Malaysia proposes stamp-duty caps for foreign-currency bank loans

Proposed two-tier cap

Budget 2027 proposes that stamp duty on an agreement for a foreign-currency loan or financing from a bank in Malaysia be capped at RM2,000 where the financing does not exceed RM100 million and at RM5,000 where it exceeds RM100 million. The proposal would apply to agreements executed from 1 January 2027. Its wording is tied both to foreign-currency financing and to a bank in Malaysia; it does not state a general cap for every loan instrument or for financing obtained from other lenders.^[1]

Current ad valorem charge

Appendix 19 describes the present charge as 0.5%. The published Stamp Act 1949 text supports that mechanism: section 2 defines a foreign-currency loan by reference to foreign currency, while section 4 charges instruments listed in the First Schedule. Item 27(a)(ii) applies RM5 for each RM1,000 or part thereof where a charge or mortgage secures repayment of a foreign-currency loan. The published item contains no equivalent RM2,000 or RM5,000 maximum.^[1][2]

Effect for multinational borrowers

For a qualifying large facility, the proposed maximum would break the direct relationship between the amount financed and the duty payable. Treasury teams should nevertheless distinguish the financing agreement covered by the announcement from security documents, guarantees and related instruments, which may have their own classification under the Stamp Act. The Budget material does not say that those related instruments are included in the new caps. That distinction matters for syndicated facilities and group treasury documentation.^[1][2]

Proposal awaits implementation

The Budget appendix announces the intended treatment but does not itself amend First Schedule item 27 or identify the implementing exemption, remission or amending provision. Until operative legislation is published, groups should model the caps for agreements expected to be executed from 1 January 2027 but should not treat them as enacted law. Transaction documents will also need to satisfy the final definition of financing from a bank in Malaysia and any conditions introduced with the implementing measure.^[1][2][3]