In Malaysia, stamp duty is governed by the Stamp Act 1949 and administered by the Inland Revenue Board or Lembaga Hasil Dalam Negeri (LHDN).
The purpose of this tax is to generate revenue for the government and regulate the property market.
What is the stamp duty in Malaysia?
Stamp duty is a tax imposed by the government on any document (instruments and not transactions) that presents an interest, right, or ownership of a property.
This includes buying, selling, and transferring properties such as residential houses, commercial buildings, industrial warehouses, and land.
An instrument can be stamped within 30 days of its execution if signed in Malaysia, or within 30 days of first being received in Malaysia if signed outside the country.
Stamp Duty Calculation in Malaysia
Stamp duty is divided into 2 categories.
-
Fixed Duties (Charged at a set price, including stamps for individual policies or copies).
-
Ad Valorem Stamp Duties.
Rates of Ad Valorem Stamp Duty
Ad valorem stamp duty is calculated based on the property's purchase price or market value, whichever is higher.
The duty varies depending on the type of property (other than shares, stock or marketable securities) and the purchase price as follows:
| Purchase Prices | Stamp Duty Rate |
| First RM100,000 | 1% |
| Next RM400,000 | 2% |
| Next RM500,000 | 3% |
| Exceeding RM1 million | 4% |
Foreign companies pay a flat rate stamp duty of 4%.
Ad valorem duties will be imposed on:
- Instrument of transfer of property.
- Instrument creating interest in property such as tenancies and statutory leases.
It is the buyer who purchases a property that is liable to pay the stamp duty.
Instrument of Transfer
Many people have doubts on how stamp duty is calculated based on instrument of transfer? It is taxed based on different tiers. Let us go through a real life scenario.
Say, today we have a detached factory with a property purchase price at RM80 million.
Stamp duty (instrument of transfer)
≈ Tiered price ÷ RM100 (rounding up if the calculation contains decimals) x Stamp duty rate
≈ (RM100,000 x 1%) + (RM400,000 x 2%) + (RM500,000 x 3%) + (RM79,000,000 x 4%)
= RM1,000 + RM8,000 + RM15,000 + RM3,160,000
= RM3,184,000
Loan Agreement
Okay, now we go to the second item. Stamp duty based on loan agreement where the rate is 0.5 % on the amount of loan.
The stamp duty on foreign currency loan agreements would be the same as Ringgit Malaysia loan agreements.
Thus, based on the RM80 million factory above, say you can get up to 85% loan.
85% of RM80 million = RM68 million
Stamp duty (loan agreement)
= RM68 million x 0.5%
= RM340,000
Total Stamp Duty Payable
Considering a detached factory valued at RM80 million as previously mentioned above.
Stamp duty (instrument of transfer) = RM3,184,000
Stamp duty (loan agreement) = RM340,000
Stamp duty (total amount payable) = RM3,184,000 + RM340,000 = RM3,524,000
Rates of Tenancy Agreement Stamp Duty
Stamp duty is charge on tenancy agreements based on the annual rent and the rental tenure. The updated stamp duty rates are as follows :
Considering a small warehouse with a monthly rental of RM18,000 and a rental tenure of 3 years.
Annual rent = RM18,000 x 12 = RM216,000
For a tenure of 3 years, the rate is RM3 for every RM250 or part thereof
Stamp duty (tenancy agreement)
≈ Annual rent ÷ RM250 (rounding up if the calculation contains decimals) x Stamp duty rate
≈ RM216,000 ÷ RM250 x RM3
= 864 x RM3
= RM2,592
Sale and Purchase Agreement (SPA) Legal Fees
| Purchase Prices | Percentage |
| First RM500,000 | 1.0% |
| From RM500,001 to RM 1 million | 0.8% |
| From RM1,000,001 to RM 3 million | 0.7% |
| From RM3,000,001 to RM 5 million | 0.6% |
| More than RM 5 million | 0.5% |
When it comes to commercial loans, different banks have different criteria for assessment.
Some general criteria banks are looking for are location, commercial property type, total number of floors within the building, the type of unit if it is in mixed development etc.
Stamp Duty Exemption (2025) Applicable for Commercial and Industrial Properties
- Instrument of Transfer
- 50% stamp duty remission is available for property transfers between parents and children (or vice versa) executed before 1 April 2023, provided the recipient is a Malaysian citizen.
- Stamp duty exemption applies to property transfers (from 1 April 2023) between parents, children, grandparents, and grandchildren for the first RM1 million of the property's value, with 50% remission on the remaining value. Recipients must be Malaysian citizens.
- Exemption on transfer of property between spouses.
- Stamp duty is exempt for transfers of land, business, assets, or shares when converting a partnership or private company into a limited liability partnership.
- RM10 fixed duty applies to property transfers between beneficiaries of the same deceased estate through release or renunciation.
- Abandoned Projects
- Stamp duty exemptions apply to loan agreements and property transfers related to abandoned projects, involving approved contractors, developers, and financiers, if executed by 31 December 2025.
- Stamp duty exemption is available for loan agreements and transfer instruments related to abandoned projects, provided they are executed by the original purchaser or their beneficiary by 31 December 2025.
Penalty for Late Payment of Stamp Duty
If it's not stamped within the required period, penalties may apply:
- RM25.00 or 5% of the deficient duty (whichever is greater) if stamped within 3 months after the deadline;
- RM50.00 or 10% of the deficient duty (whichever is greater) if stamped after 3 months but within 6 months of the deadline;
- RM100.00 or 20% of the deficient duty (whichever is greater) if stamped after 6 months from the deadline.
Stamp Duty and Industrial Malaysia
Beside stamp duty, commercial and industry property buyers should be aware that other professional costs will be incurred as well.
For example, real estate agents, property valuers, legal fees and Real Property Gain Tax (RPGT).
Industrial Malaysia offers expertise in industrial real estate, guiding clients through property buying and investment to maximise returns and minimise taxes.
WhatsApp us to explore opportunities in the dynamic industrial property market.
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