The Stamp Act 1949 (“Act”) has long served as a foundational element of Malaysia’s tax landscape, and, like all enduring legislation, it evolves to meet contemporary needs. In recent developments, the introduction of the Stamp Duty Self-Assessment System (“SDSAS”) has been on everyone’s mind – starting with Phase 1 kicking off on 1 January 2026. With this new system, taxpayers are required to first categorise their instruments according to the First Schedule of the Act, then independently and accurately determine the rate payable to the Collector and subsequently make such payments to the Collector upon filing their stamp duty return on SDSAS. This represents a marked departure from the previous framework, under which taxpayers were only required to submit their instruments online for the Collector to adjudicate and issue an official assessment notice specifying the stamp duty due – upon which the taxpayers would make payment.

With such a significant change within the stamp duty framework, the Inland Revenue Board (“IRB”) has introduced the Voluntary Disclosure Program (“VDP”).The VDP is aimed to facilitate the transition between the past framework and the newly implemented system, acting as an automatic blanket exemption for all eligible taxpayers. However, it is important to note that this program and the exemptions that come along with it would only be available for 6 months from 1 January 2026 to 30 June 2026 for instruments executed between year 2023 to year 2025.

Many taxpayers have asked why the Stamp Duty Voluntary Disclosure Programme (VDP) applies only to instruments executed between 2023 and 2025, and whether documents executed prior to 2023 fall outside stamp duty exposure.

During a recent dialogue session with CTIM members, the Director General of Inland Revenue (“DGIR”) verbally indicated that, as a matter of administrative practice, the Inland Revenue Board (“IRB”) generally audits stamp duty compliance for a period of up to three years only. This administrative approach is broadly aligned with the IRB’s general audit framework.

However, it is important to note that, legally, the Stamp Act 1949 provides a time bar of five years for the assessment and recovery of deficient stamp duty. The DGIR also clarified that instruments executed prior to 2023 are not exempt from stamp duty.

Stamp duty remains legally payable under the Act as there is no remission or exemption order granting a blanket exemption for such instruments. A blanket exemption would potentially require refunds to be made to taxpayers who have already paid duty, which is not the current policy approach. Accordingly, while instruments executed before 2023 may, in practice, be less likely to be subject to audit under current IRB administrative practice, they remain legally chargeable to stamp duty.

Our view is that the three-year scope reflects the IRB’s current administrative practice rather than a limitation imposed by legislation, and such practice is not legally binding nor guaranteed to remain unchanged. Taxpayers should therefore assess their exposure based on statutory provisions rather than solely on current audit practice.

The overarching principle of the Act is that every instrument must be stamped at the prescribed rate. In practice, many taxpayers fall foul of the late-stamping provisions, rendering them liable under Section 47A of the Act. However, non-compliance not only attracts penalties imposed by the Collector, but also carries the more serious consequence that an unstamped document may be inadmissible as evidence in court, potentially undermining a party’s claims or defences should a dispute arise.

Specifically, under Section 47 of the Act, taxpayers are required to file a stamp duty return and ensure stamp duty payable is made within 30 days of the date of execution in Malaysia or the date of receipt in Malaysia, and failure to do so would attract penalties. Subsequently, Section 47A of the Act sets out the penalties for late stamping, whereby the “late” taxpayer would be subject to fifty ringgit (RM50) or ten percent (10%) of the amount of the unpaid duty if the instrument is stamped within three (3) months after the time for stamping, or one hundred ringgit (RM100) or twenty percent (20%) of the amount of the unpaid duty, whichever sum is greater in both cases.

Under Section 47A(2) of the Act, the Collector has the power to remit or reduce the amount of duty payable. Hence, the Collector has introduced the VDP to grant a remission period for eligible taxpayers, which applies to instruments executed between 1 January 2023 and 31 December 2025. For the VDP to apply, it is exclusive to taxpayers who have duly executed and stamped the relevant instruments, but have not paid the stamp duty. However, if the taxpayer has had the instrument stamped and the duty paid, then the VDP does not apply to such parties. Given that the VDP is designed as an automatic blanket exemption, those eligible are not required to file appeals of any sort, and the system will automatically display that the payment for duty is waived.

With the introduction of the SDSAS, the likelihood of the Collector “rejecting” a taxpayer’s submission may increase. Accordingly, taxpayers should be aware of the appeals process in the event of any dispute or dissatisfaction with an assessment by the Collector. Where a taxpayer disagrees with the Collector’s assessment, the taxpayer may, within thirty (30) days from the date of the assessment, lodge a written notice of objection with the Collector. Upon determination of the objection, the Collector shall notify the taxpayer in writing of the decision. If the taxpayer remains dissatisfied with the Collector’s decision, the taxpayer may, within twenty-one (21) days from the date of notification, appeal the decision to the High Court.

The VDP can be seen as a nudge from the Collector to the taxpayers, a nudge forward in the direction of modernity through the SDSAS. Therefore, the bottom-line of the VDP is that it is introduced to encourage taxpayers to independently file, stamp and pay for their instruments in the future, fostering a culture of compliance and individual integrity under the SDSAS.