Stamp Duty in Malaysia for Transfer of Shares 

Understanding stamp duty in Malaysia is important for everyone involved in transferring company shares especially for non-listed or private companies. Whether you are a company secretary, investor or startup founder, it is essential to follow the latest Inland Revenue Board (IRB) rules to avoid penalties. This guide will explain the latest IRB updates including new valuation methods and audit exemptions for certain companies to help you stay compliant and ensure a smooth transfer process. 

What Is Stamp Duty For Share Transfer In Malaysia? 

Stamp duty is a tax on legal documents including those used to transfer shares in Malaysia. It is governed by the Stamp Act 1949 and managed by the Inland Revenue Board (IRB). This tax applies to non-listed (private) company shares only, while transfers of listed shares are usually exempt.

Stamp duty is triggered by events like sale, gifting or restructuring of shares and must be paid based on the value of the shares. Even if the transfer takes place outside Malaysia, stamp duty still applies if the documents are received in Malaysia.

For non-listed shares, the IRB requires a proper valuation to calculate the duty. This can be based on either the Net Tangible Assets (NTA) or the purchase price (consideration) whichever is higher. The older methods like par value and Price Earning Ratio (PER) are no longer accepted according to the updates under the Companies Act 2016.

IRB Stamp Duty Guidelines

In 2020, the Inland Revenue Board of Malaysia (IRB) streamlined its approach to stamp duty assessment for the transfer of non-listed company shares. These updates reflect a stronger alignment with the Companies Act 2016 to ensure clarity and consistency in how share transfers are valued and taxed. 

One of the key updates is the complete removal of “par value” and the outdated Price Earning Ratio (PER) as acceptable bases for share valuation. These changes have now been fully implemented and integrated into standard procedures. Companies must use either the Net Tangible Assets (NTA) method or the consideration price (market/agreed value) whichever is higher. 

Another significant development is the growing adoption of digital submissions and e-stamping to enhance efficiency and traceability. Companies are now encouraged to file the Form of Transfer of Securities through IRB’s online platform within 30 days of the date of execution (if signed in Malaysia) or within 30 days of receipt in Malaysia (if executed outside of Malaysia). If you fail to meet the timeline, you may result in penalties or rejection of documents.

Key updates include: 

• PER and par value are officially removed from valuation methodology. 
• Digital submission and e-stamping systems are now widely adopted. 
• The form of transfer of securities must be submitted within 30 days for adjudication.
• Audited financial statements not older than 18 months must be submitted unless exempt. 
• Continues to align with the Companies Act 2016 and Practice Directive 3/2017.

How To Calculate Stamp Duty Calculation: Methods and Examples 

The calculation of stamp duty depends on the value of shares being transferred by using one of the following two methods: 

1. Net Tangible Assets (NTA) Method 
2. Consideration (Market Value or Agreed Price) Method 

The Inland Revenue Board mandates that the higher value between the two methods is used for the purpose of stamp duty assessment. 

Step-by-Step Calculation of Stamp Duty

1. Determine NTA per share: NTA per share = Total NTA Total issued shares  

2. Compare with consideration (agreed price) for the share transfer. 

3. Use the higher value for the final stamp duty calculation.

4. Apply the stamp duty rate: 

Stamp Duty = 0.3% Higher of NTA or Consideration

Example of Share Transfer Stamp Duty

Let’s walk through an example scenario based on the IRB’s guidelines to better understand how to calculate stamp duty for a private company in Malaysia. 

ABC company is a private company incorporated in Malaysia with a total share capital of RM100,000 consisting of 100,000 ordinary shares. As of the latest financial year, the company has a Net Tangible Asset (NTA) value of RM1,000,000 and is profitable. 

Mr.A, who owns 50,000 shares (50% of the company), intends to transfer all his shares to Mr.B for a consideration (market value) of RM50,000. 

Step 1: Determine Share Value Based on NTA

Value = (NTATotal Shares)Number of Shares Transferred 

           =(RM1,000,000100,000)50,000=RM500,000

Step 2 : Compare NTA vs Consideration

• NTA-based value: RM500,000
• Consideration-based value: RM50,000

Since stamp duty is calculated on the higher value, RM500,000 will be used. 

Step 3: Calculate Stamp Duty

Stamp Duty = 0.3%Higher Value

                     = 0.003RM500,000=RM1,500

Final Stamp Duty Payable: RM1,500

If the resulting figure includes decimals, it will be rounded up to the nearest RM1,000 as per the IRB’s requirement. In this case, since RM1,500 is already a whole number, rounding is not necessary. 

Audit Requirements And Exemptions

In Malaysia, one of the most crucial requirements of the stamp duty on share transfers is for the submission of the company’s latest audited financial statements. These accounts must not be older than 18 months as of the date of the application. The audit report provides the basis for determining the company’s Net Tangible Assets (NTA), one of the two core valuation methods used in the calculation of stamp duty.

However, the Inland Revenue Board (IRB) allows exemptions for specific types of companies. These exemptions are in line with the Practice Directive 3/2017 issued by the Companies Commission of Malaysia. Based on the directive, the following types of companies are eligible for audit exemptions: 

• Dormant companies – Companies that have made no accounting transactions in a financial year.
• Zero-revenue companies – Companies with no revenue and no significant expenses during the year. 
• Threshold-qualified companies – Private companies that meet certain revenue and asset thresholds as established by the directive.

If a company is qualified under any of these categories, it is not required to submit  audited accounts during the stamp adjudication process. Management accounts can be used as well. This reduces the burden of compliance, especially on small startups and holding companies with limited activity. 

To avoid penalties, it is still mandatory to submit the Form of Transfer of Securities within 30 days of execution (or 30 days from receipt in Malaysia if executed overseas) regardless of audit exemption status.

Stamp Duty Submission Process

It is essential to know the stamp duty submission process to be timely compliant and avoid penalties in transferring company shares in Malaysia. The policies by the Inland Revenue Board (IRB) state that all transfer instruments of non-listed shares are to be adjudicated and assessed for stamp duty within a time frame.

Required Documents

• Form of Transfer of Securities (executed by transferor and transferee)
• Latest Audited Financial Statements (not older than 18 months), unless the company qualifies for audit exemption. 
• Share Sale and Purchase Agreement (SSPA) or proof of consideration
• Letter of Audit Exemption, if applicable, for dormant, zero-revenue, or threshold-qualified companies

Submission Platform

• All submissions are to be submitted through the IRB’s STAMP Assessment and Payment System (STAMPS) – an electronic platform for electronic stamping and adjudication.

Timeline for Submission

• If executed in Malaysia: 30 days from completion date
• If executed outside Malaysia: 30 days from arrival date in Malaysia

Penalty for Late Submission

• Failure to submit within the stipulated time can result in penalties and interest as charged by the IRB. The process can be started as soon as possible after completion of the transaction.

Real Property Gains Tax (RPGT) and Share Transfers

When dealing with the share transfers in Malaysian companies, it is important to consider whether the transaction may trigger Real Property Gains Tax (RPGT) especially if the company is a Real Property Company (RPC).

Learn more: https://fastlane-global.com/my/blog/real-property-gains-tax-rpgt-exemption-and-rates/

What Is an RPC?

A Real Property Company (RPC) is a controlled company where at least 75% of its total tangible assets are real property, shares in other RPCs, or both.

If the company meets this requirement, the share transfer is treated as a disposal of real property under the RPGT Act 1976, and the relevant tax implications will apply.

When RPGT Applies

RPGT is imposed on the disposal of RPC shares where the disposal results in a gain (i.e. where the disposal price exceeds the acquisition price). The tax is payable on residents and non-residents who are involved in the disposal of an RPC share. 

How to Calculate RPGT for Share Transfers

To find out if RPGT is payable, and the amount to pay, you can calculate as below:

Acquisition Price = (AB)C

A = Number of shares disposed (i.e., chargeable asset treated)

B = Total number of issued shares in the company on the acquisition date

C = Real property or RPC shares value owned by the company on the acquisition date

Disposal Price: This is the actual amount received from the disposal or its market-equivalent value.

Checklist for Company Secretaries & Advisors

Company secretaries and professional advisors play an important role in ensuring compliance with Malaysia’s stamp duty regulations on share transfers. To minimize risks, avoid penalties, and facilitate the process smoothly, a structured checklist can be helpful. 

Ensure the Appropriate Valuation Method

Use either Net Tangible Assets (NTA) or Consideration (market value), based on company type. For profit or loss-making companies, use the greater of NTA or consideration.Follow IRB’s updated guidelines issued in 2020.

Prepare Financial Documents

Submit updated audited accounts (no more than 18 months old). For companies qualified for audit exemption (dormant, zero-revenue, threshold-qualified), prepare a declaration of exemption under Practice Directive 3/2017.

Fill Transfer Forms On Time

Submit the Form of Transfer of Securities to the Inland Revenue Board within 30 days from:

• The date of signing (where signed in Malaysia), or
• The date of receipt in Malaysia (where signed overseas).

Late submission will incur a penalty.

Update Share Register Properly

Properly record the transfer of shares in the company’s member register. Maintain proper internal records for compliance under the Companies Act 2016.

Use the STAMPS System for E-Filing

Pay and file stamp duty under the STAMP Assessment and Payment System (STAMPS) portal for better efficiency and monitoring.

Conclusion

It is necessary for business owners, investors, and company secretaries in Malaysia to understand how to calculate stamp duty and undertake the necessary process steps for share transfers. Since the 2020 amendments by the Inland Revenue Board, the focus has been shifted to more transparent valuation methods and efficient documentation processes. With the complexity of share valuations and the legal requirements, it is always best to consult with experienced corporate professionals when managing the share transfers and stamp duty issues.

How FastLane Group Can Help

Navigating the stamp duty calculation and ensuring compliance with all regulatory requirements can be overwhelming. As experts in corporate services, company secretarial compliance, and share transfer procedures within Malaysia, FastLane Group supports startups, SMEs, and investors with all the steps necessary.
Let us handle the regulatory burden while you focus on business growth. Contact us now to schedule a consultation.