Q.
In general, stamp duty is payable on instruments executed in Malaysia or if executed outside Malaysia, when bought into Malaysia. Duty is payable at varying rates.
Using appropriate examples, explain the following stamp duty:
a) Fixed duty (10 marks)
b) Ad Valorem duty (15 marks)
(25 marks, 2011 Q6)
A.
Stamp duty is a tax levied on a variety of written instruments specifies in the First Schedule of Stamp Duty Act 1949. In general, stamp duty imposed to legal, commercial and financial instruments.
The Assessment and collection of Stamp Duties is sanctioned by statutory law now described as the Stamp Act 1949.
There are two types of duties:
a. Fixed duty
The Imposition of Fixed Duties on:i. a number of other legal, commercial, mercantile or capital market instruments (e.g. Power or Letter of Attorney, Articles of Association of a Company, Promissory Notes, Policy of Insurance etc); and
ii. a duplicate or a subsidiary or a collateral instrument when it can be shown that the original or principal or primary instrument has been duly stamped.
b. Ad Valorem duty
Duty varies in amount in some specified proportion to the amount or value of some obligation incurred or discharged or some property affected by the instruments.
The Stamp Act 1949 provides for:-
The imposition of ad valorem Duties (that is, according to the value) on:
i. instruments of transfer (implementing a sale or gift) of property including marketable securities (meaning loan stocks and shares of public companies listed on the Bursa Malaysia Berhad), shares of other companies and of non tangible property (e.g. book debts, benefits to legal rights and goodwill);
ii. instruments creating interests in property (e.g. Tenancies and Statutory Leases);
iii. instruments of security for monies including instruments creating contracts for payment of monies or obligation for payment of monies (generally described as `Bond`); and
iv. certain capital market instruments (e.g. Contract Notes)
Ref:
Lembaga Hasil Dalam Negeri at http://www.hasil.gov.my/goindex.php?lgv=2&chg=1