Covid-19: Exemption from stamp duty on mergers or acquisitions of SMEs in the Official Journal
Encourage mergers and acquisitions between small and medium-sized enterprises (‘SME‘), the Malaysian Prime Minister announced at the launch of the Short-term economic recovery plan (June to December 2020) (PENJANE) on June 5, 2020, this stamp duty exemption will be granted on instruments relating to mergers or acquisitions approved between SMEs during the period between July 1, 2020 and June 30, 2021.
The Stamp Duty (Exemption) Decree (No.3) 2021 (‘OCOM 3/2021‘) was published on February 25, 2021 to give effect to the above-mentioned initiative.
EO 3/2021 exempts from stamp duty the following acts performed by SMEs in connection with an approved merger or acquisition:
- contract or agreement for the sale or rental of goods (land, buildings, machinery and equipment);
- transfer instrument and memorandum of understanding;
- loan or financing agreement; and
- first lease contract.
To benefit from the exemption under OE 3/2021:
- the instrument is to be performed by SMEs as that term is defined under Section 2 of the Malaysian Small and Medium-Sized Enterprise Company Act 1995 (formerly known as the Malaysian Small and Medium-Sized Enterprise Company Act 1995). development of small and medium-sized industries);
- the merger or acquisition must be approved by the Minister of Entrepreneurship Development and Cooperatives as of July 1, 2020 but no later than June 30, 2021; and
- the instrument must be executed on or after July 1, 2020 but no later than December 31, 2021.
The definition of SMEs can be found in the Guideline for the definition of SME issued by SME Corporation Malaysia (the Secretariat of the National Council for the Development of Entrepreneurs and SMEs).
OE 3/2021 is deemed to have entered into force on July 1, 2020.