(Tax Update) Malaysia Stamp Duty Overhaul : Self-Assessment and Higher Penalties Part 4

(Tax Update) Malaysia Stamp Duty Overhaul : Self-Assessment and Higher Penalties Part 4

Once upon a time in Malaysian business culture (ie pada zaman dulu), advances between directors and their companies were done informally. No agreement. No stamping. No worries.

But that era is over.

Under the self-assessment regime for stamp duty, the burden is now on you (the taxpayer) to ensure all loan or advance agreements are properly documented and stamped in accordance with Schedule 1 of the Stamp Act 1949.

This rule applies to:

  • Advance from director to company

  • Advance from company to director

  • Borrowings between related companies

  • & more

Yes, even if it's a RM10,000 “temporary” transfer between your own group of companies or a short-term loan from the director to help with cash flow … a stamped agreement is now a must.

What changed?

Previously, both directors and SMEs didn’t bother. Why?

  • The tax authority wasn’t actively checking.

  • The amount seemed small.

  • The advance was between “own people” (

But now under self-assessment, you don’t wait for LHDN to catch you. You’re expected to know and comply. The law was always there—but now it’s being enforced.

In fact, Schedule 1 of the Stamp Act 1949 lists loan agreements as dutiable instruments. If money changes hands between two parties (even related ones), and repayment is expected, that’s a loan. That’s a document that must be stamped.

What happens if you ignore it?

Let’s say you get audited:

  • LHDN can backdate the duty and impose a penalty the unpaid stamp duty.

  • The loan may be disputed, and directors’ accounts questioned.

  • It may impact your tax deductibility, especially if the advance was interest-bearing.

  • Transfer pricing may also apply, especially when money moves between related companies.

What’s the right way?

  1. Draft a simple loan agreement – you don’t need 20 pages of legal jargon. Just basic details: parties involved, amount, repayment terms, interest (if any).

  2. Stamp it within 30 days from the date of agreement or disbursement—whichever comes first.

  3. Pay the correct stamp duty.

Final thoughts

In today's compliance landscape, “But last time no problem leh…” is no longer a valid excuse.

Stamp duty is now self-assessed. That means if you don’t comply, you kena sendiri.

A properly stamped loan agreement doesn’t just protect you from penalties—it proves that your transaction is genuine and well-documented.

So whether you’re helping your company as a director, or managing multiple entities in a group, play safe. Put it in writing. Stamp it.

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

16 May 2025 Malaysia Stamp Duty Overhaul : Self-Assessment and Higher Penalties Part 2
https://www.ktp.com.my/blog/stamp-act-malaysia-2024-part2/16may2025

20 May 2025 Malaysia Stamp Duty Overhaul : Self-Assessment and Higher Penalties Part 3 https://www.ktp.com.my/blog/stamp-act-malaysia-2024-part3/20may2025

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