteen (14) days from the date of the Audit Notification Letter or Audit Visit Letter to furnish the requested documents and information to the Stamp Office. Document Review The Stamp Duty Audit Officer(s) will be allowed to review all stamping records. In certain circumstances, the Stamp Duty Audit Officer(s) may also be required to review other documents besides the stamping records. Pursuant to Section 3A and 76 of the Stamp Act 1949, the Stamp Duty Audit Officer(s) is allowed full access to the duty payer’s records and to make copies of the relevant records and documents. In circumstances where the Stamp Duty Audit Officer(s) is required to take the original copies of documents, the Stamp Duty Audit Officer will prepare a list of the documents and an acknowledgement or receipt of the said documents. The taxpayer is allowed to make copies of those documents, if required. Conclusion of Audit The taxpayer may be summoned to the Stamp Office to discuss the audit findings. If there are no updates, the taxpayer may contact the Stamp Office handling the stamp duty audit case to request for an update on the status of the audit or to provide further information to expedite the conclusion of the stamp duty audit. Duty payer will be informed by way of an audit findings letter which will cover the issues that have been raised together with the reasons and rational for raising those issues. If the duty payer disagrees with the audit findings, the duty payer may submit an appeal together with supporting documents and information within fourteen (14) days from the date of the audit findings letter. If no appeal is made by the duty payer within the fourteen (14) days period, the duty payer is assumed to agree with the audit findings. Finally, the IRB will issue an audit resolution letter together with the Notice of Confirmation of Assessment or Notice of Amended Assessment. Audit Timeline For general review - The stamp duty audit must be completed within seven (7) days from the date of Audit Notification Letter. For comprehensive review - The stamp duty audit must be completed within sixty (60) days from the date of Audit Visit Letter.
6	Voluntary disclosure	Duty payers are allowed to make a voluntary disclosure in writing at any time after three (3) months from the due date for submission of the instrument for stamping and can be done by way of letter or electronic medium. However, this is only applicable if the Stamp Office has not initiated a stamp duty audit. Voluntary disclosure is only available to duty payers that have already submitted the instrument for stamping on the STAMPS portal.
7	Penalties pursuant to Section 47A of the Stamp Act 1949	Instrument stamped within three (3) months from the due date for stamping – RM50 or 10% of deficient duty, whichever is greater Instrument stamped after three (3) months from the due date for stamping – RM100 or 20% of deficient duty, whichever is greater
8	Appeal process	Pursuant to Section 38A and 39 of the Stamp Act 1949, a duty payer who does not agree with the Notice of Assessment or Notice of Additional Assessment may file an appeal to the Collector of Stamp Duty within thirty (30) days from the date of the Notice of Assessment or Notice of Additional Assessment. The Collector of Stamp Duty will review the appeal and respond to the duty payer in writing of his decision. If the duty payer is not satisfied with the decision of the Collector of Stamp Duty, the duty payer may within twenty-one (21) days from the date of the said written decision, appeal further to the High Court.

Latest Developments on Stamp Duty on Employment Contracts

Acknowledging the administrative and financial burden on employers to stamp all employment contracts as well as the fact that audits on stamp duty for employment contracts are new, the IRB on 6 June 2025 issued a media statement clarifying the following points in relation to the stamping of employment contracts.

Employment contracts finalized before 1 January 2025 are exempted and applicable penalties will be remitted.
Employment contracts finalized between 1 January 2025 to 31 December 2025 are required to be stamped but applicable penalties will be remitted with the condition that these employment contracts are stamped on or before 31 December 2025.
Employment contracts finalized on or after 1 January 2026 are required to be stamped and applicable penalties will be imposed for late stamping.

Subsequent to the IRB’s media statement, the IRB published the Frequently Asked Questions (“FAQ”) for the Stamping of Employment Contracts which was updated on 3 July 2025. The FAQ provides salient points on the stamping of employment contracts including a reiteration on stamp duty concessions announced in the IRB’s media statement, stamp duty rate, persons charged with stamp duty and various other pertinent points.

Conclusion

To quote Heraclitus:-

“The only constant in life is change.”

As RPGT and stamp duty step into the SAS era following corporate tax and individual tax returns which already started more than 20 years ago, we are shifting into a tax ecosystem that places a higher level of responsibility on taxpayers and tax consultants to ensure tax filings are in compliance with prevailing tax and stamp duty laws and regulations. Meanwhile the tax authorities, i.e. the IRB, will be tasked with conducting audits as a means to provide education to taxpayers and encourage compliance in the tax filings done by taxpayers.

As we progress through this change, the IRB will provide updates, such as the audit frameworks, media statements and FAQs on the stamping of employment contracts, from time to time. We look forward to further guidance which should come in the form of guidelines and other publications from the IRB.

For taxpayers and tax consultants, we have to adapt to the new requirements and process for complying with RPGT and stamp duty filing requirements as well as keep ourselves updated on the various updates, announcements and publications that are released by the Ministry of Finance and IRB.

This article was written by Michael Cheah Liat Sheng, a Tax Advisory Associate Director. If you wish to seek further clarification on any of the above issues, please contact [email protected].