To encourage mergers and acquisitions among small and medium enterprises ('SMEs'), the Prime Minister of Malaysia announced at the launch of the Short-Term Economic Recovery Plan (June to December 2020) (PENJANA) on 5 June 2020 that stamp duty exemption will be granted on instruments relating to approved mergers or acquisitions among SMEs during the period between 1 July 2020 to 30 June 2021.
The Stamp Duty (Exemption) (No. 3) Order 2021 ('E.O. 3/2021') was gazetted on 25 February 2021 to give effect to the initiative mentioned above.
E.O. 3/2021 exempts from stamp duty the following instruments executed by SMEs in relation to an approved merger or acquisition:
- contract or agreement for the sale or leasing of property (land, building, machinery and equipment);
- instrument of transfer and memorandum of understanding;
- loan or financing agreement; and
- first lease agreement.
To qualify for the exemption under E.O. 3/2021:
- the instrument must be executed by SMEs within the meaning assigned to that expression under section 2 of the Small and Medium Enterprises Corporation Malaysia Act 1995 (previously known as the Small and Medium Industries Development Corporation Act 1995);
- the merger or acquisition must be approved by the Minister of Entrepreneur Development and Cooperatives on or after 1 July 2020 but no later than 30 June 2021; and
- the instrument must be executed on or after 1 July 2020 but no later than 31 December 2021.
The definition of SMEs can be found in the Guideline for Definition of SME issued by SME Corporation Malaysia (the Secretariat to the National Entrepreneur and SME Development Council).
E.O. 3/2021 is deemed to have come into operation on 1 July 2020.
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