The Stamp Act 1949: How Malaysia Taxes Its Documents

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.