Ad Valorem Duty is the rate of duty varies according to the nature of the instruments and consideration stipulated in the instrument or the market value of a property. It is chargeable on instruments and not on transactions. If a transaction can be effected without creating an instrument of transfer, no duty is payable.

An unstamped or insufficiently stamped instrument is not admissible as evidence in a court of law, nor will it be acted upon by any public officer.

Assessment and payment of stamp duty can be made electronically via the Inland Revenue’s Stamp Assessment and Payment System (STAMPS system).

So recently, there are talks in relation to certain documents such as Novation Agreements, Deed of Gifts, Trust Deeds or any other family arrangement agreements where it has been in the past,a RM10.00 nominal stamp will be imposed. However recently LHDN imposed in some jurisdiction inconsistencies on whether the ad valerem stamp duty is imposed on these instruments.

LHDN state that previously it was done manually but ever since there is a requirement of online adjudication, ad valorem duty will be imposed if the intention of the instrument is for a conveyance of a right, benefit or ownership. Likewise investment agreement, shareholder agreement, license agreement, franchise agreement and other description that has valuable consideration.

Stamp Duty payable does not depend on the name of the instrument rather than the substance or content of the said document.

*Ad valorem in Latin means “according to the value”