Remission Order for Stamp Duty on Service Agreements Updated

MEMBER FIRM OF

The remission order relating to stamp duty on service agreements has been updated with the issuance of the Stamp Duty (Remission) Order 2021 [P.U.(A) 428/2021] (‘the 2021 Remission Order’) on 25 November 2021.

The 2021 Remission Order is deemed to have come into operation on 28 December 2018 and revokes the Stamp Duty (Remission) (No. 4) Order 2010 [P.U.(A) 476/2010] (‘the 2010 Remission Order No. 4’).

Arising from an amendment to the Stamp Act 1949 (‘the Act’) pursuant to the Finance Act 2018, the appropriate head of charge applicable to stamp duty on a service agreement was amended from item 22(1)(b) to item 22(1)(a) of the First Schedule to the Act commencing from 28 December 2018. Accordingly, the 2021 Remission Order reflects these amendments and provides, inter alia, that:

1. Any amount of stamp duty chargeable under item 22(1)(a) of the First Schedule to the Act which is in excess of 0.1% of any sum of money in relation to a service agreement chargeable with duty under the aforesaid item 22(1)(a) is remitted.
2. For the purposes of paragraph 1 above, a service agreement refers to an agreement executed by:

1. a main service provider with a person, other than a Ruler of a State or the Government of Malaysia or of any State or local authority, awarding the undertaking; or
2. a sub-provider of service with the main service provider where the main service provider has entered into an undertaking with a Ruler of a State or the Government of Malaysia or of any State or local authority awarding the undertaking.

1. Where the main service provider under paragraph 2(a) above or the sub-provider of service under paragraph (2)(b) above further executes a service agreement with another sub-provider of service and so on, the amount of stamp duty that is chargeable upon that agreement under item 22(1)(a) of the First Schedule to the Act which is in excess of RM50.00 is remitted.
2. To be entitled to the remission stated in paragraph 3 above, the agreement by the sub-provider of service or subsequent sub-provider of service shall state:

1. the names of the parties and the date of execution of the agreement referred to in paragraph 2(a) or 2(b) above, as applicable;
2. the subject matter of the agreement; and
3. that the agreement referred to in paragraph 2(a) or 2(b) above, as applicable, has been duly stamped at a rate specified in paragraph 1 above.

Comment

The update on the remission of stamp duty applicable to service agreements under the 2021 Remission Order is welcomed as it clears the confusion that arose in respect of the 2010 Remission Order No. 4 as a result of amendments made to the Act with effect from 28 December 2018.