Asset transfer cannot be delayed to avoid higher stamp duty, court rules

PUTRAJAYA: The Court of Appeal has ruled that parties cannot avoid paying ad valorem stamp duty simply by structuring an asset sale so that legal ownership passes at a later date.

A three-member bench held that an asset purchase agreement for the sale of 16 telecommunications towers amounted to a “conveyance on sale” under Section 21(1) of the Stamp Act 1949 and was, therefore, liable to ad valorem duty.

A member of the bench, Justice Firuz Jaffril, said the timing of completion was irrelevant where the agreement was, in substance, for the sale of property, as the parties had clearly intended for title in the towers to pass to GTP Network Sdn Bhd.

“The actual completion date for the transfer of assets is immaterial,” he said in a written judgment in allowing an appeal by the Collector of Stamp Duties (government).

The bench, which also comprised chairman Justice Lim Chong Fong and Justice Nadzarin Wok Nordin, ordered GTP to pay RM30,000 in costs to the government.

The ruling is expected to have significant implications for mergers and acquisitions and other transactions involving the sale of fixed or capital assets.

The dispute arose after GTP purchased the 16 towers from Meba Holdings Sdn Bhd for RM15 million under an asset purchase agreement dated Aug 1, 2023.

The collector assessed the agreement for RM584,020 in ad valorem duty, but GTP argued the agreement merely contemplated a future transfer and should attract only the RM10 nominal duty applicable to ordinary agreement.

The High Court had agreed with this, ruling that the agreement was merely an agreement to convey, and ordered the stamp duty to be refunded with interest.

The Court of Appeal, however, found that the towers were capital assets falling within the statutory definition of “property” under the Stamp Act.

“The sale assets are movable property comprising telecommunications towers, equipment and related rights.

“They are capital assets and not trading stocks in the form of goods, wares or merchandise,” Giruz said, placing the transaction within item 32(a) of the First Schedule, which imposes ad valorem duty on the sale of property.

In reaching its decision, the court relied on the Federal Court’s 2025 ruling in Havi Logistics (M) Sdn Bhd v Pemungut Duti Setem, which held that an instrument need not itself effect an immediate transfer of title before attracting ad valorem duty.

Quoting extensively from Havi Logistics, Firuz said: “The fact that the sale transaction is not concluded on the date of the instrument or that it was to be completed at a future date is immaterial.

“The timing of the closing or when the title to the property passes cannot be the determining factor.”

He said accepting GTP’s argument would let parties dodge higher duty “merely by stating in the instrument that the title to the property sold shall pass at a future date”, contrary to Parliament’s intent in enacting Section 21(1).

Senior revenue counsel Marina Ibrahim and revenue counsel Azleena Khairuddin appeared for the collector, who is also the director-general of the Inland Revenue Board.

Lawyers Anand Raj, Foong Pui Chi and Chantal Leann Barnabas acted for GTP.