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RES619
REVENUE LAWS
Lecture 5
Introduction to the Stamp Act 1949

Introduction
• Stamp duty is a form of indirect tax imposed on
chargeable instruments arising from specific
transactions, but not directly on individuals,
companies or persons.
• The duties imposed are either fixed duties or ad
valorem duties
• The rate of duty varies according to the nature of
the instruments/documents and transacted
values.
• Exemption of stamp duty is given on certain
instruments and documents.

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Principles of Stamp Duty

• Stamp duty is a tax on documents relating to immovable properties, stocks or
shares.
• Examples of such documents are :
– Lease / Tenancy Agreements : These are documents that are prepared and signed when you
rent a property. Stamp duty is calculated on the actual rent or market rent whichever is
higher. The person who leases or rents the property (lessee or tenant) is responsible for
paying stamp duty.
– Acceptance to Option to Purchase / Sale & Purchase Agreements : These are documents that
are prepared and signed when you buy or sell your property. Stamp duty is payable on the
actual price or market price whichever is higher. The buyer is responsible for paying buyer’s
stamp duty. Where seller’s stamp duty is applicable, the seller is responsible for paying
seller’s stamp duty.
– Mortgages : These are documents that are prepared and signed when you obtain a loan from
banks for your property purchase. Stamp duty is payable on the loan amount. The person
who obtains the loan (mortgagor) is responsible for paying the stamp duty on the mortgage
document.
– Share Transfer Documents : These are documents that are prepared and signed when you buy
or sell shares. Stamp duty is payable on the actual price or net asset value of the shares
whichever is higher. The person who buys the shares (transferee) is responsible for paying
stamp duty on the Share Transfer document.

History of Stamp Duty

• The duty was originally introduced in the Netherlands in 1624 and
spread to other countries subsequently, France 1654, Denmark
1657 and Prussia 1682.
• In Malaysia, Stamp Duty was introduced by the British Colonial
Government where the implementation of this duty as provided in
the Stamps Enactment 1897 and Stamps Ordinance 1907.
• Both enactments were repealed and replaced by the Stamps
Ordinance 1949 which applicable to the Federation of Malaya.
• In 1989, the Stamp Ordinance 1949 was revised and the Stamp Act
1949 was introduced.
• The new revised Act maintain the principles of previous ordinance.

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Stamps Regulations in the Federated

Malay States (FMS) & Straits Settlements

Administration and purpose of Stamp

Duty
• Purpose of stamping : document/instrument
must be duly stamped in order to be admitted as
an evidence.
• The administration and operation of the
collection of stamp duty in Malaysia are governed
by the Stamp Act 1949.
• The Director General of Inland Revenue is
responsible for the collection of stamp duty in
Malaysia.
• The Stamp Act 1949 also provides for exemption
of stamp duties on chargeable instruments.

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Meaning of “duly stamped”

Section 2 of the
Stamp Act 1949

Instruments Not Duly Stamped

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Instruments Not Duly Stamped

Instruments Not Duly Stamped

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Instruments Not Duly Stamped

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Instruments Not Duly Stamped

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Types of Instruments or
Documents to be imposed

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Ad Volerem Duty
• Duty varies in amount in some specified proportion to the amount
or value of some obligation incurred or discharged or some
property affected by the instruments.
• The Stamp Act 1949 provides for the imposition of ad valorem
Duties (that is, according to the value) on:
– instruments of transfer (implementing a sale or gift) of property
including marketable securities (meaning loan stocks and shares of
public companies listed on the Bursa Malaysia Berhad), shares of
other companies and of non tangible property (e.g. book debts,
benefits to legal rights and goodwill);
– instruments creating interests in property (e.g. Tenancies and
Statutory Leases);
– instruments of security for monies including instruments creating
contracts for payment of monies or obligation for payment of monies
(generally described as `Bond`); and
– certain capital market instruments (e.g. Contract Notes)

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Example

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Fixed Duty
• The Imposition of Fixed Duties on:
– a number of other legal, commercial, mercantile
or capital market instruments (e.g. Power or Letter
of Attorney, Articles of Association of a Company,
Promissory Notes, Policy of Insurance etc); and
– a duplicate or a subsidiary or a collateral
instrument when it can be shown that the original
or principal or primary instrument has been duly
stamped.

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Example

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Principles of First Schedule

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Principles of the First Schedule

Items Description of Instrument
1. AFFIDAVIT, STATUTORY DECLARATION OR DECLARATION IN WRITING on oath or
affirmation, made before a person authorized by law to administer an oath
2. AGREEMENT for a lease
3. AGREEMENT OR MEMORANDUM OF AGREEMENT made under hand only, and not
otherwise specially charged with any duty, whether the same is only evidence of a
contract or obligatory on the parties from its being a written instrument.
4. ANNUITY
Conveyance in consideration of, and instrument creating by way of sale or gift
Instrument creating by way of security

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Principles of the First Schedule

Items Description of Instrument
5. APPOINTMENT of a RECEIVER under a mortgage
6. APPOINTMENT of a new TRUSTEE, and APPOINTMENT in execution of a Power, of
any property, or of any share or interest in any property, by any instrument not
being a Will
7. ARTICLES OF ASSOCIATION of a company
8. ASSIGNMENT
By way of security or of any security
Upon a sale or otherwise
9. ASSURANCE
10. BILL OF SALE
Absolute
By way of security

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Principles of the First Schedule

Items Description of Instrument
11. BOND f o r s e c u r i n g t h e p a yme n t or repayment of money or the
transfer or retransfer of stock
12. BOND, COVENANT OR INSTRUMENT of any kind whatsoever
13. BOND, CHARGE, MORTGAGE or other INSTRUMENT executed by way of
INDEMNITY or of SECURITY for the due execution of an office, or for the
discharge of liabilities, arising out of the execution thereof, or to account
for money received by virtue Thereof
14. BOND on obtaining letters of administration where the estate exceeds
RM50,000.00.
15. BOND of any kind whatsoever not specifically charged with any duty

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Principles of the First Schedule

Items Description of Instrument
16. CHARGE OR MORTGAGE, AGREEMENT FOR A CHARGE OR MORTGAGE,
(including that under the Syariah) BOND, CONVENANT, DEBENTURE (not being
a marketable security) BILL OF SALE by way of security and WARRANT OF
ATTORNEY to confess and enter up judgment
17. CHEQUE (unless compounded for)
18. CONTRACT
19. CONTRACT NOTE
20. CONVEYANCE, ASSIGNMENT, TRANSFER OR ABSOLUTE BILL OF SALE
21. COUNTERPART OR DUPLICATE of any instrument chargeable with duty, and in
respect of which the proper duty has been paid—
22. COVENANT
23. DEBENTURE
24. DECLARATION of any use or trust of or concerning any property by any writing,
not being a will, or an instrument chargeable with duty as a settlement

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Principles of the First Schedule

Items Description of Instrument
25. DEED of any kind not described in this Schedule
26. DISCHARGE OF CHARGE
27. DISSOLUTION OF PARTNERSHIP
28. DUPLICATE
29. EQUITABLE MORTGAGE
30. EXCHANGE. Any instrument whereby an exchange of any property is effected.
31. FURTHER CHARGE
32. GIFT
33. INDEMNITY BOND
34. INSURANCE

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Principles of the First Schedule

Items Description of Instrument
35. LEASE OR AGREEMENT FOR LEASE: of any immovable property and for
securing the payment for the provision of services or facilities or to other
matters or things in connection with such lease
36. LEASE OR AGREEMENT FOR LEASE UNDER THE PRINCIPLES OF AL-IJARAH of the
Syariah law for the purpose of financing or securing repayment of money
37. LETTER OF GUARANTEE
38. LETTER OF HYPOTHECATION
39. LETTER OF ALLOTMENT AND LETTER OF RENUNCIATION or any document
having the effect of a letter of allotment of shares in any company or proposed
company or in respect of any loan raised or proposed to be raised by any
company or proposed company
40. MARKETABLE SECURITY
41. MEMORANDUM OF ASSOCIATION OF A COMPANY
42. PARTNERSHIP

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Principles of the First Schedule

Items Description of Instrument
43. POLICY OF INSURANCE
44. POWER OR LETTER OF ATTORNEY
45. PROMISSORY NOTE
46. PROTEST OF NOTE, that is to say, any declaration in writing made by a Notary
Public, or other person lawfully acting as such, attesting the dishonour of a
promissory note
47. RECONVEYANCE OF CHARGED OR MORTGAGED PROPERTY, RE-ASSIGNMENT,
RELEASE, DISCHARGE, SURRENDER OR RENUNCIATION of any security or of the
benefit thereof or of the money thereby secured
48. RELEASE OR RENUNCIATION that is to say, any instrument whereby a person
releases any property
49. REVOCATION of Power or Letter of Attorney
50. REVOCATION of any use or trust of any property by any writing not being a will.

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Principles of the First Schedule

Items Description of Instrument
51. SETTLEMENT being an Instrument of Settlement or Agreement for a settlement
52. SHARE WARRANT OR STOCK CERTIFICATE to bearer
53. SUBSTITUTION UNDER OR IN VIRTUE OF A POWER OF ATTORNEY and any such
instrument cancelling or varying any such substitution
54. SURRENDER OF CHARGE
55. SURRENDER OF LEASE
56. TRANSFER
57. TRUST
58. TRUST RECEIPT granted on the occasion of a loan or overdraft on goods, if
unattested

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Q & A sessions

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