Budget 2027: Stamp Duty Remission For Mid-tier Companies' Financing Proposed

KUALA LUMPUR, Oct 12 (Bernama) -- Stamp duty remission exceeding RM10 has been proposed for second-tier agreements between mid-tier companies (MTCs) and financial institutions involving excess credit facilities extended to micro, small and medium enterprises (MSMEs), for the period from Jan 1, 2027 to Dec 31, 2030.

According to the 2027 Tax Measures document published by the Ministry of Finance (MoF), the proposal aims to improve MSMEs’ cash flow by enabling them to receive early payments from excess credit facilities provided by MTCs.

The proposal is subject to two conditions: the MSME supplier must have fulfilled its contract to supply goods or services to the MTC. It must not be a parent company, subsidiary or related company of the MTC.

Currently, loan or financing agreements are subject to ad valorem stamp duty at a rate of 0.5 per cent.

Stamp duty exemption is also granted on principal factoring or invoice financing agreements executed by MSMEs with factoring companies registered with MoF and Malaysia Factoring Association members.

The exemption applies to principal factoring or invoice financing agreements executed from Jan 1, 2022 to Dec 31, 2025.

The document said the MTC Supplier Financing Programme has adopted the concept of reverse factoring. This involves two instruments: a first-tier credit facility agreement and a second-tier agreement for the utilisation of excess credit facilities.

Both agreements must be executed between the MTC and a financial institution and are subject to ad valorem stamp duty at a rate of 0.5 per cent.

Under the proposal, the stamp duty rate for first-tier agreements will remain at the ad valorem rate of 0.5 per cent.

-- BERNAMA