Early bird: A person registering for the MyTax application, scheduled to take effect on Jan 1. — YAP CHEE HONG/The Star
Experts urge grace period for self-assessment stamp duty
PETALING JAYA: People should be given more time to adapt to the self-assessment stamp duty system to be implemented by the Inland Revenue Board (LHDN) effective Jan 1.
Experts are calling for more guidance and a grace period, warning that those unprepared face heightened compliance risks.
Thannees Tax Consulting Services managing director SM Thanneermalai proposed a one-year penalty moratorium to give people more time to learn and correct mistakes without financial punishment.
Citing the e-invoicing model, he said the burden of calculating stamp duty on people would affect not only individuals but also companies.
“Compliance risk will definitely increase because people now have to decide how much stamp duty to pay and which category the instrument falls under. If a mistake is made, penalties will apply, and all penalties are being increased from Jan 1, 2026,” he said.
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Thanneermalai singled out the Stamp Act 1949, describing it as archaic and difficult to interpret due to the usage of “outdated language”.
Individuals, he said, must determine which item in the First Schedule applies to their document, whether it attracts a fixed RM10 duty or value-based rates of 1%, 3% or 4%.
“If the wrong category is chosen and duty is underpaid, the LHDN can recover the shortfall and impose penalties of 10% if corrected within three months, or 20% thereafter, subject to minimum amounts,” he said, adding that penalties could be significant.
While the MyTax system can function adequately, Thanneermalai stressed that the main challenge is in decision-making not data entry.
“If you key in the wrong information, you will get the wrong tax. Guidance at the moment, is insufficient. Five guidelines have been issued, but they are nowhere near enough,” he said.
He urged LHDN to establish a dedicated help desk and adopt a more supportive approach, adding that many individuals cannot afford to seek professional advice.
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Echoing a similar view is accounts and tax expert Datin Christine Koh who said implementing the system from Jan 1 was acceptable but called for a longer penalty-free period.
“Most non-compliance is unintentional and stems from lack of awareness rather than deliberate evasion,” she said.
She pointed out that the Stamp Act 1949, despite amendments, was more than 70 years old and contains provisions that are “too general, with wide scope and unclear definitions”.
“Stamp duty is not limited to sale and purchase agreements or tenancy agreements. In principle, all agreements, contracts and instruments are subject to stamp duty,” she said.
Even professionals continue to debate if certain documents require stamping, she added.
“For example, a customised machine purchase documented through a formal agreement is clearly stampable but ambiguity arises if the same transaction is recorded via a quotation accepted by a customer or a purchase order,” she explained.
“These are issues still being debated among lawyers and tax agents, so it is unrealistic to expect the general public to apply the rules correctly.”
She cautioned that some instruments attract a fixed duty of RM10, while others are subject to ad valorem (according to value) duty based on contract value.
“Stamping an ad valorem instrument at RM10 would result in under-stamping and potential penalties,” she added.
There are also numerous exemption and remission orders, Koh said, warning that failure to select the correct public ruling or exemption in MyTax could lead to overpayment.
For self-stamping, she advised individuals to refer to the First Schedule of the Stamp Act and consult a tax agent or lawyer when in doubt, adding that exemption orders are not reflected in the schedule.
Tratax Sdn Bhd executive director Renganathan Kannan reminded individuals that stampable instruments must be stamped within 30 days of execution in Malaysia, or within 30 days of receipt if executed overseas.
“Individuals and small landlords should ensure timely stamping of tenancy documents to avoid audits and penalties,” he said.
He said audits under the Stamp Duty Audit Framework may be conducted on a general or comprehensive basis and can cover up to three calendar years except in cases involving fraud, evasion or negligence.
