Stamp duty exemptions

Stamp duty exemptions

In Budget 2022, to enhance the accessibility to insurance and takaful products by the B40 group and Micro, Small and Medium Enterprises (MSMEs), the Government proposed the following:

• Stamp duty exemption for any insurance policies or takaful certificates for Perlindungan Tenang products, with an annual premium or takaful contribution not exceeding RM150 (previously RM100).
• Stamp duty exemptions for the purchase of insurance policies or takaful certificates by individuals or MSMEs, where the annual premium or contribution does not exceed:
  • For individuals: RM150
  • For MSMEs: RM250 
    

To legislate the above proposals, the following Orders have been gazetted:

• Stamp Duty (Exemption) (No. 5) 2018 (Amendment) Order 2021
• Stamp Duty (Exemption) (No. 15) Order 2021
• Stamp Duty (Exemption) (No. 16) Order 2021 

The Orders / Amendment Order all come into operation on 1 January 2022. 

The Stamp Duty (Exemption) (No. 5) Order 2018 was gazetted on 31 December 2018 to provide a stamp duty exemption on any insurance policies or takaful certificates for Perlindungan Tenang products, issued by a licensed insurer or a licensed takaful operator (from 1 January 2019 to 31 December 2020), with an annual premium or takaful contribution not exceeding RM100 (see Tax Alert No. 1/2019).

Thereafter, the Stamp Duty (Exemption) (No. 5) 2018 (Amendment) Order 2020 was gazetted on 31 December 2020 to extend the stamp duty waiver for another five years, until 31 December 2025 (see Tax Alert No. 1/2021).

Following the above, the Stamp Duty (Exemption) (No. 5) 2018 (Amendment) Order 2021 [P.U.(A) 462/2021] was gazetted on 21 December 2021. The Amendment Order provides that the exemption will now apply to any insurance policies or takaful certificates for Perlindungan Tenang products, with an annual premium or takaful contribution not exceeding RM150 (previously RM100).

The Stamp Duty (Exemption) (No. 15) Order 2021 [P.U.(A) 464/2021] was gazetted on 22 December 2021. The Order provides a stamp duty exemption for any insurance policies or takaful certificates for products issued by a licensed insurer or licensed takaful operator to micro enterprises or small and medium enterprises (SMEs), with an annual premium or takaful contribution not exceeding RM250.

The exemption will apply to insurance policies or takaful certificates issued between 1 January 2022 and 31 December 2025.

The following terms are defined in the Order:

(i)    Licensed insurer

Same meaning assigned to it in Section 2(1) of the Financial Services Act 2013 (FSA)

(ii)   Licensed takaful operator

Same meaning assigned to it in Section 2(1) of the Islamic FSA

(iii) Micro enterprises or SMEs

As determined by the National Entrepreneur and Small and Medium Enterprises Development Council established under Section 2A of the Small and Medium Industries Development Corporation Act 1995

(iv) Products

Insurance or takaful products which have been approved by the Central Bank of Malaysia to be offered by a licensed insurer or takaful operator as follows:
(a) Fire insurance or takaful
(b) Fire business interruption insurance or takaful
(c) Personal accident insurance or takaful
(d) Travel insurance or takaful
(e) Liability insurance or takaful
(f) Engineering insurance or takaful

The Stamp Duty (Exemption) (No. 16) Order 2021 [P.U.(A) 465/2021] was gazetted on 22 December 2021. The Order provides a stamp duty exemption on any insurance policies or takaful certificates for products issued by a licensed insurer or licensed takaful operator to an individual, with an annual premium or takaful contribution not exceeding RM150.

The exemption will apply to insurance policies or takaful certificates issued between 1 January 2022 and 31 December 2025.

The definition of “licensed insurer”, “licensed takaful operator” and “products” are the same as defined under P.U.(A) 464/2021 (refer above).