The Malaysian Court of Appeal has delivered a significant ruling stating that parties cannot postpone the legal transfer of asset ownership to circumvent higher ad valorem stamp duty. This decision arose from an asset purchase agreement where GTP Network Sdn Bhd was set to acquire 16 telecommunications towers from Meba Holdings Sdn Bhd for RM15 million.
In its written judgment, Justice Firuz Jaffril clarified that the agreement constituted a “conveyance on sale” under Section 21(1) of the Stamp Act 1949, thus subject to ad valorem duty. The court emphasized that the actual completion date of the asset transfer is secondary to the agreement’s primary intention: the sale of property and the subsequent passing of title to the buyer, GTP Network Sdn Bhd. This ruling overturns a previous High Court decision that had classified the agreement as merely an agreement to convey, which would have incurred only a nominal RM10 duty.
The Court of Appeal affirmed that telecommunications towers are considered capital assets, not trading stocks. Therefore, they fall under the Stamp Act’s provisions for ad valorem duty on property sales, as specified in item 32(a) of the First Schedule. The court cited the Federal Court’s 2025 precedent in Havi Logistics (M) Sdn Bhd v Pemungut Duti Setem, which established that an instrument does not need to effect an immediate transfer of title to be liable for ad valorem duty.
Justice Firuz stressed that permitting delays in title transfer to evade higher duties would undermine the legislative intent of Section 21(1) of the Stamp Act. Consequently, GTP Network Sdn Bhd has been ordered to pay RM30,000 in costs to the government. This judgment is expected to have considerable implications for future mergers, acquisitions, and other transactions involving the sale of fixed or capital assets in Malaysia.
About the Author
