Understanding Stamp Duty for Property Transactions
In Malaysia the Stamp Act 1949 governs the application of stamp duty which is a key aspect of any sale and purchase of house transactions. For anyone buying or selling a house, understanding stamp duty and how to calculate the amount payable is crucial for both compliance and financial planning. Briefly, the Stamp Act imposes a tax on the sale and transfer of property transactions. Stamp duty is a form of tax levied on the transaction value of a property, and it must be paid within 30 days from the date of execution of the sale and purchase agreement. It can be paid, either at the Stamp Office or online through the relevant platforms set up by the Malaysian government. This tax serves as a means of revenue for the government and ensures that transactions are legally recognized. Upon payment, a stamp duty certificate is issued and it is advisable to be attach the certificate to the sale and purchase agreement. How to calculate Stamp Duty? Calculating stamp duty for the sale and purchase of residential property is straightforward but requires attention to detail. The stamp duty is calculated based on the property\’s purchase price or the market value, whichever is higher. Current Stamp Duty Rates As of the latest update, the stamp duty rates for residential property transactions in Malaysia are as follows: First RM100,000 : 1% RM100,001 to RM500,000 : 2% RM500,000 to RM1,000,000 : 3% Above RM1,000,000 : 4% How to calculate the stamp duty 1.Determine the Purchase Price: Identify the purchase price stated in the Sale and Purchase Agreement or the market value of the property, if higher. 2.Apply the Stamp Duty Rates: Calculate the stamp duty in stages according to the applicable rates: For the first RM100,000 : 1% For the next RM400,000 (from RM100,001 to RM500,000) : 2% For the next RM500,000 (from RM500,001 to RM1,000,000) : 3% For any amount above RM1,000,000 : 4% 3.Add Up the Amounts: Sum the calculated amounts to find the total stamp duty payable. For example, if the purchase price of the property is RM750,000, the stamp duty payable is calculated as follows: 1.First RM100,000 : 1% = RM1,000 2.Next RM400,000 (RM100,001 to RM500,000) : 2% = RM8,000 3.Next RM250,000 (RM500,001 to RM750,000) : 3% = RM7,500 Total Stamp Duty = RM1,000 + RM8,000 + RM7,500 = RM16,500 In conclusion, understanding the Stamp Act and the calculation of stamp duty is crucial for anyone involved in the property market as you can navigate property transactions more effectively and avoid any legal pitfalls associated with unpaid duties.
Does Termination Relieve A Contractor For Pre-termination Delay?
In law, termination does not take away a plaintiff’s right to claim Liquidated and Ascertained Damages (“LAD”) accrued in respect of pre-termination delay unless expressly stated in the contract. That is, in the absence of express contractual provisions, termination does not relieve a contractor’s liability for LAD accrued in respect of pre-termination delay. In PWC Bina Sdn Bhd v Ideal City Development Sdn Bhd [2022] MLJU 519 (“PWC Bina”), the contract provided for LAD between the period from the extended completion date and the date of practical completion. The plaintiff argued that the arbitrator had wrongfully re-written the contract by allowing the defendant to claim LAD for the period between the extended completion date to the date of termination of the contract and therefore, the arbitral award ought to be set aside. Lim Chong Foong J (as he then was) held that the arbitrator was not plainly wrong: “It is common ground that the Plaintiff’s proposition is indisputable in a typical completed contract. However, this is a terminated contract mid-stream before completion is achieved. In the circumstances, I am of the view that the Arbitrator’s finding is not plainly wrong and unacceptable. A similar result has been achieved in the recent English Supreme Court case of Triple Point Technology Inc v PTT Public Company Limited [2021] UKSC 29 akin to the circumstances here where the contractual provisions did not expressly provide for a terminated contract scenario.” In Triple Point Technology Inc v PTT Public Company Limited [2021] UKSC 29 (“Triple Point v. PTT”), PTT entered into a software contract with Triple Point whereby Triple Point was to provide and install certain software for PTT. Article 5.3 of the contract stipulates that: “If CONTRACTOR fails to deliver work within the time specified and the delay has not been introduced by PTT, CONTRACTOR shall be liable to pay the penalty at the rate of 0.1% (zero point one percent) of undelivered work per day of delay from the due date for delivery up to the date PTT accepts such work…” A dispute occurred between the parties and PTT terminated Triple Point before the project was completed. Triple Point sued PTT at the TECHNOLOGY AND CONSTRUCTION COURT (“TCC”) for unpaid invoices. PTT counterclaimed for breach of contract and LAD. TCC allowed PTT’s claim for LAD. At the UK Court of Appeal (COA), TCC’s decision on the LAD. The COA held that although Triple Point did not complete the project on time, PTT was not entitled to claim LAD because PTT did not “accept” the (uncompleted) work as per Article 3.5. The UK Supreme Court (SC) reversed COA’s decision and held that PTT was contractually entitled to claim LAD for pre-termination delay irrespective of whether PTT had accepted the unfinished work, and that this accrued right to LAD cannot be taken away unless expressly provided for in the contract. According to the SC, termination does not take away the accrued rights unless the contract expressly stipulates so. SC further added that the COA’s interpretation of Article 5.3 LAD is only claimable if the incomplete work were “accepted” by PTT) is inconsistent with commercial reality and the accepted function of LAD. According to the SC, whether an employer is contractually entitled to claim LAD for pre-termination delay is a matter of construction of the contract as opposed to a matter of principle. The SC stated that a contractor can still be held liable for liquidated and ascertained damages (“LAD”) even if the contract was terminated (prior to the completion of the project).
Legal Compliance for SME Business in Malaysia
Do you know SMEs play a vital role in the Malaysian economy representing 97% of the total business establishments and comprising nearly 40% of the country’s Gross Domestic Product (GDP). Do you know many among the B40 (Bottom 40%) income groups are employed in SMEs? Are you concerned that Government regulation can have a significant impact on these SMEs and compliance with regulations is a major burden for the SMEs. Recent studies reveal many SMEs are badly impacted by increasing costs of doing business due to penalties arising from non-compliance. Running a company requires compliance with statutory requirements set out by the Companies Act, and failure to do so may result in fines and imprisonment. Some common mistakes SMEs may make are not notifying the Registrar of any business changes, failing to lodge annual returns within the required timeline, not keeping proper documentation, to name a few. Some of the compliance requirements relevant to SMEs are:- Personal Data Protection & Privacy Policy: PDPA 2010 requires SMEs to comply with the “Notice” requirement, that is, notice given must consist of how the personal data is processed, purpose of collection, and rights of access by data user. Occupation Safety and Health (OSH) Policy: OSHA 1994 requires employers to implement an effective system to ensure safety of workplace for staff, employee’s participation & continual improvement in the management of OSH. Tax Compliance: Businesses are required to register for taxes, including GST (Goods and Services Tax), if applicable, and file annual income tax returns, in compliance with the Income Tax Act 1967. Labor Laws: Compliance with the Employment Act 1955 is essential, which covers employment terms, wages, working hours, and employee benefits. SMEs must adhere to the regulations set by the Ministry of Human Resources. Environmental Regulations: Some SMEs may need to comply with environmental laws, such as the Environmental Quality Act 1974, which governs pollution control and waste management. Conclusion: Non-compliance with any applicable law may cause SMEs to be subjected to potential fines and /or imprisonment. For example, section 15 of OSHA 1994 requires every employer and every self-employed person to ensure the safety, health and welfare of their staff at the workplace. Penalties for breaches have increased from RM50,000.00 to RM500,000.00, and imprisonment term reduced from not exceeding 5 to not exceeding 2 years. Non-compliance with any applicable laws governed under the Local Government Act 1976 may result in retraction of business and advertising licences by local authorities. Without such licences, companies are prohibited from operating their businesses and this may cause losses to the company and potential loss of reputation within the industry. So, do you want your business to stay compliant? Don’t wait for compliance, legal issues to hit you! Take a proactive approach – secure your business’s future with our in-house legal team. We are committed to providing with proactive, strategic legal and compliance advice that helps your business to minimize legal costs, non compliance penalties. We help your business to thrive.