Stamp Duty Exemption in Malaysia: Which Reliefs Apply to a Factory or Industrial Land

Key Takeaways

• Malaysia has no general stamp duty exemption for factories. The first home exemption, including the bigger relief proposed in Budget 2027, covers residential homes only, so a factory, warehouse or industrial land transfer pays the normal 1% to 4% scale unless a specific relief applies.
• The three reliefs that do work for industrial property are: section 15A of the Stamp Act 1949 (transfer between associated companies with 90% common ownership), section 15 (company reconstruction or amalgamation), and the family transfer exemption in P.U.(A) 178/2023.
• The family exemption waives the duty on the first RM1 million of market value and half the duty above that, for gifts between parents and children or grandparents and grandchildren, where the recipient is a Malaysian citizen. It only helps when the factory is held in personal names, not in a Sdn Bhd.
• Section 15A relief is lost if the companies stop being associated, or the transferee sells the property, within three years. You apply to the LHDN State Director's office where the property sits, and you still submit the instrument for stamping.
• Exempt documents must still be stamped on time. For documents signed from 2023 to 2025, LHDN's 2026 voluntary disclosure programme waives late penalties if you stamp and pay by 31 December 2026.

This guide explains who is exempt from stamp duty in Malaysia when the property is a factory, warehouse or industrial land, what each relief requires, and the mistakes that cost owners money. It is general information, not legal or tax advice: confirm your case with your lawyer or tax agent before you sign.

Is There a Stamp Duty Exemption for Buying a Factory in Malaysia?

For an ordinary purchase, no. The exemptions most people read about are for homes. The Budget 2027 tax measures propose to keep the 100% exemption for a first residential home up to RM500,000 and add a partial exemption for homes up to RM750,000, for sale and purchase agreements signed from 1 January 2027 to 31 December 2030. Every one of those conditions refers to a residential home bought by a Malaysian citizen, so none of it reaches a factory or warehouse.

A factory transfer is charged under item 32(a) of the First Schedule on the price or market value, whichever is higher: 1% on the first RM100,000, 2% up to RM500,000, 3% up to RM1 million and 4% above that. Our Stamp Act guide covers the scale, the loan rate and the flat 4% for foreign buyers in detail.

To put a number on it, the median terrace factory in JPPH-registered transactions for Selangor and Kuala Lumpur over the 24 months to August 2026 sold for RM1.17 million, and the median detached factory for RM10 million. On those values the transfer duty is RM30,800 and RM384,000. That is why the reliefs below are worth understanding before a family or group reorganises who owns the factory.

Exemption, remission and relief: what the words mean

LHDN's relief page uses three terms:

When you rely on a section 80 order, LHDN says you must quote the gazette reference or attach a copy of the order when you apply for stamping or adjudication.

Who Is Exempt From Stamp Duty in Malaysia? The Reliefs That Work for Industrial Property

Section 15A: Moving a Factory Between Associated Companies

This is the relief factory owners meet most often. A common case: the factory sits in a personal holding company and the owners want it in the operating company, or a group moves a warehouse into the subsidiary that runs the logistics business.

The conditions in the Act

Under section 15A of the Stamp Act 1949, duty under item 32(a) or (b) is not charged when LHDN is satisfied that:

1. The instrument transfers a beneficial interest in property from one limited company to another.
2. The companies are associated: one beneficially owns at least 90% of the other's issued share capital, or a third limited company owns at least 90% of both. Ownership can be direct or through other companies.
3. The transfer is to achieve greater efficiency in operation.
4. The transferee company is incorporated in Malaysia.

The relief is refused if the deal is part of an arrangement where any of the price comes from or goes to an outside person, where the property was earlier passed through such a person, where the companies will stop being associated within three years, or where the transferee will sell the property within three years.

What happens after approval

If any of those events happens after the relief is allowed, each company that signed must tell LHDN in writing within 30 days. If a declaration given to support the claim turns out untrue, the exemption is revoked and the duty becomes payable with interest at 6% a year. LHDN may ask for a statutory declaration made by an advocate and solicitor.

How to apply

LHDN says applications under sections 15 and 15A go to the State Director's office where the property is located, so a factory in Klang or Shah Alam goes to the Selangor office. The instrument must still be presented for stamping: section 15A says it is only duly stamped once LHDN has certified that the duty is paid or not chargeable.

Example. A group moves a detached factory valued at RM10 million from its property company to a 100% owned operating subsidiary. Without relief, the transfer duty is RM384,000. With section 15A approved, item 32(a) duty is not charged, but the group must keep the 90% link and the factory for three years.

The Family Transfer Exemption (Love and Affection)

P.U.(A) 178/2023, the Stamp Duty (Exemption) (No. 3) Order 2023, covers any immovable property, so it applies to a factory, warehouse or industrial land as much as to a house. The conditions:

• It must be a voluntary disposition inter vivos: a gift during the giver's lifetime, not a sale.
• The giver and receiver must be mother or father and child (either direction), or grandfather or grandmother and grandchild (either direction). "Child" includes a stepchild and a legally adopted child.
• The transfer must be signed on or after 1 April 2023.
• The recipient must be a Malaysian citizen.
• Value is the market value.

The duty on the first RM1 million of value is exempt. Above RM1 million, half the duty is charged.

Worked examples

The catch for factory owners

Many factories are owned by a Sdn Bhd, not by the parents personally. The order names individuals as givers and receivers, so it does not cover a company transferring a factory to a child, and it does not cover a transfer of shares in the company that owns the factory. Siblings, uncles, nieces and in-laws are also outside the order. A transfer to a child who is not a Malaysian citizen does not qualify.

Other Stamp Duty Exemptions a Factory Owner May Meet

The list of stamp duty orders on LHDN's site includes several that touch business financing rather than the property transfer itself, such as remissions for converting conventional financing to Syariah financing and for rescheduling or restructuring Islamic financing, and an exemption for renewing Islamic revolving facilities where the original instruments were properly stamped. Ask your bank and lawyer whether one applies to your refinancing.

Budget 2027 also proposes changes that matter to manufacturers and their suppliers:

• Loan or financing agreements in foreign currency from Malaysian banks: duty capped at RM2,000 for loans up to RM100 million and RM5,000 above that, from 1 January 2027.
• Peer to peer financing between MSMEs and investors: duty above RM10 remitted, from 1 January 2027 to 31 December 2030.
• CAKNA government contract financing: remission extended or reintroduced to 31 December 2030.
• Supplier financing through mid tier companies: duty above RM10 remitted on second tier agreements, from 1 January 2027 to 31 December 2030.

These are Budget proposals. They apply only once the Finance Act or the exemption orders are gazetted.

How to Avoid Paying More Stamp Duty Than You Need To

There is no lawful way around duty on an ordinary factory sale, but owners regularly overpay or lose relief through avoidable mistakes:

1. Choose the owner before you buy. If the factory will end up in the operating company, buy it in that company. A later move costs duty unless section 15A applies.
2. Plan family succession while the owners are alive. The family order only covers gifts between living persons in the listed relationships.
3. Apply for relief before you treat the deal as done. Section 15 and 15A relief must be approved by LHDN. Do not complete on the assumption that it will be granted.
4. Keep the structure for three years. Selling the factory or diluting the 90% link within three years of a section 15A transfer brings the duty back.
5. Stamp on time, even when the duty is zero. An exempt instrument still has to be submitted.

How Do You Waive a Stamp Duty Penalty?

Under section 47A, a late document pays the greater of RM50 or 10% of the unpaid duty if stamped within three months after the deadline, and the greater of RM100 or 20% after that, according to LHDN's late stamping penalty guideline. The Act lets LHDN reduce or remit that penalty, but that is at its discretion.

The simplest route this year is LHDN's 2026 Stamp Duty Special Voluntary Disclosure Programme. The Star reported that it was extended to 31 December 2026, that it covers instruments signed between 1 January 2023 and 31 December 2025, that penalties are waived automatically once the duty is paid, and that it does not apply to fraud. An unstamped factory tenancy or a forgotten transfer from those years should be stamped before the year ends. For tenancies, our tenancy stamp duty calculator shows the duty first.

What Changes for a Factory Compared With a House?

If you are selling and leasing back, the sale is an ordinary transfer and no special exemption applies: see our sale and leaseback guide. For legal fees on the purchase itself, use the legal fees and stamp duty calculator.

Frequently Asked Questions

Who is exempt from stamp duty in Malaysia?

Exemptions come from the First Schedule of the Stamp Act 1949, from Finance Minister orders under section 80, and from the company reliefs in sections 15 and 15A. For a factory, the ones that usually matter are section 15A between associated companies and the family transfer order P.U.(A) 178/2023. The first home exemption is for residential homes only.

What are the stamp duty exemptions for 2026?

For property, the main live ones are the first home exemption for homes up to RM500,000, the family transfer exemption on the first RM1 million of value, and the section 15 and 15A company reliefs. LHDN's voluntary disclosure programme also waives late penalties for documents signed in 2023 to 2025 if they are stamped and paid by 31 December 2026. Budget 2027 proposes further changes from 1 January 2027 once legislated.

Is a factory transfer from parents to children exempt from stamp duty?

Yes, partly, if the parents own the factory personally and give it to a child who is a Malaysian citizen. The duty on the first RM1 million of market value is exempt and half the duty above that is charged. If the factory belongs to a company, the order does not apply.

Can I transfer my factory into my own company without stamp duty?

Not under section 15A if you own it personally, because that relief is only between two associated limited companies. A transfer from you to your company is normally charged at the full 1% to 4% scale on market value. Plan the owner before you buy.

How do I avoid stamp duty on a factory?

You cannot avoid duty on an ordinary sale, but you can avoid paying it twice or paying penalties. Buy in the right entity, use section 15A or the family order only when the conditions truly fit, and stamp every document on time, including exempt ones.

How do I waive a stamp duty penalty?

For documents signed from 1 January 2023 to 31 December 2025, stamp and pay under LHDN's 2026 voluntary disclosure programme by 31 December 2026 and the penalty is waived automatically. Outside the programme, LHDN may reduce or remit a penalty at its discretion, so write to your LHDN stamp office with the reasons.

FactoryHub is dedicated to helping every client find the right factory or warehouse. If you are buying, selling or restructuring the ownership of a factory in Klang, Shah Alam or anywhere in Selangor, contact Peter Tan (REN 12771) at 016-666 6872 or Jason Low (PEA 1478) at 012-288 1834.