Stamp Duty on Intercompany Loan
Understanding the stamp duty implications for intercompany loan agreements under Malaysian law
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Introduction to Loan Agreement Stamp Duty
A loan agreement is an instrument subject to stamp duty pursuant to item 22 or item 27 of the First Schedule of the Stamp Act 1949. This legal requirement ensures proper documentation and taxation of financial transactions between companies.
Upon execution, the loan agreement must be stamped within 30 days from the execution date as stipulated in Section 47. Failing to meet this deadline will subject the agreement to late stamping penalties under Section 47A, which can result in additional costs and complications.

Key Deadline
Stamp within 30 days of execution to avoid penalties
Key Features of Intercompany Loans
Unsecured
The loan is provided without any collateral or security backing, relying on the trust between related companies.
Indefinite Tenure
No fixed maturity date is set, allowing flexibility in the loan arrangement between parent and subsidiary.
On Demand Repayment
The loan is repayable on demand basis, giving the lender control over when funds should be returned.
These features make intercompany loans chargeable under item 22(1)(b) of the Stamp Act 1949, which governs loans with indefinite periods.
Legislative Framework
"… loan, … agreement or instrument of any kind whatsoever: (1) Being … for any sum or sums of money at stated periods, … (b) for a term of life or any other indefinite period for every RM100 and also for any fractional part or sum periodically payable RM 1.00"
Item 22(1)(b) of the First Schedule provides the legal basis for stamp duty on intercompany loans. This provision specifically addresses loans with indefinite periods, which is the typical structure for intercompany financing arrangements.
1%
Standard Rate
Applicable stamp duty rate on the loan sum
Stamp Duty Remission Order
The Stamp Duty (Remission) (No. 2) Order 2012 [PU(A) 258/2012] provides significant relief on stamp duty for qualifying loan agreements. This remission is based on 0.1% of the stamp duty chargeable, offering substantial savings for companies.
Eligibility Requirements
  • Loan agreement must be without security
  • Repayable on demand basis
  • Single bullet repayment structure
Legal Provision
"The amount of stamp duty that is chargeable under subsubitem 22(1)(b) of the First Schedule to the Act upon a loan agreement or loan instrument without security for any sum or sums of money repayable on demand or in single bullet repayment under that subsubitem which is in excess of zero point one per cent (0.1%) is remitted."
Understanding the Remission Calculation
A close examination of the phrase "stamp duty that is chargeable" reveals it refers to stamp duty payable. The application of the remission is based on 0.1% of the stamp duty payable, not 0.1% of the loan sum.
Since stamp duty chargeable means stamp duty payable, the remission applies to the excess of 0.1% of the stamp duty payable. This means the net stamp duty payable would be equivalent to 0.1% of the stamp duty payable.

Important Note
The remission is calculated as 0.1% of the stamp duty payable, not 0.1% of the loan amount
Case Study: Bintang Property Sdn Bhd
Bintang Property Sdn Bhd is a property developer in Seremban engaged in housing development in Seremban 2, closing its accounts to 31.12 every year.
01
The Transaction
On 1.7.2025, Bintang Property Sdn Bhd borrows RM30 million from its holding company, Bulan Holding Bhd
02
Purpose
To carry out advertisement and promotion of its property development projects
03
Loan Terms
Unsecured and repayable based on funds available from property sales or upon request by Bulan Holding Bhd in single bullet repayment
Stamp Duty Computation
The loan agreement is chargeable under item 22(1)(b) and subject to stamp duty at 1% of the loan amount.
1
Loan Amount
RM30 million
2
Standard Rate
1% stamp duty
3
Stamp Duty Payable
RM300,000
Applying the Remission
The loan agreement under item 22(1)(b) is eligible for stamp duty remission under PU(A) 258/2012. The excess of 0.1% of the stamp duty payable would be remitted, resulting in significant savings.
Stamp Duty Payable
RM300,000
Less: Remission of Excess 0.1%
(RM299,700)
Final Stamp Duty at 0.1%
RM300
The remission reduces the stamp duty from RM300,000 to just RM300, representing a 99.9% reduction in the stamp duty burden.

Correction Note
Item 3 should read 1% (not 0.1%) on the loan sum, further restricted to 0.1% of stamp duty
Conclusion
Stamp duty is contentious and challenging, requiring careful attention to detail and current regulations. The computation of stamp duty under the First Schedule must take into account the latest exemption or remission orders to ensure compliance and optimize tax efficiency.
For intercompany loans, understanding the remission provisions under PU(A) 258/2012 can result in substantial savings, reducing the effective stamp duty rate from 1% to just 0.1% of the stamp duty payable. Professional advice is recommended to ensure proper application of these provisions.
99.9%
Potential Savings
Through proper remission application
2025 © Dr Choong Kwai Fatt