In Malaysia’s contemporaneous mergers and acquisitions (M&A) market, share sales and asset sales are typically the two most commonly used transaction structures. Whether a business is expanding, a private equity firm is deploying capital, or a foreign investment is entering Malaysia, the structure chosen will directly shape the liabilities, regulatory exposure and especially costs and stamp duty implications. This article provides a practical overview of the differing stamp duty treatments between the two structures, equipping businesses to negotiate more strategically and manage transaction costs more effectively.
A. Share Sales
A share sale transaction will involve acquisition of the ownership of shares in a company. As opposed to asset sales, stamp duty treatment in respect of share transfer instrument is rather more straightforward.
Stamp Duty Position: Item 32(b), First Schedule, SA 1949
Item 32(b), First Schedule of the Stamp Act 1949 (“SA 1949”) stipulates the stamp duty rate for instrument of conveyance or transfer of shares at a flat rate of 0.3% on the higher of (a) the purchase price (consideration), or (b) the market value of the shares on the date of transfer.
LHDN’s Guidelines on Computation of Share’s Market Value
In computing the market value of shares, the Inland Revenue Board of Malaysia (“LHDN”) had issued relevant guidelines dated 6 November 2019 on stamp duty for share transfer instruments in respect of shares not listed on Bursa Malaysia Berhad¹. Essentially under these guidelines, the market value of shares will be determined based on the net tangible asset (“NTA”) value of the company.
B. Asset Sales
On the contrary, an asset sale typically involves the acquisition and transfer of a company’s assets, e.g. machineries, equipment, intellectual property, business contracts, customer lists, inventories, etc. Unlike share sale, the stamp duty treatment in respect of an agreement for asset sale appears to be more complex and controversial, as the stamp duty may be assessed separately on each class of asset transferred depending on its nature.
Stamp Duty Position: Items 32(a) and (aa), First Schedule, SA 1949
Under Items 32(a) and 32(aa), First Schedule of the SA 1949, stamp duty on asset transfer instruments is assessed on the higher of the consideration or market value of the transferred asset, at ad valorem duty rates ranging from 1% to 4%, depending on whether it involves a local or foreign purchaser.
On the other hand, Exemption (a), Item 4, First Schedule of the SA 1949 also provides that, if the agreement is for or relating to the sale of any ‘goods, wares or merchandise’, it would then be exempt from stamp duty.
Landmark Decision: Havi Logistics (M) Sdn Bhd v Pemungut Duti Setem [2025] 2 MLJ 845
Given the two positions above, dispute has arisen in the recent Federal Court case of Havi Logistics as to whether fixed assets (such as computer software, computer hardware, fittings, renovation, plant, machinery and equipment, excluding inventories) sold under an asset purchase agreement will fall within the expression “goods”, and therefore be exempt from stamp duty under Exemption (a), Item 4 of the First Schedule.
The court held that the dictionary meaning of the words ‘goods, ware and merchandise’ clearly show that they all refer to trading goods, i.e. items held for sale in the ordinary course of business rather than capital or non-trading movable properties. Therefore, only trading goods would come under the exemption, whereas non-trading moveable properties would remain chargeable with ad valorem duty under Item 32(a) of the First Schedule.
Accordingly, as the fixed assets in question were non-trading in nature, the asset purchase agreement was assessed at ad valorem duty as an instrument of conveyance on sale under Item 32(a) of the First Schedule.
LHDN’s Guidelines
Following the Havi Logistics case, LHDN further released a guideline dated 29 December 2025 clarifying the stamp duty applicability on sale and purchase agreements and instruments of transfer involving movable assets². In essence, the guideline draws a clear distinction on stamp duty treatment between the sale of trading goods or merchandise and the sale of one’s own capital assets, in line with the Federal Court’s decision.
To simplify, the table below illustrates the distinction between the two categories of assets:
|
Feature |
Goods, Wares or Merchandise |
Non-Trading/ Capital Assets |
|
Legal Nature |
Items held for the purpose of trade or sale |
Items to facilitate business operation |
|
Examples |
Trading stock, inventories |
Machinery, equipment, vehicles, other fixed and tangible assets |
|
Applicable Item under First Schedule |
Exemption (a), Item 4 |
Item 32(a) or (aa) |
|
Duty Payable |
Exempted |
Ad valorem duty (1% – 4%) |
Key Takeaways
In short, the stamp duty burden between a share sale and an asset sale in an M&A transaction can be significant. On any sizeable transaction involving capital and non-trading assets, parties should assess and anticipate the stamp duty exposure of what is being purchased at the outset and not after the agreement is signed. Getting the deal structure right from the outset is far less costly than discovering the stamp duty consequences once the deal is done.
***
¹ https://phl.hasil.gov.my/pdf/pdfam/GP_SAHAM_2019_23062020_1.pdf
***
This article was written by Chin Wan Xin (Associate) with the assistance of Wong Pro Sam (Intern) from Donovan & Ho’s corporate practice.
Our corporate practice group advises on corporate acquisitions, restructuring exercises, joint venture arrangements, shareholder agreements, employee share options and franchise businesses, Malaysia start-up founders and can assist with venture capital funds in Seed, Series A & B funding rounds. Feel free to contact us if you have any queries.
