Kuala Lumpur:A proposal for stamp duty remission exceeding RM10 has been introduced for second-tier agreements between mid-tier companies (MTCs) and financial institutions. This proposal targets excess credit facilities extended to micro, small, and medium enterprises (MSMEs) from January 1, 2027, to December 31, 2030.

According to BERNAMA News Agency, the initiative is part of the 2027 Tax Measures document published by the Ministry of Finance. It aims to enhance MSMEs' cash flow by facilitating early payments through excess credit facilities provided by MTCs.

Two conditions apply to this proposal MSME suppliers must fulfill their contracts to supply goods or services to the MTC, and they must not be a parent company, subsidiary, or related entity of the MTC.

Currently, loan or financing agreements are subject to a 0.5 percent ad valorem stamp duty. However, stamp duty exemption is available for principal factoring or invoice financing agreements executed by MSMEs with factoring companies registered with the Ministry of Finance and members of the Malaysia Factoring Association. This exemption applies to agreements from January 1, 2022, to December 31, 2025.

The MTC Supplier Financing Programme has incorporated the reverse factoring concept, which involves two instruments a first-tier credit facility agreement and a second-tier agreement for utilizing excess credit facilities. Both agreements, executed between the MTC and a financial institution, are currently subject to a 0.5 percent ad valorem stamp duty.

The proposal maintains the stamp duty rate for first-tier agreements at the ad valorem rate of 0.5 percent.