(Tax Update) Malaysia Stamp Duty Overhaul : Self-Assessment and Higher Penalties Part 2

(Tax Update) Malaysia Stamp Duty Overhaul : Self-Assessment and Higher Penalties Part 2

The Inland Revenue Board (IRB) has started a quiet but serious operasi to enforce compliance with the Stamp Act 1949 — and the focus is now on tenancy agreements, related-party transactions & others. If you're running a business and have been casually signing agreements without sending them for stamping, it's time to pay attention.

Why? Because starting from 1 January 2026, the Stamp Act will adopt a self-assessment regime — and the IRB is already preparing the ground.

What’s Happening Now?

The IRB, through its Stamp Office, has been visiting businesses to check whether written agreements have been properly stamped. If they find unstamped documents, they’re advising taxpayers to submit these agreements for stamping — along with a late stamping penalty.

This includes:

  • Tenancy Agreements – especially those involving rental of commercial property.

  • Related-Party Agreements – contracts between companies under the same group (e.g., service agreements, financing arrangements, guarantees).

  • Service Agreements – such as management fees, outsourcing, and consultancy services.

If any of these agreements are not stamped, they may be inadmissible in court and will trigger penalties.

What’s Changing in 2026?

Currently, many SMEs only send agreements for stamping when required — for example, when a lawyer needs to use them in court. But starting 1 January 2026, the new self-assessment model will flip the burden onto you, the taxpayer.

This means:

  • You are responsible to determine if an agreement is subject to stamp duty.

  • You must calculate the correct duty and pay it within the time frame.

  • If you fail to do so, you risk penalties — even without being audited.

IRB will no longer pre-assess your documents — that part becomes your job.

Real Life Examples That May Trigger Stamp Duty

Here are some examples of agreements that could easily slip under the radar, but are now in IRB’s spotlight:

  • A director lends RM500,000 to the company – and signs a simple loan agreement. Stampable.

  • A holding company signs a service agreement to provide admin support to a subsidiary. Stampable.

  • Your company rents a warehouse from another Sdn Bhd owned by your family. Stampable.

  • You provide a corporate guarantee to the bank on behalf of your related company. Stampable.

In the past, many SME bosses may have viewed these documents as internal or informal. But under the new regime, even “friendly” agreements between related companies must be treated formally and properly stamped.

IRB’s Focus: Education First, Then Enforcement !

To be fair, IRB has been giving early warnings. Officers have been explaining to taxpayers the importance of stamping, especially ahead of the 2026 self-assessment switch. The aim is to:

  • Educate businesses on their duties,

  • Clarify what agreements are stampable,

  • And reduce confusion due to legal terms in the current legislation.

In fact, there are rumours that during recent IRB visits, taxpayers were penalised for not stamping their instruments — including late penalties. Yes, the new provisions under the Stamp Act officially take effect on 1 January 2026, but the IRB appears to be applying them retrospectively in practice.

The SME Dilemma

As a tax agent, I understand many SME bosses are already stretched. With MBRS 2.0, e-invoicing rollout, and staff shortages, this might feel like just another compliance headache.

But this isn’t just about penalties. A properly stamped document protects your business. It makes your agreement legally valid and helps you in disputes — especially when dealing with tenants, related parties, or financial institutions.

What You Should Do Now

  • Do a review – Go through your company’s tenancy agreements, director loans, service agreements, and related-party contracts.

  • Check the stamping status – If it’s not stamped, consider voluntary stamping now to avoid heavier penalties later.

  • Talk to your tax agent – Don’t wait until 2026. By then, self-assessment will kick in and IRB may take a stricter stance.

Final Thought

Have you stamped your agreement? If you’re unsure — better to check now, than to pay later.

Past blog
16 April 2025 Malaysia Stamp Duty Overhaul : Self-Assessment and Higher Penalties
https://www.ktp.com.my/blog/malaysia-stamp-duty-self-assessment/16apr2025

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