Stamp duty exemption on the instrument of loan or financing agreement

Stamp duty exemption on the instrument of loan or financing agreement executed between an SME and a financial institution

In February 2021, Bank Negara Malaysia (BNM) announced the establishment of a RM200 million Disaster Relief Facility (DRF) 2021 to alleviate the financial burden on small and medium enterprises (SMEs) affected by floods and to enable them to resume business operations.

Following the above, the Stamp Duty (Exemption) (No. 8) Order 2021 [P.U.(A) 333] was gazetted on 12 August 2021 to provide a stamp duty exemption on the instrument of loan or financing agreement relating to the loan or financing facility (defined below) executed between an SME and a financial institution. This exemption is not automatic and must be applied for.

The exemption shall apply to relevant instruments executed pursuant to a letter of offer issued by the financial institution between 2 February 2021 and 31 December 2021. The application for the exemption will have to be accompanied by the letter of offer, stipulating the approval of the loan or financing facility.

The following terms have been defined in the Order:

(a)  Financial institution

Same meaning as that assigned to “banker” in Section 2 of the Stamp Act 1949, and any person prescribed as a financial institution by the Minister under Section 2(1) of the Central Bank of Malaysia Act 2009 (CBA) for the purposes of Section 49 of the CBA.

(b)  Loan or financing facility

Means the DRF 2021 approved under BNM’s Fund for SMEs

(c)  SMEs

Enterprises as may be determined by the National Small and Medium Enterprises Development Council established under Section 2A of the Small and Medium Industries Development Corporation Act 1995

The Order is deemed to have come into operation on 2 February 2021.