Executive summary
The Malaysian Inland Revenue Board (MIRB) released, on 26 February 2019, guidelines for stamp duty relief under Sections 15 and 15A of the Stamp Act 1949 (the Guidelines). The Guidelines take into account the tightening of the stamp duty relief provisions proposed in the 2019 Budget.1
This Alert summarizes the key aspects of the Guidelines.
Detailed discussion
Stamp duty relief under Section 15
Section 15 provides relief from stamp duty in cases of reconstructions or amalgamations of companies.
The Guidelines stipulate that to qualify for the exemption, the application will have to be filed with the Collector of Stamp Duties (Collector) via submission to any State Offices, or online via the MIRB’s website through the Stamp Duty Assessment and Payment System (STAMPS), followed by the submission of supporting documents by hand delivery.
The standard statutory declaration2 for the Section 15 stamp duty relief application is set out in an Appendix to the Guidelines. The process for approved or rejected applications is also explained in the Guidelines. In addition, the Guidelines also outline the documents which are to be furnished in support of the application.
Stamp duty relief under Section 15A
Section 15A provides relief from stamp duty in cases of transfer of property between associated companies.
The 2019 Budget proposed several changes to tighten the stamp duty relief conditions and the proposals were subsequently enacted on 27 December 2018.3 One of the additional requirements is that the transfer of property is to achieve “greater efficiency” in the operations of both transferor and transferee. The Guidelines explain that to justify “greater efficiency,” a three-year operational plan of both companies will need to be provided. The plan should include an explanation of “greater efficiency” in the form of a narrative, graph, chart, schedule, etc. It should also clearly outline the objective and strategy in achieving the level of stipulated operational efficiency in three years, along with any other supporting documents, where relevant.
If “greater efficiency” will not be achieved, the company must provide a reasonable justification for the Collectors’ consideration. It is to be noted that the Collectors’ decision is final.
It is also noted that the Guidelines stipulate the following:
i) Section 15A stamp duty relief would not apply on the transfer of a business
ii) Generally, transactions such as the transfer of shares and real property would qualify for relief
It is understood that the MIRB is strictly observing the above Guidelines and as such would seek to restrict Section 15A stamp duty relief only to transactions involving the transfer of shares or real property.
Similar to the application for relief under Section 15, the application should be filed with the Collector via submission to any State Offices, or online via the MIRB’s website through STAMPS, followed by the submission of supporting documents by hand delivery. The statutory declaration4 for the application of this relief is included as an Appendix to the Guidelines.
Endnotes
1. See EY Global Tax Alert, Malaysia releases 2019 Budget, dated 4 December 2018.
2. A formal statement affirming that the particulars are true and to be signed in the presence of the Commissioners of Oaths.
3. See EY Global Tax Alert, Malaysia enacts 2019 Budget proposals, dated 3 January 2019.
4. A formal statement affirming that the particulars are true and to be signed in the presence of the Commissioners of Oaths.
