The Tax Analysis Division of the Ministry of Finance has issued the above policy statement on 30 December 2010. It stipulates that service agreements executed on or after 1 January 2011 will be subject to ad valorem duty of 0.1%. For multi-tier service agreements, ad valorem duty of 0.1% will be imposed on the first tier only. The ad valorem duty of 0.1% will be imposed on:
a) the first tier for service agreements executed between a private entity and the service provider; or
b) the second tier for service agreements executed between an entity which is exempted from payment of stamp duty (eg. the Government of Malaysia) and the service provider.
The service agreements executed for other tiers will be subject to stamp duty at a fixed rate of RM50 and the excess duty will be remitted.
Following from the policy statement, the Stamp Duty (Remission) (No.4) Order 2010 [P.U.(A) 476/2010] was gazetted on 31 December 2010 to remit the stamp duty collected in excess of RM50.
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