STAMP DUTY Stamp Duty on Instruments of Transfer of Property Compounding Payment of Duty on Unstamped Cheques, Contract Notes or Insurance Policies Penalty for Late Stamping Standardising Stamp Duty on Share Transactions by Foreign Investors Stamp Duty on Loans for Higher Education Stamp Duty on Security Instruments Under Syariah Principles Standardising Rate of Stamp Duty on Selected Instruments 1. Stamp Duty on Instruments of Transfer of Property Stamp duty is chargeable on instruments of transfer of property based on the transaction value or the market value of the property, whichever is the higher. Currently, the rate of stamp duty on instruments of transfer of property (except stock, shares, marketable securities and certain accounts receivables or book debts) is as follows :- a. 1% on the first RM100,000; b. 2% on the next RM400,000; c. 3% on the next RM1,500,000; and d. 4% on the remaining amount. As most up-market properties are for commercial usage, in order to reduce the cost of doing business in Malaysia, it is proposed that the rate of stamp duty payable on instruments of transfer of property be amended as follows :- a. 1% on the first RM100,000; b. 2% on the next RM400,000; and c. 3% on the remaining amount. The proposal is to be effective from 1st January 2001. ^ top 2. Compounding Payment of Duty on Unstamped Cheques, Contract Notes or Insurance Policies Currently, the Minister may authorise any banker, stockbroker or insurer to compound for the payment of duty on unstamped cheques, contract notes or policies of insurance respectively on conditions which include the payment of the amount of stamp duty due after each quarter i.e on the 1st day of January, 1st day of April, 1st day of July and the 1st day of October in each year. It is proposed as follows :- a. the Collector of Stamp Duties be empowered in the place of the Minister to authorise any banker, dealer (previously stockbroker) or insurer to compound for the payment of duty on any unstamped cheques, contract notes or policies of insurance respectively; and b. all stamp duties compounded by the banker, dealer (previously stockbroker) or insurer are to be remitted to the Collector on the 1st day of each calendar month. Arising from the proposal, the relevant payments are to be made on a monthly basis instead of quarterly. The above proposal is to be effective from 1st January 2001. ^ top 3. Penalty for Late Stamping Currently, dutiable instruments not stamped within the specified period may be stamped on payment of, in addition to the unpaid duty, a penalty of RM25 or four times the amount of the deficient duty, whichever sum is the greater. To ensure transparency in imposing a penalty in respect of late stamping, the following penalty structure is proposed with effect from 1st January 2001 :- Period after time of stamping Penalty Payment   Within 3 months RM25 or 50% of deficient duty Whichever sum is the greater More than 3 months but not later than 6 months RM50 or 100% of deficient duty Whichever sum is the greater Other situations RM100 or 200% of deficient duty Whichever sum is the greater The above proposal reduces the maximum amount of penalty from four times to two times the unpaid duty. ^ top 4. Standardising Stamp Duty on Share Transactions by Foreign Investors Currently, stamp duty of up to RM200 is imposed on contract notes relating to share transactions at the Kuala Lumpur Stock Exchange through foreign stockbroking firms, whereas stamp duty calculated at 0.1% of the share value is imposed on such contract notes if the transactions are executed through local stockbroking firms. To eliminate the anomaly stated above, it is proposed that stamp duty at a maximum rate of RM200 be imposed on such share transactions irrespective of whether the transactions are executed through foreign or local stockbroking firms. The proposal is to be effective from 1st January 2001. ^ top 5. Stamp Duty on Loans for Higher Education Currently, instruments for loans obtained to pursue higher education attract ad valorem stamp duty at the rate of RM2.50 for every RM500.00 or part thereof of the principal sum of the loan. To reduce the financial burden on students pursuing higher education, the Government has proposed to reduce the duty payable on such loan instruments to a flat rate of RM10.00. This proposal is to be effective from 1st January 2001. ^ top 6. Stamp Duty on Security Instruments Under Syariah Principles Currently, instruments used as securities under syariah principles suffer certain stamp duty disadvantages compared to securities under conventional principles. To standardise the stamp duty on security instruments under syariah principles it is proposed that such instruments be subject to stamp duty similar to that on security instruments under conventional principles. This proposal is to be effective from 1st January 2001. ^ top 7. Standardising Rate of Stamp Duty on Selected Instruments Stamp duties are imposed based on various fixed and ad valorem rates depending on the type of instrument. The fixed rates range from 15 sen to RM100.00. The stamping process is complicated by these widely differing rates. To simplify and expedite the stamping process, it is proposed that the fixed stamp duty rate on all documents (except for cheques and Memorandum and Articles of Association) imposed under the First Schedule of the Stamp Act, 1949 be standardised at RM10.00. The current fixed rates on such documents are as follows :- Brief Description of Class of Instrument Item No of Charge First Schedule Stamp Act, 1949 Current Fixed Stamp Duty Rate Affidavit, Statutory Declaration or Declaration in Writing on Oath 2 5.00       Agreement or Memorandum of Agreement made under hand only not otherwise specially charged with any duty 4 3.00       A charge or mortgage on or an assignment by way of security of accounts receivables to a bank, merchant bank or borrowing company in Malaysia approved by the Minister of Finance, pursuant to an agreement for discounting invoices or hire-purchase receivables 27(d) 5.00       Conveyance, Assignment Transfer (on the absolute sale of accounts receivables) 32(c) 5.00       Letter of Guarantee 50 2.00       Letter of Hypothecation 50A 3.00       Letter of Allotment and Letter of Renunciation 51 1.00       Various policies of insurance 58(1)(a), (b), (2), (3), (5), (6)(a), (6)(b), (7) and (8) 2.00       Promissory Note (not in favour of banks) 60(b) 1.00       Protest Note 61 1.00       Trust Receipt 78 3.00 In respect of several classes of instruments for which ad valorem duties are payable, the rates have been amended as follows :- Brief Description of Class of Instrument Item No. of Charge First Schedule Stamp Act, 1949 Ad Valorem Current Rate Proposed Rate Charge or Mortgage, Agreement for a Charge or Mortgage, etc being the only or principal or primary security, etc. 27(a)(ii) RM2.50 for every RM500.00 or part thereof but the total duty payable shall not exceed RM500.00 RM5.00 for every RM1,000.00 or part thereof but the total duty payable shall not exceed RM500.00         27(a)(iii) RM2.50 for every RM500.00 or part thereof RM5.00 for every RM1,000.00 or part thereof         Conveyance, Assignment, Transfer on sale of any stock, shares or marketable securities 32(b) 30 sen for every RM100.00 or part thereof RM3.00 for every RM1,000.00 or part thereof This proposal is to be effective from 1st January 2001. ^ top