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Stamp duty exemption for Small and Medium Enterprises on any instrument executed for mergers or acquisitions
Under the Short-term Economic Recovery Plan (PENJANA) announced on 5 June 2020, the Government proposed to waive the stamp duty on any instrument executed by small and medium enterprises (SMEs) for mergers and acquisitions (see EY Take 5: COVID-19: Short-term Economic Recovery Plan). Thereafter, SME Corporation Malaysia published on its website the “Guidelines & Procedures on Incentive of Stamp Duty Exemptions on M&A by SMEs” to provide guidance on the said exemption (see Tax Alert No. 16/2020).
To legislate the above, the Stamp Duty (Exemption) (No. 3) Order 2021 [P.U.(A) 73] was gazetted on 25 February 2021. The Order provides a stamp duty exemption for the following merger- or acquisition-related instruments executed by SMEs:
- Contract or agreement for the sale or lease of property (land, building, machinery and equipment)
- Instruments of transfer and memorandum of understanding
- Loan or financing agreement
- First leasing agreement
The exemption will apply to instruments executed between 1 July 2020 and 31 December 2021. However, the exemption is also subject to the condition that the merger or acquisition is approved by the Ministry of Entrepreneur Development and Cooperatives between 1 July 2020 and 30 June 2021.
The Order is deemed to have come into operation on 1 July 2020.