Introduction
Stamp duty is a form of tax imposed on legal documents to make them legally enforceable and admissible in court. In the context of property transactions in Sarawak, two (2) of the most important documents subject to stamp duty are the Sale and Purchase Agreement (SPA) and the Memorandum of Transfer (MOT). The duties imposed differ in terms of the nature of the instrument and the value of the property being transacted. This article outlines the key legal guidelines and computations of stamp duties applicable in Sarawak.
Legislative Framework
Stamp duty in Sarawak is governed by the Stamp Act 1949 (Act 378), a federal legislation that applies throughout Malaysia, including Sarawak and Sabah. The Inland Revenue Board of Malaysia (Lembaga Hasil Dalam Negeri or LHDN) is the authority responsible for assessment and collection of stamp duties.
The valuation and adjudication of stamp duties are guided by the First Schedule of the Stamp Act 1949, as well as relevant Exemption Orders, Budget announcements, and Public Rulings issued by LHDN.
Sale and Purchase Agreement (“SPA”)
General Concept of SPA
A SPA is a legal document executed between a vendor and a purchaser that sets out the terms and conditions of the sale of property. Although not mandatory to be stamped for enforceability, an unstamped SPA is inadmissible in court and cannot be used as evidence in legal proceedings – as prescribed under the Evidence Act 1950.
Stamp Duty on SPA
The stamp duty on a SPA for property is nominal and imposed at a fixed rate under Item 22 of the First Schedule to the Stamp Act 1949.
- RM10.00 for each executed SPA document (regardless of property value)
Note: Each original or duplicate copy retained for legal or official purposes must be individually stamped.
Timing for Stamping
- If executed in Sarawak: Within 30 days from the date of execution.
- If executed outside Malaysia: Within 30 days from the date it is first received in Sarawak.
Memorandum of Transfer (“MOT”)
General Concept of MOT
The MOT is the legal instrument used to effect the transfer of ownership of land or real property from the vendor to the purchaser, and it must be registered with the Land and Survey Department of Sarawak.
Stamp Duty on MOT
Stamp duty on a MOT is ad valorem, meaning it is calculated based on the purchase price or market value of the property, whichever is higher. Rates under Item 32(a) of the First Schedule to the Stamp Act 1949 are as follows:
| Value Bracket (RM)* | Rate |
| First RM100,000 | 1% |
| Next RM400,000 | 2% |
| Next RM500,000 | 3% |
| Any amount exceeding RM1,000,000 | 4% |
*Note: of the consideration or market value of the property, whichever is greater.
Example Calculation
If a residential property is valued at RM750,000:
- First RM100,000 @ 1% = RM1,000
- Next RM400,000 @ 2% = RM8,000
- Remaining RM250,000 @ 3% = RM7,500
Total Stamp Duty = RM16,500
Party to pay
The purchaser typically bears the stamp duty cost for the MOT, unless contractually agreed otherwise (to be borne by the Vendor or to be borne equally between the parties).
Exemptions and Remissions
First-Time Home Buyers
Under various government housing schemes, including the former Home Ownership Campaign (HOC) and Budget initiatives, stamp duty exemptions may apply:
- SPA exemption: Full exemption up to a purchase price of RM500,000 (subject to applicable policy period)
- MOT exemption: May be partially or fully exempted depending on value and buyer eligibility
Family Transfers
Certain family transfers qualify for exemptions or remissions:
| Type of Transfer | Exemption / Remission |
| Between husband and wife | Full exemption under Item 66 of First Schedule |
| Between parent and child | 50% remission on ad valorem duty (conditions apply) |
| Between grandparent & grandchild | May qualify for remission, subject to LHDN’s discretion and supporting documents |
Supporting documents typically required include:
- Birth certificates
- Marriage certificates
- Statutory declarations
Valuation and Disputes
Disputed Property Valuation
Where LHDN assesses that the property is undervalued, it may apply a higher market valuation for stamp duty purposes. This usually arises where the SPA price appears significantly below market value.
Right to Object
An aggrieved party may object to the valuation by:
- Submitting a formal Notice of Objection to LHDN
- Attaching a private valuation report from a licensed valuer
- Making representation and requesting re-assessment
Stamping Procedure and Timeline
Step-by-step process:
- Stamping of SPA
- Submit to LHDN (physically or via STAMPS online system)
- Pay RM10.00 per copy
- Submission of MOT for Adjudication
- Submit completed MOT with SPA, valuation form, and any exemption request
- LHDN issues a Notice of Assessment
- Payment and Certificate of Stamp Duty
- Stamp duty paid to LHDN
- MOT stamped and endorsed
- Lodgement at Land and Survey Department
- Stamped MOT is submitted for title transfer and name change
- Registration process concludes with issuance of title under new name
| Delay Period | Penalty |
| Not more than 3 months | RM25 or 5% of the duty (whichever is greater) |
| 3 to 6 months | RM50 or 10% of the duty (whichever is greater) |
| More than 6 months | RM100 or 20% of the duty (whichever is greater) |
Conclusion
Stamp duty on SPAs and MOTs in Sarawak must be properly assessed, stamped, and paid within the prescribed time to ensure legality and enforceability of the documents. While the SPA incurs a nominal fixed duty, the MOT is subject to a tiered ad valorem rate. Awareness of exemptions, accurate valuation, and adherence to statutory procedures are vital for a smooth property transfer process in Sarawak. For tailored advice and assistance, consult a qualified lawyer or conveyancer licensed to practice in Sarawak.
