Introduction
As Malaysia advances towards a self-assessment regime for all taxpayers, with taxpayers having to compute and pay stamp duties on their own effective 1 January 2026, the Inland Revenue Board Malaysia (“IRB”) has introduced the Stamp Duty Audit Framework, also known as the Rangka Kerja Audit Duti Setem (“Framework”), effective from 1 January 2025. This Framework is not merely a procedural guideline, rather, it marks the beginning of a stricter enforcement and a new era of taxpayer accountability and transparency in stamp duty compliance.
Stamp Duty Audit Framework[1]
1. General Review (Semakan Umum)
At its core, the Framework is designed to verify that the correct stamp duty has been paid according to the Stamp Act 1949 (“SA 1949” or “Act”). This involves the examination of all instruments that are subject to duty. The Framework introduces two distinct modes of audit, i.e., general review and comprehensive review.
A general review is primarily a desk audit conducted at the IRB offices. It involves an examination of documents attached by the auditee during their online stamping application via the Stamp Assessment and Payment System (“STAMPS”). Should the IRB require further details, the auditee may be called to the office for an interview. Based on the findings, a general review case can be escalated to a more in-depth comprehensive review. In such circumstances, the auditee will be notified as per the normal process of initiating a comprehensive review.
2. Comprehensive Review (Semakan Menyeluruh)
A comprehensive review, in contrast, involves a detailed on-site audit that may be conducted at the auditee’s premises or a mutually agreed location. This type of review scrutinises all executed documents in the auditee’s possession.
3. Objective
The principal objective of the Framework is to encourage voluntary compliance with the provisions of the SA 1949. It also serves as an educational initiative to inform taxpayers of their tax responsibilities and obligations. The Framework aims to ensure that stamping is carried out correctly and in an orderly manner, while also explaining the laws, rights, and responsibilities of all parties involved in the audit process.
4. Stamping Period
A stamp duty audit, whether general or comprehensive, may cover a period of up to three (3) calendar years. However, this three-year statutory time limit is not applicable in cases involving fraud (penipuan) (Section 74 of the SA 1949), and duty evasion or negligence (pelarian duti atau kecuaian) (Sections 63 and 64 of the SA 1949).
5. Selection Criteria for Audit
Stamp duty audit cases are identified using a computerised system that applies risk assessment criteria or relies on information obtained by the IRB from multiple sources.
The key methods for selecting these audit cases include:
- Using risk-based assessment criteria;
- Targeting specific industries;
- Focusing on particular issues relevant to certain categories of duty payers; and
- Acting on information provided by third parties.
6. Implementation of Stamp Duty Audit
(a) Initial Audit Action –
The audit process formally begins with a notice to the taxpayer. For general reviews, this comes in the form of a Notification of Audit Action sent through the STAMPS platform. For comprehensive reviews, the IRB issues a Letter of Audit Visit. Recipients must respond within fourteen (14) working days. In cases where valid reasons are provided, the audit may be deferred. Each audit notification outlines key details such as the proposed audit date, required documents, the name of the assigned audit officer, and the estimated duration of the review
Additionally, the IRB may extend its audit to encompass related entities such as subsidiaries or companies under common control. If no audit visit is conducted in a comprehensive review case, a formal Letter of Determination of Commencement of Case Conclusion Period will be issued to initiate the audit resolution phase.
(b) Conducting the Audit Visit –
Applicable only to comprehensive reviews, visits may take place at various locations including the auditee’s premises or the IRB offices. During the visit, audit officers will identify themselves and present their authority cards. They will explain the audit’s legal basis under Sections 3A and 76 of the SA 1949, outline the scope of the audit, and inform the auditee of their legal rights and obligations. Officers are authorised to inspect and retrieve physical documents, as well as download relevant electronic data.
7. Duration of the Visit
Audit visits typically last between one (1) to four (4) days. However, the actual duration may be extended based on factors such as the volume of documentation, the complexity of records, and the level of cooperation received from the auditee.
8. Review and Access to Records
Audit officers are entitled to review all stamping records and any related documents, whether in physical or electronic form. They may make copies or take original documents, provided a documented inventory is maintained. Officers may also access electronic records and download data using suitable storage devices.
Pursuant to the newly introduced Section 35B of the SA 1949, any person liable to pay stamp duty on an instrument is required to retain the instrument and all relevant documents for a period of seven (7) years from the date the duty is paid.
9. Concluding the Audit
At the close of the audit, auditees may be invited to participate in discussions (either in person or virtually) to review and clarify findings. Following this, a Case Review Findings Letter will be issued, outlining the audit results and the supporting rationale. The auditee has fourteen (14) working days to submit any objections or additional documentation. If no response is received, the findings will be deemed accepted, and a Notice of Amended Assessment along with applicable penalties will be issued.
Audit completion timelines are strictly defined:
- Comprehensive reviews must be concluded within sixty (60) working days from the date of the audit visit letter.
- General reviews must be finalised within seven (7) working days of the audit notification.
- Any delays will be formally communicated by the IRB.
10. Voluntary Disclosure
Conditions
Taxpayers are permitted to make voluntary disclosures for documents that were submitted for stamping beyond the prescribed three-month window, provided this occurs before any audit action has commenced. The audit process is deemed to have commenced once the IRB issues a Letter of Request for Documents and Information. Only documents submitted through STAMPS are eligible.
11. Penalty for Voluntary Disclosure
A concessionary penalty of 10% or RM50 (whichever is higher) may apply.
(a) Offences and Penalties
Under Section 47A of the SA 1949, penalties may be imposed for unpaid or insufficient stamp duty. Nonetheless, the Collector retains the discretion to reduce or waive penalties, particularly in cases where taxpayers come forward voluntarily in respect of their non-compliance.
(b) Appeals
Pursuant to Section 38A of the SA 1949, taxpayers dissatisfied with an audit outcome may submit a Notice of Objection to the Collector within thirty (30) days from the date of Collector’s assessment or additional assessment. The Notice must state the grounds of objection, and the Collector may request further information in relation to those grounds. Notwithstanding the objection, the taxpayer remains liable to pay the duty in accordance with the original assessment pending the outcome of the Notice. If still dissatisfied, they may appeal to the High Court within twenty-one (21) days of receiving the Collector’s decision, pursuant to Section 39 of the Act.
Conclusion: Proactive Steps for Businesses and Individuals
Maintaining clear, accurate records is no longer just a good practice, but a necessity. Businesses must ensure that all stamp duty-related documents are properly stamped and readily accessible in the event of an audit. A well-maintained audit trail not only demonstrates compliance but also helps to avoid unnecessary disputes.
Regular internal reviews are just as important. By periodically checking and verifying stamping records, businesses can catch discrepancies early and take corrective action before minor issues become major problems. Equipping staff with the right training on stamping procedures and current legal requirements further strengthens this compliance framework.
Professional advice can also make a difference. Tax consultants and legal advisors offer valuable insights into the intricacies of the SA 1949, helping businesses stay ahead of regulatory demands. At the same time, maintaining open and transparent communication with the IRB fosters trust and supports a smoother, more cooperative audit process.
With the IRB’s enhanced audit framework, stamp duty audits are no longer a remote possibility but a growing reality. Businesses that adopt a proactive and structured approach will not only reduce their risk exposure but also reinforce their financial and regulatory credibility.
For further information, please contact:
M Inamul Hassan Shah, Partner, Azmi & Associates
hassanshah@azmilaw.com
- Stamp Duty Audit Framework (Rangka Kerja Audit Duti Setem): https://www.hasil.gov.my/media/x5hn0ha0/rangka-kerja-audit-duti-setem-2025.pdf
