# The Stamp Act 1949: How Malaysia Taxes Its Documents

> The Stamp Act 1949 (Act 378) is the statute behind Malaysia's stamp duty — a tax on legal, commercial and financial documents that ranges from a flat RM10 to progressive ad valorem rates, administered by LHDN and shifting to a self-assessment system from 2026.

- Category: taxation
- Language: en
- Status: published
- Updated: 2026-08-14
- Canonical: https://negaraku.md/en/taxation/stamp-act-1949

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Sign a tenancy, take out a housing loan, transfer a title, buy shares through a broker — and somewhere in the paperwork sits a tax you may never have noticed. That tax is **stamp duty**, and the law behind it is the **Stamp Act 1949 (Act 378)**. What makes it unusual is its target: stamp duty is charged on the **instrument** — the written document itself — and not on the transaction it records. Get the document stamped and it stands up in court; leave it unstamped and it may be worth little more than the paper it is printed on.

This is a plain, statute-level guide to what the Act taxes, how the duty is worked out for the documents people meet most often, the deadlines and penalties, and the shift to self-assessment now rolling out from 2026.

## What does the Stamp Act 1949 actually tax?

The Act imposes duty on **instruments, not transactions**. An instrument is any written document, and stamp duty is levied on legal, commercial and financial instruments. The Stamp Act 1949 is **Act 378** in the Laws of Malaysia, and the chargeable instruments — together with the duty each attracts — are set out in the **First Schedule** to the Act. Administration sits with the **Inland Revenue Board of Malaysia (Lembaga Hasil Dalam Negeri, LHDN / IRBM)**.

The Act came into force in **Peninsular (West) Malaysia on 5 December 1949** and was **extended to Sabah and Sarawak from 1 October 1989** by P.U. (B) 441/1989. First enacted as F.M. Ordinance No. 59 of 1949, it was revised as Act 378 in 1989 (in force from 2 January 1990).

Because the charge attaches to the paper rather than the deal, the same underlying arrangement can produce several dutiable documents — a sale of property, for example, generates both a transfer instrument and, if financed, a loan agreement, each stamped in its own right.

## Ad valorem or fixed: the two ways duty is calculated

Every stamp duty falls into one of two mechanics.

| Duty type | How it is calculated | Typical instruments |
|---|---|---|
| **Ad valorem duty** | The rate varies according to the nature of the instrument and the **consideration or market value** involved | Transfers of property (sale or gift), marketable securities and shares; instruments creating property interests such as tenancies and statutory leases; security instruments (Bond); capital-market instruments such as Contract Notes |
| **Fixed duty** | A nominal amount imposed **without relation** to the consideration or amount stated, generally starting at **RM10** per instrument | Power or Letter of Attorney, Articles of Association, Promissory Notes, Policies of Insurance; and a duplicate, subsidiary or collateral instrument where the original principal instrument has already been duly stamped |

The distinction matters in practice. Ad valorem duty on a high-value transfer can run to tens of thousands of ringgit; fixed duty on a letter of attorney is a flat RM10 whatever the sums involved behind it.

## How much is duty on a property transfer?

The transfer of ownership is captured by a **Memorandum of Transfer (MOT)**, and its ad valorem duty is tiered. Effective **1 January 2019**, the scale on the transfer instrument is:

| Portion of price / value | Rate |
|---|---|
| First RM100,000 | 1% |
| RM100,001 to RM500,000 | 2% |
| RM500,001 to RM1,000,000 | 3% |
| Above RM1,000,000 | 4% |

The tiers are marginal, so each band applies only to the slice of value within it. A property priced at RM600,000, for instance, is charged 1% on the first RM100,000, 2% on the next RM400,000, and 3% on the remaining RM100,000.

One important carve-out changed the arithmetic for foreign buyers. From **1 January 2026**, non-citizen individuals (excluding permanent residents) and foreign companies buying residential property face a **flat 8%** stamp duty on the instrument of transfer, up from the previous 4%. This flat rate was inserted as **Item 32(ab)** of the First Schedule by the Finance Act 2025 (Act 874), replacing the earlier flat 4% under Item 32(aa).

At the other end, first-time buyers who are Malaysian citizens enjoy a substantial exemption under the **i-Miliki** initiative: a **100% exemption on both the instrument of transfer and the loan agreement** for a first residential property priced **up to RM500,000**, and a **75% exemption** for a first home priced **RM500,001 to RM1,000,000**. Eligibility requires that the buyer has never owned any residential property. The full up-to-RM500,000 exemption, originally gazetted under P.U.(A) 53/2021 (transfer) and P.U.(A) 54/2021 (loan), was extended by Budget 2026 to sale-and-purchase agreements executed up to **31 December 2027**.

## How much is duty on a loan or tenancy?

**Loan and financing agreements.** Stamp duty on a loan or financing agreement is **0.5% of the total loan sum**. Financed insurance premiums — such as MRTA (Mortgage Reducing Term Assurance) or MLTA (Mortgage Level Term Assurance) — are excluded from the sum on which the 0.5% is charged.

The 0.5% base rate is not, however, unconditional for a first home. Under the Stamp Duty (Exemption) (No. 2) Order 2021 [P.U.(A) 54/2021], a loan agreement financing a **Malaysian citizen's first residential property priced up to RM500,000 is fully (100%) exempt**, and Budget 2026 extended this exemption to sale-and-purchase agreements executed up to **31 December 2027**. Eligibility requires that the buyer has never owned any residential property.

**Tenancy agreements.** A tenancy is charged per **RM250 of annual rent**, with the rate stepping up according to the length of the lease:

| Lease term | Duty per RM250 of annual rent |
|---|---|
| Up to 1 year | RM1 |
| Exceeding 1 to 3 years | RM3 |
| Exceeding 3 to 5 years | RM5 |
| Exceeding 5 years | RM7 |

A **RM10 minimum** duty applies. Note that the picture tightened recently: effective **1 January 2025**, the previous **RM2,400 annual-rent exemption** for tenancy agreements was removed, so the full annual rent is now chargeable, subject only to that RM10 floor.

## When must a document be stamped, and what if it is late?

Timing is strict. An instrument **executed within Malaysia must be stamped within 30 days** of its execution. If it is **executed outside Malaysia**, it must be stamped within 30 days after it is **first received** in Malaysia.

Missing the deadline carries two consequences. First, an **unstamped or insufficiently stamped instrument is not admissible as evidence** in a court of law, nor will a public officer act upon it — a serious problem if you ever need to enforce the document. Second, there is a monetary penalty:

| Late stamping | Penalty |
|---|---|
| Stamped **within 3 months** after the due date | **RM50 or 10%** of the deficient duty, whichever is higher |
| Stamped **later than 3 months** after the due date | **RM100 or 20%** of the deficient duty, whichever is higher |

## How do you stamp a document now?

Stamping in Malaysia is done electronically. As part of the move to self-assessment, the **e-Duti Setem** platform **replaced the earlier STAMPS portal from 1 January 2026**. Through it, a taxpayer submits the instrument, the duty is determined, and payment is made — producing the stamp certificate that evidences the document has been duly stamped.

## What changes under self-assessment from 2026?

The bigger reform is not the rates but **who calculates the duty**. Under the **Stamp Duty Self-Assessment System**, taxpayers **assess, declare and pay** the duty themselves, rather than waiting for LHDN to raise an assessment. The roll-out is phased across three years:

| Phase | Effective | Instruments covered |
|---|---|---|
| Phase 1 | 1 January 2026 | Rental/lease, general encumbrance and security instruments |
| Phase 2 | 1 January 2027 | Property transfer instruments |
| Phase 3 | 1 January 2028 | All remaining instruments |

To ease the transition, LHDN announced (media release dated 21 December 2025) a **special penalty waiver for Phase 1 instruments**: no penalty is imposed where the stamping application is submitted between **1 January and 31 December 2026**. The waiver covers errors in the Stamp Duty Return Form (BNDS), inaccurate information affecting the duty assessment, and offences under subsection 72D(2) of the Act — but it does **not** cover failure to stamp or late stamping, so the 30-day late-stamping penalty still applies. Separately, a Stamp Duty Voluntary Disclosure Programme runs from 1 January to 30 June 2026 for instruments executed in 2023–2025.

The practical effect is a shift in responsibility. Once an instrument type moves into self-assessment, the burden of computing the right duty — and the exposure if it is under-declared — sits with the taxpayer and their advisers, not with a counter officer who checks the sum on the way in.

## What's next

Rates, exemptions and the self-assessment scope are **year-sensitive** — the 8% foreign-buyer rate, the first-time-homebuyer exemption bands and their 31 December 2027 validity, and the Phase 1 penalty-waiver window all carry dated cut-offs, so confirm the current position against the live LHDN Stamp Duty Order and e-Duti Setem guidance before you rely on them for a specific document. For the authoritative text, the **Stamp Act 1949 (Act 378)** and its **First Schedule** remain the primary reference, published by LHDN.

## Sources

- Pengenalan Duti Setem (Introduction to Stamp Duty) — https://www.hasil.gov.my/en/duti-setem/pengenalan-duti-setem/ (Lembaga Hasil Dalam Negeri Malaysia (LHDN / IRBM))
- Penalti (Duti Setem) — Stamp Duty Penalty — https://www.hasil.gov.my/duti-setem/penalti-duti-setem/ (Lembaga Hasil Dalam Negeri Malaysia (LHDN / IRBM))
- Stamp Act 1949 (Act 378) — official text — https://www.hasil.gov.my/media/hwdf2s3g/20240101-stamp-act-1949-act-378.pdf (Lembaga Hasil Dalam Negeri Malaysia (LHDN / IRBM))
- Malaysian Tax Law – Stamp Duty — https://oneasia.legal/en/4480 (One Asia Lawyers)
- Malaysia's New Stamp Duty Self-Assessment and Audit Framework — https://oneasia.legal/en/7085 (One Asia Lawyers)
- Property Law in Malaysia: Stamp Duty for Transfer of Property — https://chialee.com.my/property-law-in-malaysia-stamp-duty-for-transfer-of-property/ (Chia, Lee & Associates)
- Stamp Duty on Instrument of Transfer and Loan Agreement — https://www.lowpartners.com/stamp-duty-instrument-transfer-loan-agreement/ (Low & Partners)
- 2026 Guide: Stamp Duty, e-Stamping, and Tenancy Agreement Fees in Malaysia — https://www.propertyguru.com.my/property-guides/stamp-duty-and-administration-fee-for-tenancy-agreement-28223 (PropertyGuru Malaysia)
- Malaysia Tenancy Agreement Stamp Duty Calculator (2026 Rates) — https://speedhome.com/blog/stamp-duty-tenancy-agreement-calculator/ (SpeedHome)
- Govt To Implement Self-Assessment Stamp Duty System In Phases Starting 2026 — MoF — https://bernama.com/en/news.php?id=2353694 (BERNAMA (Malaysian National News Agency))
- Stamp Duty Malaysia 2026: Rates, Exemptions and Penalties — https://www.cleartax.com/my/en/stamp-duty-malaysia (ClearTax Malaysia)
- Laws of Malaysia — Stamp Act 1949 (Act 378), online updated reprint text — https://www.jkptg.gov.my/images/pdf/perundangan-tanah/Act_378_-_Stamp_Act_1949.pdf (Jabatan Ketua Pengarah Tanah dan Galian (JKPTG) — Laws of Malaysia Act 378)
- Stamp Act 1949 (commencement note reproduction) — https://www.lowpartners.com/stamp-act-1949/ (Low & Partners)
- 8% Stamp Duty for Foreigners Malaysia 2026 (statutory analysis citing Finance Act 2025 / Item 32(ab)) — https://propcashflow.my/blog/foreigner-stamp-duty-8-percent-malaysia/ (PropCashflow.my)
- Budget 2026: Stamp duty exemption extended for first-time homebuyers — https://www.thestar.com.my/business/business-news/2025/10/10/budget-2026-stamp-duty-exemption-extended-for-first-time-homebuyers (The Star)
- Malaysia's 2026 Budget: What it Means for Foreign Investors — https://www.china-briefing.com/china-outbound-news/malaysias-2026-budget-what-it-means-for-foreign-investors (China Briefing (Dezan Shira & Associates))
- Stamp duty exemptions on the purchase of first residential homes (P.U.(A) 53/2021 & 54/2021) — https://www.ey.com/en_my/technical/tax-alerts/stamp-duty-exemptions-on-the-purchase-of-first-residential-homes (EY Malaysia (Tax Alert))
- Special Penalty Waiver for Stamping of Phase 1 Instruments in 2026 (quoting LHDN 21 Dec 2025 media release) — https://dnh.com.my/special-penalty-waiver-for-stamping-of-phase-1-instruments-in-2026/ (Donovan & Ho)

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