The Stamp Act 1949 (“Act”) has long been a cornerstone of Malaysia’s tax framework, evolving over time to keep pace with changing regulatory and commercial realities. A major recent development is the introduction of the Stamp Duty Self-Assessment System (“SDSAS”), with Phase 1 taking effect on 1 January 2026. Under this new regime, taxpayers must now take an active role: they are required to classify their instruments under the First Schedule of the Act, determine the applicable duty themselves, and make payment upon filing their stamp duty return through SDSAS. This marks a clear shift from the previous system, where instruments were submitted for adjudication and the Collector would issue an official assessment before payment was made.
To support this transition, the Inland Revenue Board (“IRB”) has rolled out a element of Malaysia’s tax Voluntary Disclosure Programme (“VDP”), designed as a temporary measure to ease taxpayers into the new system. The VDP provides an automatic blanket exemption for eligible taxpayers, but only for a limited period of six months—from 1 January 2026 to 30 June 2026—and applies specifically to instruments executed between 2023 and 2025.
Questions have arisen as to why the VDP is limited to this three-year window and whether earlier instruments fall outside the scope of stamp duty exposure. In a recent engagement with members of the Chartered Tax Institute of Malaysia (CTIM), the Director General of Inland Revenue (“DGIR”) indicated that, in practice, the IRB typically reviews stamp duty compliance within a three-year period, in line with its broader audit approach.
However, this administrative practice should not be confused with the legal position. The Stamp Act 1949 allows for a five-year time limit for the assessment and recovery of underpaid stamp duty. The DGIR also made it clear that instruments executed prior to 2023 are not exempt from duty. There is currently no remission or exemption order covering such instruments, and any blanket exemption could raise complications, including potential refund claims from taxpayers who have already paid.
As such, while older instruments may face a lower likelihood of audit under current IRB practices, they remain legally subject to stamp duty. Taxpayers should therefore evaluate their positions based on statutory requirements rather than relying solely on prevailing audit trends, which may change over time.
At its core, the Act requires that all chargeable instruments be duly stamped. In practice, many taxpayers fall into non-compliance due to late stamping, which triggers penalties under Section 47A. Beyond financial penalties, there is also a significant legal risk: unstamped instruments may be inadmissible in court, potentially jeopardizing legal claims or defenses.
Section 47 of the Act requires stamp duty to be paid within 30 days of execution (or receipt in Malaysia, where applicable). Failure to comply results in penalties under Section 47A. If stamping occurs within three months after the deadline, the penalty is RM50 or 10% of the unpaid duty, whichever is higher. Beyond three months, the penalty increases to RM100 or 20% of the unpaid duty, again whichever is higher.
The Act also grants the Collector discretion execution in Malaysia under Section 47A(2) to remit or reduce penalties. The VDP operates within this framework, offering relief for qualifying taxpayers with instruments executed between 1 January 2023 and 31 December 2025. Importantly, the programme applies only where instruments have been executed and stamped but the duty remains unpaid. It does not extend to cases where both stamping and payment have already been completed. Eligible taxpayers benefit automatically, with no need to submit an appeal, as the system will reflect the waiver upon submission.
With SDSAS shifting responsibility to taxpayers, there may be a higher incidence of disputes over assessments. Taxpayers who disagree with the Collector’s determination may file a written objection within 30 days. If dissatisfied with the outcome, they may further appeal to the High Court within 21 days of receiving the decision.
Ultimately, the VDP serves as both a transitional tool and a policy signal. It encourages taxpayers to regularize past non-compliance while preparing for a more self-directed system going forward. In doing so, it aims to promote greater accountability, accuracy, and compliance under the SDSAS framework.
