Implementation of The Self-Assessment System for Stamp Duty in 2026
The Measures for the Collection, Administration and Enforcement of Tax Act 2024 introduced a self-assessment system for stamp duty effective 1 January 2026 (“Effective Date”).
The self-assessment stamp duty system (“STSDS”) is implemented in phases based on the types of instruments, as follows:
| Phase | Effective Date | Type of Instruments |
| 1 | 1 January 2026 | Instruments or agreements relating to rental or lease, general stamping and securities. |
| 2 | 1 January 2027 | Instruments of transfer of property ownership. |
| 3 | 1 January 2028 | Instruments or agreements other than stated in Phase 1 and Phase 2. |
STSDS now requires duty payers to upload information and undertake self-assessment of the value of stamp duties for the instruments.
Prior to this, the entry of stamp duty information is done by the duty payers, the stamp duty is assessed by the Inland Revenue Board of Malaysia (“IRBM”). The duty payers will make stamp duty payments based on the assessment notice issued by IRBM through the Stamp Assessment and Payment System (STAMPS) (“existing Adjudication Process”).
Self-assessment process
With effect from 1 January 2026, all stamp duty matters must be carried out through e-Duti Setem via the MyTax portal. In other words, instruments executed prior to the Effective Date but presented for stamping on or after 1 January 2026 are to be processed through e-Duti Setem.
Amendment to Section 36 of the Stamp Act 1949 (“Stamp Act”)
With the introduction of STSDS, Section 36 of the Stamp Act has been amended to provide both the STSDS and the existing Adjudication Process.
Effective from 1 January 2026, every person shall electronically file their stamp duty return in the prescribed form together with the instrument which is executed and chargeable with duty in accordance with Section 35A of the Stamp Act.
Once the stamp duty return is filed, the Collector of Stamp Duties (“Collector”) shall be deemed to have made an assessment of duty on the instrument based on the information furnished in the return.
For instruments not falling within the first phase of the STSDS (i.e. instruments other than rentals or leases, general stamping and securities instruments), stamping will continue to be subject to adjudication and the existing Adjudication Process under Section 36(1)(b) of the Stamp Act.[1] Where the Collector proceeds with the existing Adjudication Process under Section 36(1)(b) of the Stamp Act, the instrument is to be stamped within 14 days after notice of the assessment issued by the Collector[2].
It should be noted that under the new regime, applications for stamping of instruments subject to remission and exemption will still need to be formally assessed by the Stamp Duty Collector.
Power to Raise Assessment/Additional Assessment by the Collector
Although the filing of stamp duty returns with instruments is deemed to be an assessment made by the Collector under Section 36(1)(a) of the Stamp Act, the Collector has the power to raise assessments or additional assessments if it appears to him that no or insufficient duty has been paid on a chargeable instrument.
Section 36CA of the Stamp Act empowers the Collector to make an assessment or additional assessment within 5 years after the date the duty is or would have been paid; and make an assessment on an instrument, without limitation of time, where any fraud or wilful default or negligence has been committed in relation to stamp duty. This provision seeks to recover duty on insufficiently stamped instruments whether due fraud, wilful default or negligence.
However, Section 36CA of the Stamp Act is applicable only to instruments presented for stamping from 1 January 2026 in accordance with section 35A.[3]
Penalties
As a consequence of the implementation of the STSDS, the following new offences and revised penalties have been introduced into the Stamp Act and took effect on 1 January 2026. Notwithstanding this, IRBM has announced there will be no penalty on instruments stamped under the STSDS for the offence of submitting an incorrect return or the offence of providing any incorrect or inaccurate information relating to any matter affecting the imposition of duty. This special concession period of no penalty is applicable to stamping applications submitted from 1 January 2026 to 31 December 2026.
| Section under Stamp Act | Description |
| Section 3A Powers of Collector | Failure to provide the required information during audit constitutes an offense under Section 3A(5) of the Stamp Act. These include the following offences for which a person shall be guilty of an offence and shall be liable on conviction to a fine not exceeding RM10,000: Failure to comply with the notice to furnish instrument, book, account, record or other document and any translations of such;Obstruction or refusal to give access to the Collector into any land, building or place;Obstruction or hindrance of the Collector or the valuers authorised by him in the exercise of the Collector’s powers;Refusal to produce the instrument, book, account, record or other document in his custody or under his control on being required to do so by the Collector;Failure to provide reasonable facilities and assistance; orRefusal or failure to comply with the directions to answer any question lawfully asked by the Collector or the valuers authorised by him. |
| Section 72B Penalty for failure to keep record and other offences | Any person who, without reasonable excuse— (a) fails to keep and retain the books, records and documents as required under subsection 9(7); (b) fails to notify the Collector as required under subsection 15(6a); (c) fails to notify the Collector as required under subsection 15a(6); or (d) fails to keep the instrument and all relevant documents as required under section 35b, shall be guilty of an offence and shall be liable on conviction to a fine not exceeding RM10,000. |
| Section 72C Failure to furnish return | Any person who fails to furnish a return with the instrument which is executed and chargeable with duty in accordance with Section 35A without reasonable excuse shall be guilty of an offence and shall be liable on conviction to a fine not exceeding RM10,000. If no prosecution has been instituted in relation to such failure, the Collector may require that person to pay a penalty of not less than RM200 and not more than RM2,000. The Collector may, if he thinks fit, reduce or remit such penalty. |
| Section 72D Incorrect returns | Where a personmakes an incorrect return or gives any incorrect information, unless it was done in good faith, such person shall be guilty of an offence and shall be liable on conviction to a fine of not less than RM1,000 and not more than RM10,000 and shall pay a special penalty equal to the amount of unpaid duty. If no prosecution has been instituted in respect of the incorrect return or incorrect information, the Collector may require that person to pay a penalty equal to the amount of unpaid duty. However, the Collector may, if he thinks fit, reduce or remit such penalty. |
However, this announced waiver will not cover a failure to submit the stamp duty return within the prescribed time (i.e. late filing penalty), and the taxpayer must still ensure timely submission to avoid such penalties.
Conclusion
With the introduction of the Stamp Duty Audit Framework by the IRBM on 1 January 2025, in preparation for the transition to the STSDS, and the implementation of STSDS in 1 January 2026, duty payers are required to exercise diligence to ensure that all relevant documents are properly stamped under the Stamp Act. Under the Stamp Act, it is required that every instrument listed in the First Schedule be duly stamped.
Given that STSDS has placed the burden on duty payers to identify chargeable documents and determine its correct duty payable, duty payers should maintain proper documentation and if necessary, to defend against potential reassessments or audit.[4]
Co-written by
Brandon Shen Shi Han,Partner
(Construction Dispute Resolution)
brandon.shen@azmandavidson.com.my
Ng Yee Fung,Partner
(Corporate & Commercial Practice)
ng.yeefung@azmandavidson.com.my
[1] Section 36(1)(b) of the Stamp Act provides where a person has furnished a return together with an instrument in accordance with section 35A, the Collector shall assess the duty on the instrument, if any, with which in his judgment an instrument is chargeable.
[2] Amended Section 40 of the Stamp Act came into effect on 1 January 2026
[3] Paragraph 21 of the Explanatory Statement to the Finance Bill 2024 states that the new section 36CA is to empower the Collector to raise additional assessment as a consequence of the introduction of STSDS.
[4] Section 35B of the Stamp Act requires every person who is liable to pay duty chargeable on an instrument to keep the instrument which is submitted with a return under section 35A and all relevant documents in relation to the instrument for seven years from the date the duty is paid.
