Stamp Duty Act Malaysia: What the Stamp Act 1949 Means for Factory Buyers, Sellers and Tenants
Malaysia's Stamp Duty Act is the Stamp Act 1949. Here is what it says for a factory or warehouse deal: ad valorem rates on transfers, loans and tenancies, the 4% foreign rate, who pays, the 2026 self-assessment phases, late penalties and exemptions such as section 15A.
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Key Takeaways
- The "Stamp Duty Act" in Malaysia is the Stamp Act 1949 (Act 378). It taxes written instruments, not transactions: if a document is listed in its First Schedule, it must be stamped, usually within 30 days of signing.
- For a factory purchase, the transfer (Form 14A or MOT) pays ad valorem duty of 1% on the first RM100,000, 2% up to RM500,000, 3% up to RM1 million and 4% above that, on the price or market value, whichever is higher. A foreign company or non-citizen pays a flat 4% on industrial property, not the 8% that applies to homes from 2026.
- A factory loan agreement pays 0.5% (RM5 per RM1,000) in the normal case, and a factory tenancy pays RM1 to RM7 per RM250 of annual rent depending on the term, with no RM2,400 exemption since 1 January 2025.
- From 1 January 2026 the Act runs on self-assessment, phased in by document type until 2028. Late stamping costs RM50 or 10% of the unpaid duty (within 3 months of the deadline), or RM100 or 20% after that.
- An unstamped agreement cannot be used as evidence in court (section 52), so a tenant or buyer who skips stamping weakens their own position.
This guide explains what the Act actually says, section by section where it matters to a factory or warehouse deal. It is general information, not legal or tax advice: check your own case with your lawyer or tax adviser.
What Is the Stamp Duty Act in Malaysia?
The law people search for as the "Stamp Duty Act" is formally the Stamp Act 1949, first enacted as F.M. Ordinance No. 59 of 1949 and revised in 1989 as Act 378. It applies throughout Malaysia and is administered by the Collector of Stamp Duties at the Inland Revenue Board (LHDN). The updated text published by LHDN as at 1 January 2024 is the base version, and later changes come through the yearly Finance Acts.
According to LHDN's own introduction to stamp duty under the Stamp Act 1949, the Act has 10 substantive parts and 4 schedules. Stamp duty is charged on instruments, and section 2 defines an instrument to include every written document. What decides the duty is the content and legal effect of a document, not its title: a purchase order that works as an agreement can be treated as one.
How the Act is built
| Part of the Act | What it does | Why it matters for a factory deal |
|---|---|---|
| Section 4 | Makes every instrument in the First Schedule chargeable | Your SPA, transfer, loan and tenancy are all listed |
| Section 4(3) | Only the principal instrument pays full duty; the others pay RM10 each | The transfer usually carries the ad valorem duty and the SPA pays RM10 |
| Section 12A | Fixes the date for market value | For a transfer under a stamped SPA, value is taken at the SPA date |
| Sections 15 and 15A | Relief for reconstructions and transfers between associated companies | Moving a factory within a group can be relieved |
| Section 47A | Penalty for late stamping | RM50 or 10%, or RM100 or 20% |
| Section 52 | Unstamped instruments inadmissible in evidence | An unstamped lease is hard to enforce in court |
| First Schedule | The list of instruments and rates | Items 27 (loans), 32 (transfers) and 49 (leases) |
| Third Schedule | Who must pay | Buyer pays on the transfer, tenant on the lease |
What Is the Latest Version of the Stamp Act?
There is no new "Stamp Duty Act 2025". The Stamp Act 1949 is still the Act; it is amended almost every year by the Finance Act passed after the Budget. The changes that matter to industrial property are:
- Finance (No. 2) Act 2023, from 1 January 2024: added item 32(aa), a flat RM4 per RM100 (4%) on property bought by a foreign company or by a person who is neither a citizen nor a permanent resident.
- Finance Act 2024 (Act 862), from 1 January 2025: replaced the lease rates in item 49(a) with RM1, RM3, RM5 or RM7 per RM250 of annual rent for terms of up to 1 year, over 1 to 3 years, over 3 to 5 years and over 5 years. It also laid the legal groundwork for self-assessment.
- Finance Act 2025 (Act 874), from 1 January 2026: defined "residential property", added item 32(ab) at RM8 per RM100 (8%) for residential property bought by foreigners, and kept industrial property at the 4% rate of item 32(aa). It also set a 24-month window for certain refund applications.
When you read the Act, use the LHDN text plus these Finance Acts, or ask your lawyer for a consolidated copy. Any Budget measure only applies once the next Finance Act is in force.
What Is Ad Valorem Stamp Duty, and How Is It Different From Fixed Duty?
The Act charges two kinds of duty, as LHDN explains in its introduction:
- Fixed duty: a flat RM10, for example on duplicates and counterparts, insurance policies and the secondary documents of a transaction under section 4(3).
- Ad valorem duty: a duty that rises with the amount or value, charged on the consideration in the document or the market value. LHDN gives Form 14A, the Memorandum of Transfer (MOT), tenancy agreements and leases as examples.
For a factory or warehouse, three ad valorem items do almost all the work.
Item 32(a): transfer of a factory or industrial land
The Act charges, for every RM100 or part of RM100 of the price or market value, whichever is greater:
| Portion of the value | Rate |
|---|---|
| First RM100,000 | RM1 per RM100 (1%) |
| RM100,001 to RM500,000 | RM2 per RM100 (2%) |
| RM500,001 to RM1,000,000 | RM3 per RM100 (3%) |
| Above RM1,000,000 | RM4 per RM100 (4%) |
Worked example using registered prices. The median terrace factory in JPPH-registered transactions for Selangor and Kuala Lumpur over 24 months to August 2026 sold for RM1.17 million. A Malaysian buyer pays RM1,000 + RM8,000 + RM15,000 + RM6,800 (4% of the RM170,000 above RM1 million) = RM30,800. At the median detached factory price of RM10 million, the duty is RM1,000 + RM8,000 + RM15,000 + RM360,000 = RM384,000.
Item 32(aa): foreign buyers of industrial property
A foreign company, or a person who is neither a citizen nor a permanent resident, pays a flat RM4 per RM100 on the whole price or market value. On the RM1.17 million terrace factory above, that is RM46,800. The 8% rate in item 32(ab) applies only to residential property (a house, condominium, apartment, flat, service apartment or SOHO used solely as a dwelling), so it does not apply to a factory, warehouse or industrial land.
Item 27: the factory loan or charge
The principal security for a loan pays RM5 for every RM1,000 or part of it (0.5%) in the ordinary case. A 90% loan of RM1,053,000 on the RM1.17 million factory pays 1,053 × RM5 = RM5,265. The Act has a lower scale for loans to a small and medium enterprise: RM0.50 per RM1,000 on the first RM250,000 of aggregate loans in a calendar year and RM2.50 per RM1,000 up to RM1 million, before the normal RM5 rate. Your bank's lawyer will tell you whether it applies.
Item 49: the factory tenancy
Since 1 January 2025 a lease or tenancy pays, for every RM250 or part of the average annual rent:
| Lease term | Duty per RM250 of annual rent |
|---|---|
| Up to 1 year | RM1 |
| Over 1 year, up to 3 years | RM3 |
| Over 3 years, up to 5 years | RM5 |
| Over 5 years or indefinite | RM7 |
The registered median rent for a terrace factory in Selangor and KL is RM3,700 a month. On a 2-year term, annual rent is RM44,400, which is 178 blocks of RM250, so the duty is 178 × RM3 = RM534, plus RM10 for each duplicate. Try your own figures in the tenancy stamp duty calculator.
Who Pays Stamp Duty Under the Act?
Section 33 and the Third Schedule decide who is liable. LHDN's examples:
- Form 14A / MOT: the transferee, that is the buyer.
- Loan agreement and charge: the borrower (chargor).
- Tenancy or lease: the tenant (lessee); the landlord pays for the landlord's copy.
- Any instrument not listed in the Third Schedule: the person who prepares, makes or executes it.
A contract can shift the cost between the parties, but the legal liability stays with the person named in the Act. If your tenancy says the landlord pays and he does not, the document is still unstamped.
When Must You Stamp, and What Changed With Self-Assessment in 2026?
Under LHDN's late stamping penalty guideline, an instrument signed in Malaysia must be stamped within 30 days of signing, and one signed abroad within 30 days of reaching Malaysia.
From 1 January 2026, stamping moved to a self-assessment system (paragraph 36(1)(a)), phased in by type of document:
| Phase | From | Documents |
|---|---|---|
| 1 | 1 January 2026 | Securities (loans and charges), tenancies and leases, general stamping |
| 2 | 1 January 2027 | Property transfers that do not need a JPPH valuation |
| 3 | 1 January 2028 | All other instruments |
Under self-assessment you file a return and the duty is deemed assessed on that date; payment is then due within 30 days. Documents not yet in self-assessment stay under formal assessment by LHDN (paragraph 36(1)(b)). The practical steps on MyTax are covered in our guide to paying duti setem LHDN online.
Penalties for late stamping (section 47A)
| How late | Penalty |
|---|---|
| Within 3 months after the stamping deadline | RM50 or 10% of the unpaid duty, whichever is greater |
| More than 3 months late | RM100 or 20% of the unpaid duty, whichever is greater |
LHDN's own example: duty of RM5,000 stamped more than three months late attracts a penalty of RM1,000. Penalties also apply to exempt instruments that are submitted late: RM50 or RM100 even when the duty itself is zero.
The 2026 voluntary disclosure window
LHDN's Special Voluntary Disclosure Programme for stamp duty 2026 waives the late penalty automatically for instruments signed from 1 January 2023 to 31 December 2025, provided they are stamped and the duty is paid by 31 December 2026. If you hold an unstamped factory tenancy from those years, this is the cheapest time to fix it. It does not cover fraud, and documents stamped under it will not be audited.
Who Is Exempt From Stamp Duty in Malaysia?
The Act gives relief in three ways:
- Exemptions written into the Act: the general exemptions in the First Schedule and specific exemptions under items such as 4, 32 and 49.
- Ministerial exemptions and remissions under section 80, made by order of the Finance Minister.
- Reliefs for company restructuring: section 15 (reconstruction or amalgamation) and section 15A, which relieves item 32(a) duty on a transfer between associated limited companies where one owns at least 90% of the other, or a third company owns at least 90% of both, the transfer improves operating efficiency and the transferee is incorporated in Malaysia.
Section 15A is the one factory owners meet most: moving a factory from a personal holding company into the operating company, or between group companies. Relief has to be applied for and approved before you rely on it. LHDN also stresses that an exempt instrument must still be submitted for stamping so the exemption can be endorsed on it.
What Changes for a Factory or Warehouse Compared With a House?
- No 8% foreign rate: foreigners pay 4% on industrial property under item 32(aa).
- Bigger numbers, bigger penalties: at RM10 million, a 20% late penalty on RM384,000 of duty would be RM76,800.
- Market value test: if the agreed price is below market value, duty is charged on market value. Related-party sales of factories are a common trigger.
- Long leases cost more: a 6-year factory lease pays RM7 per RM250, more than double the 2-year rate.
For the full cost picture of a purchase, including legal fees, use the legal fees and stamp duty calculator. Sellers should also read our guide to RPGT when you sell a factory.
Common Mistakes With the Stamp Act
- Treating the SPA as the document that pays ad valorem duty. Under section 4(3) the parties choose the principal instrument; normally the transfer pays and the SPA pays RM10.
- Using the price instead of the market value on a cheap related-party sale.
- Forgetting that a tenancy renewal is a new instrument that needs stamping again.
- Leaving a tenancy unstamped to "save" a few hundred ringgit, then finding it cannot be produced in court.
- Assuming exemption means no filing. Exempt instruments still go to LHDN.
Frequently Asked Questions
What is the stamp duty act in Malaysia?
It is the Stamp Act 1949 (Act 378), the federal law that charges duty on written instruments listed in its First Schedule, such as property transfers, loan agreements and tenancies. LHDN administers it through the Collector of Stamp Duties. The rates are set in the First Schedule and changed through the yearly Finance Act.
What is the latest version of the stamp duty Act in Malaysia?
The base text published by LHDN is the Stamp Act 1949 as at 1 January 2024. It was then amended by the Finance Act 2024 from 1 January 2025 (new tenancy rates) and the Finance Act 2025 from 1 January 2026 (self-assessment, and an 8% rate for foreigners buying homes). Read the base text together with those Acts.
How much is ad valorem duty?
On a property transfer it is 1% on the first RM100,000, 2% on the next RM400,000, 3% on the next RM500,000 and 4% above RM1 million, on the price or market value, whichever is higher. A foreign buyer of industrial property pays a flat 4%. On a normal loan it is 0.5%, and on a tenancy RM1 to RM7 per RM250 of annual rent.
What are the changes to stamp duty in Malaysia in 2026?
Self-assessment began on 1 January 2026 for loans, tenancies and general stamping, with property transfers following in 2027 and other instruments in 2028. Foreigners buying residential property now pay 8%, while industrial property stays at 4%. LHDN is also waiving late penalties for instruments signed in 2023 to 2025 if they are stamped by 31 December 2026.
Who is exempt from stamp duty in Malaysia?
Exemptions come from the Act itself, from Finance Minister orders under section 80, and from reliefs such as section 15A for transfers between associated companies with at least 90% common ownership. Exempt documents must still be submitted to LHDN for endorsement, or a late penalty can apply.
What happens if a tenancy agreement is not stamped?
It is still valid between the parties, but under section 52 it cannot be admitted as evidence in court until stamped with the duty and any penalty. A landlord chasing unpaid rent, or a tenant defending the lease, would first have to stamp it late.
Does the buyer or seller pay stamp duty on a factory?
The buyer pays the duty on the transfer under the Third Schedule, and the borrower pays the duty on the loan. On a tenancy the tenant pays for the original and the landlord for the landlord's copy.
FactoryHub is dedicated to helping every client find the right factory or warehouse. For a purchase, sale or lease in Klang and Port Klang, call Peter Tan (REN 12771) at 016-666 6872, or Jason Low (PEA 1478) at 012-288 1834.
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