The economic downturn has badly affected the SMEs and the major cause is the Covid-19 outbreak. In continuation with the Malaysian Government’s drive to minimize the financial burden experienced by the small and medium enterprises, the stamp duty has been exempted.
On 10 September 2021, the Stamp Duty (Exemption) (No. 10) Order 2021 (E.O. 10/21) was gazette. This order is deemed to be in force on 1 January 2021, retrospectively.
The E.O. 10/21 offers exemption from stamp duty on any financing agreement or instrument of the loan with reference to the financing facility or loan that was duly approved under the specific types of funds. Such funds must be established by Bank Negara Malaysia for SMEs. These funds include:
- Agrofood Facility
- Economic Sectors Facility
- Small Medium Enterprises Automation and Digitalisation Facility
According to the exemption order E.O. 10/21, the financing facility or loan must be executed between the SME and financial institution. Such an institution must have issued a “Letter of Offer” on or after 1 January 2021. However, the date must not exceed the deadline of 31 December 2021.
When submitting an exemption application under E.O. 10/21, the SME should also attach the “Letter of Offer” issued by the financial institution. This letter must state that a financing facility or loan has been approved.
With reference to the exemption order E.O. 10/21, the meaning of the term ‘Financial Institution’ is similar to the one that is mentioned for the “Banker” U/S 2 of the Stamp Act 1949.
Besides, any person that has been prescribed as the “Financial institution” by the Minister of Finance (under subsection2 (1) of the “Central Bank of Malaysia Act 2009” (CBM Act) in relation to the Section-49 of the CBM Act 2009;
and the term “Small and Medium Enterprises” includes all those enterprises that have been determined by the “National Small and Medium Enterprises Development Council’ (NSMEDC). The (NSMEDC) was established under the authority of the Small and Medium Industries Development Corporation Act 1995.