Q.
How to determine which instrument of agreement is subjected to stamp duty?
A.
DETERMINATION OF LIABILITY
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The first step is to identify the class of instrument under which a particular chargeable instrument may fall into. In the case of standard instruments, the rule in classification of instruments is that the real and true meaning of the instrument is to be ascertained, that the description of it given in the instrument itself by the parties is immaterial.Whereas in the case of non-standard instruments, the substance of the instrument, as construed by examination of the rights and obligations created and not its FORM will determine its classification. Examples where this RULE would apply include instruments effecting divestment of rights or interests in property by way of a ` Declaration of Trust` or a `Deed of Family Arrangement` or release on `Sale` or by way of `Gift` or by way of `Security`.
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The second step involves statement of liability of standard instruments where an instrument is liable to stamp duty within two different categories or heads. It is provided that distinct matters including separate considerations shall be separately charged.
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The third step involves non-standard instrument which by its classification will be liable to ad valorem duty. This instrument would require examination and when appropriate, measurement of the value of the consideration, that is, the price of the promise or act to be performed by the instrument.
The major principle in the application of the law on stamp duties is that the subject matter of tax is the INSTRUMENT and not the TRANSACTION. For example, agreement made verbally is not subject to stamp duty.
Ref:
Lembaga Hasil Dalam Negeri at http://www.hasil.gov.my/goindex.php?lgv=2&chg=1.