Guide to Calculating Stamp Duty of Shares

Guidelines on Stamp Duty

In 2020, the IRB issued Guidelines that provide new directions regarding the determination of stamp duty for transfers of non-listed shares. It is worth mentioning that the latest valuation method for these shares has been changed, deleting referencing to par value according to Companies Act 2016. Ratios used in the computations above as well were based on invalid Price Earning Multiple (PER) values.

The 2019 and 2020 Guidelines reiterate the need for audited company accounts with the Transfer of Securities Form. Nonetheless, some firms including threshold qualified, dormant and zero-revenue companies are exempted from the necessary audit.

Further still, the Guidelines reaffirm the company secretary’s responsibility to record appropriately in the member’s register all necessary details with respect to share issue and transfer, regardless of section 102 of Companies Act 2016.

Pursuant to the 2020 guidelines, stamp duty will be calculated based on the value of shares rounded up to the nearest thousand. For example, transfer of shares will involve payment of stamp duty in a sum not exceeding one thousand ringgit and at the rate of three ringgit for every one thousand or part thereof.

RPGT Act

The RPGT Act states that a controlled company is the Real Property Company (RPC). This applies when the value of its owned properties, shares of other RPCs held in another RPC, or both represent at least 75% of its total tangible assets. Any company that acquires this defined value less than 75% cannot be considered as a Real Property Company (RPC).

Acquisition Price

If the company becomes an RPC on the date of acquisition, then its acquisition price under the RPGT Act will be computed as A/B x C.

Formula: A/B x C

A = shares considered as chargeable asset

B = total number of the issued shares in this company at chargeable asset acquisition date

C = defined value of the real property and shares or both owned by the relevant company at the acquisition date of the chargeable asset.

Consequently, the price will be the amount paid to purchase RPC shares or consideration considered to approximate the market value of RPC shares if acquisition date is on the date of acquisition in respect of purchased chargeable asset.

Disposal Price

Disposal price refers to the value in cash or its equivalent that is exchanged in selling RPC shares. Where the disposal price exceeds acquisition price, it makes for a chargeable gain attracting RPGT.