This article first appeared in Forum, The Edge Malaysia Weekly on March 31, 2025 - April 6, 2025

Stamp duty compliance has always been a complex issue, but with the latest amendments to the Stamp Duty Act, businesses and individuals must be more vigilant than ever. The introduction of a self-assessment system, combined with stricter enforcement and an expanded audit framework from the Inland Revenue Board (IRB), means that compliance is no longer optional — it is essential. As these changes take effect in 2025, the key question is not just how they will be enforced but whether taxpayers are truly prepared to navigate them.

Self-assessment system: Taxpayers are now responsible for calculating their own stamp duties. This shift places greater pressure on businesses to ensure accurate documentation and calculations to avoid penalties.

Mandatory stamping for all instruments: All instruments under the Stamp Duty Act must now be stamped, with the IRB granted expanded audit powers to enforce compliance. This includes agreements, contracts, deeds, licences and other legally specified documents.

Revised penalty rates for late stamping:

•     Instruments executed within Malaysia must be stamped within 30 days of execution.

•     Instruments executed outside Malaysia must be stamped within 30 days of first receipt in Malaysia.

New Stamp Duty Audit Framework: Effective Jan 1, 2025, the IRB has implemented a stamp duty audit framework aimed at ensuring fair, transparent and impartial audits.

To help taxpayers navigate these changes, these are the 10 key principles of the stamp duty audit framework that businesses and individuals should consider to ensure compliance:

1.    The IRB can conduct two types of audits: semakan umum (general review) and semakan menyeluruh (comprehensive review).

2.    Semakan umum involves reviewing documents submitted during the application for stamping and payment via the IRB’s Stamp Assessment and Payment System (STAMPS). The IRB will then issue the surat pemakluman tindakan audit (audit notification letter). Generally, a taxpayer filling out the adjudication form online will need to submit supporting documents such as annual financial services and/or valuation reports (where relevant). As for semakan menyeluruh, it is a field audit where the IRB will visit the taxpayer’s premises.

3.    The audit typically covers a period of three calendar years, but the IRB can extend this to five years or more in cases of fraud, willful default or negligence. It is worth considering what constitutes negligence or fraud.

•     Can a company be considered negligent if inter-company documents that should have been stamped were left unstamped?

•     If, during the execution of documents, a company knowingly decides not to stamp them despite being aware of the requirement, does this indicate an element of fraud?

4.    Selection criteria for audit: While the framework has outlined several selection criteria for audits, including risk assessment criteria, specific industries and specific groups, it is unclear how the IRB applies these criteria: Would the IRB evaluate based on the type of instrument or industry, or would it assess taxpayer behaviour? Are there other red flags that could trigger an audit?

5.     The framework suggests that the IRB may extend its audit coverage to related companies within a group. This raises the question about the extent of taxpayer cooperation with the IRB: If the taxpayer challenges the audit or disputes the IRB’s findings, how will the IRB respond?

6.     The IRB has the authority to request copies of the instruments or, if necessary, original documents for review. However, this does not constitute a raid. It is an enforcement power granted under the Stamp Duty Act to facilitate audits.

7.     Once the audit is finalised, the IRB must issue a completion letter or clearance letter to confirm the audit’s conclusion.

8.     The framework also specifies that:

•     Semakan umum (general review) must be completed within seven days.

•     Semakan menyeluruh (comprehensive review) must be completed within 60 days.

However, the IRB has the authority to extend these timeframes when necessary.

9.      The framework allows taxpayers to make voluntary disclosure, with a concession penalty of 10% or RM50, whichever is higher. Interestingly, under Section 47A of the Stamp Duty Act, the pemungut (collector) has the discretion to reduce or waive the penalty on a case-by-case basis.

10.     Appeal process: Taxpayers have the right to appeal the IRB’s decisions under the Stamp Duty Act. If dissatisfied with the IRB’s ruling, taxpayers can bring their appeal to the High Court.

Maintaining accurate and thorough records is essential. Businesses must ensure that all relevant documents are properly stamped and readily available for audit. A well-documented audit trail not only demonstrates compliance but also minimises the risk of disputes.

Regular internal assessments play a critical key role in proactive compliance. Periodically reviewing and verifying records allows businesses to identify discrepancies early and take corrective action before issues escalate. Additionally, providing training for employees involved in the stamping process ensures they fully understand the latest requirements and procedures.

Engaging tax consultants and legal experts can offer valuable insights into navigating the complexities of the Stamp Duty Act. At the same time, maintaining open and transparent communication with the IRB fosters trust and facilitates smoother audit processes.

With the IRB’s enhanced audit framework, stamp duty audits are no longer a distant concern — they are a reality. Businesses that take a structured and proactive approach will not only mitigate risks but strengthen their financial and regulatory standing. In an evolving compliance landscape, preparation is not just an option — it is the key for taxpayers to navigate audits with confidence.

Soh Lian Seng is head of tax at KPMG in Malaysia

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