Loan Agreement Stamp Duty Exemption: Everything You Need to Know
Stamp duty is a tax levied on various types of documents, including loan agreements. In Malaysia, the stamp duty on loan agreements ranges from 0.5% to 2% of the loan amount, depending on the loan type and amount. This means that borrowers have to pay a significant amount of money in stamp duty when taking out a loan.
However, there is some good news for borrowers. The Malaysian government has recently announced the Loan Agreement Stamp Duty Exemption, which exempts stamp duty for loan agreements up to RM500,000. This exemption is effective from 27 February 2021 until 31 December 2025.
The loan agreement stamp duty exemption is part of the government’s effort to support the economic recovery of Malaysia, particularly in light of the COVID-19 pandemic. It is a welcome relief for borrowers, as it will help reduce the cost of borrowing and make it easier for them to obtain financing.
Who is eligible for the loan agreement stamp duty exemption?
The loan agreement stamp duty exemption applies to all individuals and businesses in Malaysia, including those who have already taken out loans or are planning to do so. However, there are some eligibility requirements that borrowers need to meet in order to qualify for the exemption.
Firstly, the loan must be secured by immovable property, such as a house or a shop lot. This means that unsecured loans, such as personal loans or credit card loans, are not eligible for the exemption.
Secondly, the loan amount must not exceed RM500,000. Loans above this amount will still be subject to stamp duty, as per the usual rates.
Lastly, the loan agreement must be executed from 27 February 2021 until 31 December 2025. Loans agreements executed before or after this period will not be eligible for the exemption.
How does the loan agreement stamp duty exemption work?
Under the loan agreement stamp duty exemption, borrowers are not required to pay the stamp duty on loan agreements up to RM500,000. This means that they can save a significant amount of money on stamp duty fees.
For example, if you take out a RM300,000 loan, you would normally have to pay RM3,000 in stamp duty fees (assuming a 1% stamp duty rate). However, with the exemption, you would be completely exempt from paying stamp duty on your loan agreement.
It is important to note that the exemption only applies to stamp duty on loan agreements. Other types of documents, such as security documents or transfer documents, are still subject to stamp duty.
The loan agreement stamp duty exemption is a welcome relief for borrowers in Malaysia. It is a much-needed measure to help reduce the cost of borrowing and support the economic recovery of the country. With this exemption, borrowers can save a significant amount of money on stamp duty fees. However, it is important for borrowers to ensure that they meet the eligibility requirements and execute their loan agreements within the stated period to qualify for the exemption.