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Franchise Agreement Stamp Duty Malaysia

Franchise Agreement Stamp Duty in Malaysia: A Comprehensive Guide

Are you planning to start your own franchise business in Malaysia? If so, you may have heard about the term “franchise agreement stamp duty.” It`s a crucial component in the process of setting up a franchise business in the country.

In this article, we`ll dive deep into the world of franchise agreement stamp duty in Malaysia. We`ll discuss what it is, how it works, and everything else you need to know.

What is Franchise Agreement Stamp Duty?

Franchise agreement stamp duty is a tax that franchisees need to pay to the Malaysian government when they sign their franchise agreement. The amount of stamp duty payable varies depending on the value of the franchise agreement.

In Malaysia, the Stamp Act 1949 governs the payment of stamp duty, and franchise agreements are considered as “instruments” that are chargeable under this law.

How Does it Work?

To understand how franchise agreement stamp duty works, let`s take a closer look at the stamp duty rates in Malaysia:

– For agreements valued between RM1 to RM1,000: stamp duty rate is RM1 per agreement

– For agreements valued between RM1,001 to RM5,000: stamp duty rate is RM2.50 per agreement

– For agreements valued between RM5,001 to RM10,000: stamp duty rate is RM5 per agreement

– For agreements valued between RM10,001 to RM20,000: stamp duty rate is RM10 per agreement

– For agreements valued between RM20,001 to RM30,000: stamp duty rate is RM20 per agreement

– For agreements valued between RM30,001 to RM40,000: stamp duty rate is RM30 per agreement

– For agreements valued between RM40,001 to RM50,000: stamp duty rate is RM40 per agreement

– For agreements valued between RM50,001 to RM100,000: stamp duty rate is RM50 per agreement

– For agreements valued between RM100,001 to RM500,000: stamp duty rate is 0.5% of the agreement value

– For agreements valued above RM500,001: stamp duty rate is RM2,500 per agreement

Therefore, if the value of your franchise agreement is RM50,000, you`ll need to pay a stamp duty of RM40. If the value of your franchise agreement is RM1 million, you`ll need to pay a stamp duty of RM5,000.

Who Pays for the Franchise Agreement Stamp Duty?

Under the law, it`s the responsibility of the franchisee to pay for the stamp duty. This means that you, as the franchisee, need to ensure that the stamp duty is paid before signing the franchise agreement.

If the franchisee fails to pay the stamp duty, the agreement won`t be considered valid, and you may face legal consequences.

Conclusion

In conclusion, franchise agreement stamp duty is a crucial aspect of setting up a franchise business in Malaysia. The amount of stamp duty payable depends on the value of the franchise agreement, and it`s the responsibility of the franchisee to pay for it.

Make sure you factor in the cost of stamp duty when planning your franchise business in Malaysia. It`s always a good idea to seek the advice of a professional tax consultant or a lawyer to ensure that you comply with all the legal requirements.