What is Stamp Duty?
Stamp duty is a tax duty imposed by the government on documents that have a financial, commercial and legal effect.
What kind of documents are required to be stamped?
Pursuant to section 4 of the Stamp Act 1949, subject to the Act and subject to the exemptions contained in this Act and in any written law for the time being in force, the several instruments specified in the First Schedule shall be chargeable with stamp duties specified in such Schedule.
You may read First Schedule of the Stamp Act 1949 here to check on the list of documents chargeable with stamp duties.
Who is in charge of stamp duty?
The authority who is in charge of stamp duty is Inland Revenue Board (Lembaga Hasil Dalam Negeri, LHDN).
Is a contract still valid without stamping?
The answer might surprise you, even if a signed contract is not stamped, it is actually VALID under the law.
Then why do we need to stamp it?
Pursuant to section 52(1)(a) of the Stamp Act 1949, no instrument shall be admitted in evidence unless such instrument in duly stamped. In other simple words, without stamping on the documents themselves, you are unable to rely on them in a court of law.
What should I do?
If you wish to submit an unstamped document to court as evidence, you would have to stamp the document and pay the late stamping penalty to the Inland Revenue Board (LHDN).
The Law
Pursuant to section 47 of the Stamp Act 1949, any unstamped instrument drawn or made within Malaysia may be stamped after execution on payment of the unpaid duty if the instrument is presented for stamping WITHIN THIRTY (30) DAYS of its execution if executed within Malaysia, or within thirty days after it has been first received in Malaysia if it has been executed out of Malaysia.
Late Stamping Penalty
|
Time of delay |
Penalty (Whichever is greater) |
|
if the instrument is stamped within 3 months after the time for stamping |
RM25 or 5% of the amount of the deficient duty |
|
if the instrument is stamped later than 3 months but not later than 6 months after the time for stamping |
RM50 or 10% of the amount of the deficient duty
|
|
in any other case (more than 6 months) |
RM100 or 20% of the amount of the deficient duty |
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Disclaimer:
The information published in this article is provided for general informational purposes only and does not constitute any legal advice from the Yee & Partners. Feel free to seek legal advice from our professional lawyers.