The inscription Stamp Duty made of wooden cubes on a plain background

Redefining Compliance

Stamp Duty under Malaysia’s Self-Assessment Regime

Introduction

The Stamp Act 1949 has long stood as a cornerstone of Malaysia’s tax framework, gradually evolving to reflect the nation’s shifting economic conditions, legal developments and administrative practices.

Under the Stamp Act 1949, certain instruments must be properly stamped to be legally enforceable. Documents that are unstamped or insufficiently stamped may be rejected as evidence in court, which could undermine legal claims or defences. Proper stamping is also essential for effecting the official transfer of property ownership, as authorities will only recognise transfers supported by duly stamped instruments. Additionally, late stamping can attract penalties from the authorities, making timely compliance not only a legal requirement but also an important measure to avoid unnecessary financial exposure.

Effective 1 January 2026, a major transformation will take place with the implementation of the Stamp Duty Self-assessment System (SAS). This will be a significant move towards modernising and streamlining the stamp duty process. Under this new system, taxpayers will be required to independently determine the correct amount of stamp duty payable and make payment accordingly, without relying on or waiting for any notification, verification or assessment from the Inland Revenue Board of Malaysia (IRBM).

This reform not only enhances efficiency and reduces processing delays but also harmonises the administration of stamp duty with Malaysia’s long-established self-assessment regime for income tax, reinforcing the overarching principle of taxpayer responsibility and voluntary compliance.

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Phased Implementation

The implementation of the stamp duty SAS was initiated via the 2025 Budget announcement and the enactment of Finance Act 2024 as well as the Measures for the Collection, Administration and Enforcement of Tax Act 2024 on 31 December 2024. It was reiterated in the 2026 Budget announced recently on 10 October 2025 that a phased transition to a stamp duty SAS which goes on as planned starting from 1 January 2026.

Phase	Effective Date	Type of Instruments
Phase 1	From 1 January 2026	Instruments or agreements related to rental or lease, general 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

Following the implementation of the stamp duty SAS, it is anticipated that a widespread of audits will be carried out by the IRBM to ensure compliance readiness. The IRBM has already activated the Stamp Duty Audit Framework from 1 January 2025 which will now cover instruments executed in the preceding three (3) years, i.e. 2022, 2023 and 2024, with penalties and assessments extending further in cases of fraud, wilful default or negligence. Historically, enforcement was limited, leading many businesses to assume that only court-admissible documents required stamping.

One of the key enhancements under the Stamp Duty Audit Framework is the broadened audit scope, which now includes employment contracts, service agreements and inter-company arrangements. This shift in enforcement has raised concerns among businesses, particularly as many were previously unaware that standard employment and service contracts constitute dutiable instruments.

In response, the IRBM issued a Media Release on 6 June 2025, confirming that employment contracts are subject to a fixed stamp duty of RM10 under Item 4 of the First Schedule to the Stamp Act 1949. To facilitate a smoother transition, stamp duty concession is provided for employment contracts executed before 1 January 2025. For contracts signed between 1 January 2025 and 31 December 2025, the RM10 stamp duty remains applicable, but penalties for late stamping are waived provided the documents are stamped by 31 December 2025.

Finance Act 2025 – Stamp Duty

In the recent Budget 2026 announcement, several measures were included to pave the way for the phased implementation of the stamp duty SAS starting from 1 January 2026.

Employment contract

The the stamp duty exemption threshold for employment contracts is increased from RM300 to RM3,000 per month with effect from 1 January 2026. The higher exemption threshold eases compliance costs for employers hiring lower-income workers under formal contracts, encouraging fair employment practices and reducing dependence on informal arrangements.

Payment of stamp duty

Based on the current rules of the stamp duty SAS framework, stamp duty is due and payable on the day of the submission of the stamp duty return. The Measures for the Collection, Administration and Enforcement of Tax Act 2025 which was effective 1 January 2026 spelled out that stamp duty will be due and payable within 30 days from the date the return is submitted. This provides a breather to duty payers in managing the timing of duty payment.

Penalties for late stamping

Under the official assessment system, late penalty payment is only imposed to the duty payer once an official assessment is raised by the Stamp Office. With effect from 1 January 2025, if an instrument is not stamped within the stipulated period, the late payment penalty imposed is based on the delay period. In order to streamline the imposition of penalties relating to late stamping, the above late stamping penalty is also imposed on late submission of return and late payment of stamp duty under the stamp duty self assessment system.

Application for refund of stamp duty

Currently, a duty payer is not allowed to obtain a refund from the Collector for duty paid as a result of an error or mistake. Now, an application for refund of excessive stamp duty paid in respect of error or mistake can be made via electronic submission.

Revision of stamp duty penalties

In line with the implementation of the stamp duty SAS, it was proposed that the penalty rates be revised as follows:

Offences	Proposed
Unstamped instruments for registration of transfer Registration of instruments of transfer of debentures or shares (executed abroad) is not duly stamped	Not less than RM1,000 and not exceeding RM10,000
Compound duty on unstamped instruments Failure to pay the remitted compound duty to the Collector within the fixed period on or before the 14th day of the next month	RM500 or 20% of the amount payable, whichever is higher
Incorrect information Offence of failing to disclose all facts and circumstances in an instrument duly executed with the intention of evading payment of duty	Not less than RM2,500 and not exceeding RM50,000
Execution and signing of documents not duly stamped Offence of executing and signing documents that have not been duly stamped	Not less than RM1,000 and not exceeding RM10,000
Execution of a contract note Offence for failing to execute and transfer a contract note	Not less than RM1,000 and not exceeding RM10,000
Stamp certificates Offences relating to stamp certificates, such as selling or falsifying stamp certificates and others	Not less than RM2,500 and not exceeding RM50,000

IRBM’s New Stamp Duty Guidelines

The IRBM has released the following guidelines to better facilitate the shift to a stamp duty SAS:

Guidelines on the Introduction of Stamp Duty under the Stamp Act 1949

This guideline provides the basic information of the stamp duty scope in Malaysia. Among the topics covered on this guideline include:

type of assessment
type of duties
instruments chargeable with duty
appeal procedure
application for refund

Guidelines on the Imposition of Stamp Duty on Loan or Financing Instruments for the Purchase of Goods Listed under the First Schedule of the Hire Purchase Act 1967

This guideline was issued to explain the imposition of stamp duty on loan or financing documents for the purchase of goods listed under the First Schedule of the Hire-Purchase Act 1967 (HPA) which will be subject to stamp duty of RM10 per instrument. The list of goods under the First Schedule are:

All consumer goods (goods purchased for individual, family or household consumption)
Motor vehicles, namely
- Invalid carriages
- Motor cycles
- Motorcars including taxi cabs and hire cars
- Goods vehicles (where the maximum permissible laden weight does not exceed 2,540kg)
- Buses, including stage buses

Loans for the purchase of items listed under the First Schedule are based on any Shariah principles or conventional hire-purchase.

Guidelines on the Imposition of Stamp Duty on Instruments of Sale and Purchase and Instruments of Transfer for Movable Property

This guideline was issued to explain the imposition of stamp duty on instruments of sale and purchase and instruments of transfer for movable property. Movable property was spelled out in the guideline to be property that can be moved or transferred, such as plants, machinery, vehicles, equipment, weapons, jewelry and others.

The taxpayer needs to first determine whether the movable property being sold is a business/individual asset or trading goods. The applicable stamp duty are as follows:

Business / Individual Assets		Trading Goods
Instruments of Sale and Purchase	Ad valorem duty	Exempted
Instruments of Transfer of Title	Subject to fixed duty of RM10 per instrument if instrument of sale has been subject to ad valorem duty Subject to ad valorem duty if signed instrument of sale is not available	Subject to ad valorem duty if instrument of transfer of title is available If instrument of transfer of title is not available, instrument of sale will still be exempted from duty

Guidelines on the Imposition of Penalties on the Late Stamping of Instruments under the Stamp Act 1949

This guideline was issued to explain the imposition of penalties on the late stamping of instruments. Every instrument liable to duty shall be stamped within the prescribed period, including instruments chargeable with stamp duty but the duty is exempted. In determining the penalties to be imposed, the guideline clarified how to compute the delay period as below:

Situation

Late stamping period

Return filed on time

Commences from the expiry of the 30-day period to pay the stamp duty from the date of submission of the return

Return filed late

The sum of:

The number of days the stamp duty return was late; and
The number of days the stamp duty payment was late

Guideline for Applications for Stamping via the Self-Assessment Stamp Duty System (STDS)

This guideline was issued to provide explanations and guidance regarding the responsibilities of duty payers and the procedures in submitting the stamp duty return form. This guideline also explains the types of instrument that need to be stamped under the Stamp Act 1949 in line with the implementation of the stamp duty SAS which is effective from 1 January 2026.

No Penalty in the First Year of Stamp Duty SAS

In line with the implementation of Phase 1 of the stamp duty SAS beginning 1 January 2026, the IRBM has issued a Media Release to waive penalties in the first year of implementation.

Penalties will be waived for the following offences:

Submission of incorrect stamp duty return form
Providing incorrect or inaccurate information relating to any matters that affect the imposition of stamp duty
Any offences for incorrect stamp duty return or submission of incorrect information under Section 72D(2) of the Stamp Act 1949 identified through any audit findings carried out during this waiver period

The penalty waiver applies to stamping applications submitted from 1 January 2026 to 31 December 2026.

Kindly note that there is no waiver announced in relation to failure to submit the stamp duty return form within the prescribed time. Therefore, duty payers are advised to ensure that the stamp duty returns are submitted on time.

Way Forward

It is essential for taxpayers to have a strong understanding of the stamp duty requirements. Any inaccuracies or omissions in assessment or reporting may trigger audits, penalties and significant fines, making diligent compliance and careful review critical to mitigating potential risks.

Taxpayers should take proactive steps to strengthen their internal processes, knowledge and controls well ahead of implementation:

Build technical understanding
Ensure relevant personnel understand when an instrument is chargeable, the applicable stamp duty rates, reliefs, exemptions and timing rules. This includes commonly overlooked documents such as employment contracts, service agreements and inter-company arrangements.
Review existing and ongoing documents
Conduct a review of contracts and instruments executed in recent years to identify any unstamped or under-stamped documents and regularise them where necessary, taking advantage of transitional reliefs where available.
Strengthen internal controls and workflows
Put in place clear procedures for identifying dutiable instruments, computing stamp duty, obtaining approvals and ensuring timely stamping. Responsibility should be clearly assigned to avoid gaps or duplication.
Prepare for audits and record-keeping
Maintain proper documentation, working papers and supporting records to substantiate stamp duty assessments. Records should be organised and retained in anticipation of IRBM audits under the Stamp Duty Audit Framework.
Familiarise with the electronic filing systems
Ensure readiness to use the relevant electronic stamping platform (e.g. STAMPS / MyTax / e-Duti Setem), including access rights, user training and internal checks before submission.
Seek professional review where needed
For complex or high-value transactions, consider obtaining professional advice or conducting a pre-implementation health check to mitigate exposure to penalties and fines. Early preparation will help taxpayers adapt smoothly to the self-assessment regime, reduce compliance risks and avoid costly errors once the system takes effect.

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