(TAX UPDATE) Who Pays Stamp Duty on a Tenancy Agreement?

The Statutory Position and What It Means in 2026

Introduction

When a landlord and tenant sit down to sign a tenancy agreement, one question almost always surfaces: who actually pays the stamp duty?

The answer is set out in the Stamp Act 1949, but the statutory default and market practice do not always align. With the move to self-assessment and the new penalty regime taking effect in 2026, the cost of getting this wrong has risen sharply.

The Statutory Position

The liability for stamp duty in Malaysia is governed by Section 33 of the Stamp Act 1949 (Act 378), which provides:

The expense of providing the proper stamp duty be borne, (a) in the case of the instruments described in the first column of the Third Schedule, by the person mentioned in the second column of such Schedule; (b) in the case of every other instrument, by the person drawing, making or executing such instrument."

For tenancy agreements and leases, the Third Schedule is the operative reference.

The Schedule expressly names the lessee (tenant) as the person liable for stamp duty on the principal lease or tenancy instrument.

In short, the chain of authority for a tenancy agreement is:

Section 33(a), Stamp Act 1949 → Third Schedule → Tenant pays on the original; landlord pays on the duplicate.

Where an instrument is not listed in the Third Schedule, the default rule under Section 33(b) applies: the duty falls on the person drawing, making or first executing the document. For a tenancy agreement, however, the Third Schedule resolves the question directly, and Section 33(b) is not engaged.

Statutory Default vs Contractual Allocation

While Section 33 establishes the default, the parties are free to agree otherwise. Three arrangements are common in the Malaysian rental market.

Tenant pays in full. The conventional position, tracking the Third Schedule. Most tenancy agreements default to this allocation, often without explicit drafting.

Cost split equally. Each party bears the duty on its own copy. Landlord on the duplicate, tenant on the original. This mirrors the statutory split under Section 33(a) read with the Third Schedule.

Landlord absorbs the full cost. Increasingly common in competitive rental markets and for higher-value properties. For landlords reporting rental income under Section 4(d) of the Income Tax Act 1967, stamp duty paid is a deductible expense, which softens the after-tax economics.

The key point : silence in the tenancy agreement does not mean the cost is shared by default. Silence means the statutory allocation under Section 33(a) and the Third Schedule applies in full, and the tenant pays the principal duty. A well-drafted agreement should state the allocation expressly to remove any ambiguity.

Why It Matters: Section 52 and the Evidentiary Risk

The stamp duty itself is modest, typically RM50 to RM500 per year for most residential tenancies. The real exposure lies in Section 52 of the Stamp Act 1949, which provides that an unstamped or insufficiently stamped instrument is inadmissible as evidence in any court proceeding.

For a landlord, this means : if the tenant defaults, damages the property, or refuses to vacate, the tenancy agreement cannot be relied on in litigation until it is properly stamped, and by then, late penalties have accrued. The agreement is recoverable, but the delay and cost are entirely avoidable.

What Changed in 2026

Three regulatory developments make the "who pays" question more pressing this year.

1. STAMPS portal decommissioned ; e-Duti Setem now live. From 1 January 2026, all tenancy agreement stamp duty must be paid via e-Duti Setem at mytax.hasil.gov.my. Whoever is paying needs MyTax access via MyDigital ID or an LHDN-registered account.

2. Self-assessment framework (STSDS). Under the amended Section 36 of the Stamp Act, the filing of a stamp duty return is now deemed an assessment, with the Collector retaining a discretionary adjudication route. Both parties to the tenancy must provide their details on the return, and both are required to retain the original agreement and digital certificate for seven years for audit purposes.

3. Heavier penalty regime. The Finance Act 2024 and Tax Bill 2025 amendments to Section 47A of the Stamp Act, effective 1 January 2026, significantly increase late stamping and non-compliance penalties, with fines reaching up to RM50,000 for certain offences. The 30-day stamping window under Section 47 has not changed; the consequences of missing it have.

Practical Drafting Recommendations

For most landlords and tenants, the practical answer is straightforward: write the allocation into the agreement and stamp it on time.

A single clause is sufficient:

"All stamp duty payable on this Agreement shall be borne by the [Tenant / Landlord / equally between the parties], notwithstanding the statutory position under Section 33 and the Third Schedule of the Stamp Act 1949."

For landlords managing a portfolio of rental properties, we recommend two standing practices : (i) standardise the stamp duty clause across all tenancy templates rather than negotiating it deal by deal, and

(ii) build the e-Duti Setem stamping step into your onboarding checklist within the 30-day window under Section 47, with the digital certificate filed alongside the executed agreement and retained for the seven-year self-assessment period.

KTP's View

Section 33 and the Third Schedule give a clear default. The tenant pays. But the law also gives the parties full freedom to contract around that default. The mistake we see most often is not the allocation itself, but the silence around it. Agreements that leave the stamp duty question implicit, then surface as a dispute when the bill arrives or when the document is needed in court.

With the move to self-assessment and the expanded penalty regime now in force, ambiguity has become a costlier position to hold. Spell it out in the agreement, stamp within 30 days, and retain the certificate for seven years. The compliance cost is small.

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