Beginner's Guide to Understanding Stamp Duty

Stamp duty is a tax charged on stock market transactions in Malaysia. Understanding how it works can help you optimize your investment strategy and reduce overall costs.

What is Stamp Duty?

Stamp duty is a government tax on stock purchases and sales. It's calculated based on the transaction value and has different rates for buying and selling.

Stamp Duty Rates (Malaysia)

• Buy: RM 1 per RM 1,000 (maximum RM 1,000)
• Sell: RM 1 per RM 1,000 (maximum RM 200)

How to Calculate Stamp Duty

Example: Buying RM 5,000 worth of stocks

• Calculation: RM 5,000 ÷ RM 1,000 = 5 units
• Stamp Duty: 5 × RM 1 = RM 5
• Total Cost: RM 5,000 + RM 5 = RM 5,005

Who Pays Stamp Duty?

In Malaysia, the buyer pays stamp duty on purchases and the seller pays on sales. This is automatically deducted from your account by your broker.

Strategies to Reduce Stamp Duty

• Batch larger purchases together to hit the maximum cap
• Understand the tiered system and plan accordingly
• Consider the long-term value over short-term trading
• Use brokers that handle calculations transparently

Stamp Duty Example Comparison

Transaction	Amount	Stamp Duty
Buy RM 1,000	RM 1,000	RM 1
Buy RM 5,000	RM 5,000	RM 5
Buy RM 100,000	RM 100,000	RM 1,000 (capped)

💡 Key Takeaway: Stamp duty is an unavoidable cost for Malaysian stock transactions. Plan your trades accordingly and use tools like Duitwise to calculate exact costs before investing.