Stamp Duty on POs: What the Stamp Act 1949 Actually Says

Purchase orders and invoices move through most businesses every day, yet neither term appears anywhere in the Stamp Act 1949. Whether a document is chargeable with duty depends not on its label, but on the role it plays in a transaction.

Once a supplier accepts a purchase order, both parties have agreed on what is being bought, at what price and on what terms. In substance, the document functions as an agreement or memorandum of agreement made under hand, which the Act charges at a fixed duty of RM10. The deciding factor is what the order covers. Agreements relating to the sale of goods, wares or merchandise are exempt, so a PO for stock, raw materials or merchandise needs no stamping. Services carry no such exemption, which means a PO for maintenance, repairs or outsourced work attracts the RM10 duty, unless its value is below RM300.

Invoices sit in a different position. A standard invoice that simply requests payment is not among the instruments listed as chargeable with duty. The picture changes when an invoice sets out the full commercial terms of a deal, as it then begins to resemble an agreement in its own right.

The amount is modest, but timing is not. Documents are expected to be stamped within 30 days of signing, and late stamping now attracts a penalty. The more serious consequence lies elsewhere. An instrument that is not duly stamped cannot be admitted in evidence until the duty and penalty are settled, a hurdle that can slow the recovery of an unpaid service bill at the very moment it matters most.

If you wish to focus on running and growing your business, our CFO advisory team can take care of your accounting, payroll, tax planning, e-stamping, corporate secretarial and compliance matters for you. Feel free to WhatsApp us at 010-246 2151.