What Is Stamp Duty?
Stamp duty is a tax imposed by the Inland Revenue Board of Malaysia (LHDN) on certain legal documents — such as sale & purchase agreements, property transfer forms, tenancy agreements, and loan agreements.
It is important to note that stamp duty is charged on the document (“instrument”), not on the transaction itself.
If a document is not stamped, it may not be admissible in court as proof of the agreement.
How Stamp Duty Is Calculated
1. For Property Transfer (Sale & Purchase of House, Land, etc.)
Stamp duty uses an ad valorem (percentage-based) rate, calculated on the property’s price or market value:
- 1% for the first RM100,000
- 2% for RM100,001 – RM500,000
- 3% for RM500,001 – RM1,000,000
- 4% for amounts above RM1,000,000
For foreign buyers (non-citizens / non-PR), a flat 4% rate applies on the entire property value.
2. For Loan / Financing Agreements
When you sign a loan agreement (housing loan, vehicle loan, business financing, etc.), stamp duty is charged at:
0.5% of the total loan amount
3. Other Documents That May Incur Stamp Duty
- Tenancy agreements
- Transfer of shares or securities
- Business contracts and other legal instruments
Each document type has either a fixed stamp duty or a rate based on the stated value.
Who Pays the Stamp Duty?
| Type of Document | Party Responsible for Paying |
|---|---|
| Property Transfer (e.g., sale & purchase / transfer of ownership) | Buyer / transferee |
| Loan / Financing Agreement | Borrower |
| Tenancy Agreement | Tenant (lessee) |
| Share Transfer | Buyer / acquirer |
In most cases, the responsibility follows standard legal practice — but the contract may specify otherwise, depending on the agreement between both parties.
When Must Stamp Duty Be Paid?
- If the document is signed in Malaysia → within 30 days of signing
- If the document is signed overseas → within 30 days after the document arrives in Malaysia
Failing to stamp within the time limit may lead to penalties.
Why Is Stamp Duty Important?
- A stamped document is legally valid and accepted in court.
- Property and loan transactions cannot be finalized without proper stamping.
- Helps prevent disputes and verifies the authenticity of agreements.
- Ensures compliance with Malaysian tax and legal regulations.
Key Takeaway
- If you are buying a house / property, you must budget extra for stamp duty — not just the price of the house.
- If you are taking out a loan, make sure the cost of the duty for the loan agreement is taken into account.
- Don’t neglect document stamping — so that your agreement is legally valid.
- For rent, lease — stamp duty still needs to be paid so that the agreement is valid and can be used as evidence in the event of a dispute.
