Proposed amendments to the Stamp Act 1949

26 November 2025

On 18 November 2025, the Finance Bill 2025 and Measures for the Collection, Administration and Enforcement of Tax Bill 2025 (collectively, “Bills”) were tabled before Parliament for first reading. The Bills propose significant amendments to various tax legislation including the Stamp Act 1949 (“Stamp Act”).

This article outlines the key proposed amendments to the Stamp Act.

Wage threshold for stamp duty exemption on employment agreements

The Bills seek to increase the wage threshold for the stamp duty exemption on employment contracts from RM300 to RM3,000 per month as reflected in proposed amendments to Item 4(b) of the First Schedule to the Stamp Act. The amendment would apply to employment contracts executed from 1 January 2026, and would cover to service and employment contracts where the employee earns RM3,000 or less per month. This includes maritime agreements, such as those between master and mariners.

Grantee or transferee to bear stamp duty

The Stamp Act would also be amended to revise the Third Schedule, which allocates responsibility for paying stamp duty. Under the proposed changes to Item 7, stamp duty on instruments involving an exchange of property would no longer be shared equally between the parties; instead, it would be borne by the “grantee or transferee”.

Timeframe for stamp duty payment

Where stamp duty is declared through a stamp duty return, that return constitutes a deemed assessment. The duty payable must be paid and the instrument stamped within 30 days of the Collector’s notice of assessment, together with any applicable late-stamping penalty.

Increase in penalties

Among the key proposed amendments is a series of penalty increases under the Stamp Act outlined below:

 

Provision	Offence	Previous penalty	New penalty
Section 4A	Failure to register an instrument executed outside Malaysia that purports to transfer debentures issued by, or shares, in a Malaysian company	Fine not exceeding RM250	Fine from RM1,000 to RM10,000
Section 61	Failure to set forth all facts and circumstances	Fine not exceeding RM2,500	Fine from RM2,500 to RM50,000
Section 63	Executing or signing a document that is not duly stamped	Fine not exceeding RM1,500	Fine from RM1,000 to RM10,000
Section 64	Failure to execute and transmit contract note	Fine not exceeding RM1,500	Fine from RM1,000 to RM10,000
Section 72A	Fraudulently attaching, detaching, or counterfeiting a stamp certificate	Fine not exceeding RM1,500	Fine from RM2,500 to RM50,000

 

Collector’s powers

It is proposed that the Collector would be empowered to issue guidelines to clarify the provisions of the Stamp Act, facilitate compliance, and address other matters relating to the Act.

It is also proposed that the Collector may apply any excess stamp duty, which otherwise would be refundable to the taxpayer, to offset other stamp duties or taxes due from the same taxpayer, including income tax or real property gains tax.

Comment

The proposed amendments are expected to come into operation on 1 January 2026.

The clarification that stamp duty in respect of a stamp duty return must be paid within 30 days of the Collector’s notice of assessment is a welcome development, as it provides greater certainty on the applicable deadline.

There has also been a notable escalation in penalties under several provisions of the Stamp Act. For example, the penalty for executing or signing an unstamped document under section 63 has increased from a maximum of RM1,500 to a range of RM1,000 to RM10,000, signalling a stricter enforcement stance.

These increases suggest that the Stamp Office may be more prepared to invoke the relevant provisions and impose financial penalties on taxpayers who, among other breaches, fail to stamp executed instruments within the prescribed timeframe. Taxpayers should ensure close compliance with their obligations under the Stamp Act to reduce the risk of significantly higher fines.